42 Organizations Urge Legislative Leaders to Include Comprehensive Rx Price Transparency in NYS Budget

By AARP NY | March 20, 2023

Governor, Senate Proposals Would Require Advance Reporting of Price Hikes & Address Shady Rx Industry Deals

ALBANY, N.Y. – Forty-two organizations representing the aging, communities of color, labor, physicians, clergy and more are urging New York State’s legislative leaders to include in the final 2023-24 state budget one of the most comprehensive prescription drug price transparency reforms in the nation.

The organizations joined to sign a letter (reprinted in full below) to Senate Majority Leader Andrea Stewart-Cousins and Assembly Speaker Carl Heastie urging enactment of

reforms proposed by Governor Kathy Hochul that would require drug makers to report planned price hikes in advance, expand the State’s authority to investigate proposed increases, and disclose deals that delay consumers’ access to cheaper generic drugs.

The Senate included many of these reforms in its budget proposal last week, but unfortunately the Assembly’s proposal did not include any.

The following Rx transparency issues are on the table as lawmakers and the Governor negotiate a final budget due April 1:

Require prescription drug manufacturers to report price increases in advance, including the reasons for the increase and a requirement to provide consumers – and state taxpayers, who pay $9 billion in prescription drug costs every year – advance notice of proposed prescription drug price hikes, and;
Require disclosure of or a ban on ‘pay for delay’ deals by which brand name drug makers pay generic manufacturers to keep their cheaper generic versions off the market for nearly 17 months on average, according to the Federal Trade Commission. With generic drugs as much as 85% less expensive than brand name drugs, delaying access to cheaper versions amounts to a price hike – costing American consumers as much as $37 billion a year, according to researchers. In fact, some experts believe that ‘pay for delay’ deals are “evolving” to include categories of value transfer less likely to attract antitrust scrutiny.

“It’s nothing short of outrageous that Americans continue paying three times more for the same prescription drugs as people in other countries while prices here continue skyrocketing,” said AARP New York State Director Beth Finkel. “It would be just as outrageous if our state leaders don’t at least take the modest step of ensuring New Yorkers know what they’ll have to pay for the medications they need. And if other states’ experience is a guide, transparency could well lead to smaller and fewer price hikes in New York.”

There was an increase over the past three years in the number of New Yorkers 45 and older who called being able to afford prescription drugs “important” (88% in 2022 vs. 81% in 2019), according to AARP New York surveys of 1,000+ New Yorkers 45-plus in each of those years.

“The Governor’s proposal represents one of the most comprehensive prescription drug price transparency initiatives in the nation as it combines far-reaching drug price increase reporting requirements with mandatory disclosure of ‘pay for delay’ agreements, which keep consumers from accessing cheaper generic versions of drugs for 17 months on average, according to the U.S. Federal Trade Commission,” the letter says.

The Governor’s plan would empower the New York State Department of Financial Services to investigate drug manufacturers’ assertions as to reasons for price increases, building upon the agency’s existing authority to investigate certain price spikes.

Already, 19 states including California, Texas, New Jersey, Connecticut and Vermont have enacted 26 drug transparency laws. Vermont reported an almost 80% decline in the number of price increases of 15% or more for its taxpayer-funded Medicaid program between 2016 and 2020. Oregon’s transparency law resulted in 70% fewer reports of price increases over its threshold of 10% or higher for drugs priced at $100 or more in the first year, from 2019 to 2020.

Not only could transparency tamp down price hikes, but advance knowledge of increases would arm consumers with the prescription price information they need to choose the right health plans for them.

“Nearly a third of older African Americans skip prescriptions because of the cost,” said Hazel N. Dukes, President of the NAACP New York State Conference President and a member of the NAACP National Board of Directors and NAACP Executive Committee. “That has to change. Shining a light on proposed price hikes and shady deals that keep generics from us – and investigating egregious increases – would be a great start.”

“Hispanic Federation supports the Prescription Drug Price and Supply Chain Transparency Act of 2023, which would bring transparency to prescription drug prices in New York, an important issue that directly affects the lives of so many in our community,” said Frankie Miranda, President and CEO, Hispanic Federation. “It is essential that New York’s Latino community receives culturally competent information regarding the affordability of life-saving prescription drugs. Expanding information transparency would help ensure that communities make informed and sensible decisions regarding their medications and can lead to all New Yorkers living healthier lives.”

“Too many New Yorkers report cutting pills in half or avoiding filling their prescriptions because of costs,” said Amanda Dunker, Health Policy Director at the Community Service Society of NY & coordinator for Health Care For All New York. “Governor Hochul’s Executive Budget Drug Pricing Transparency proposal would shed light on unfair industry practices that drive up costs to patients and we urge the Legislature to include it in the final budget.”

“An increase to prescription drug price transparency is a vital step to ensuring older adults can plan for their health care needs,” said Karen L. Nicolson, CEO/Executive Director of the Center for Elder Law & Justice. “The health care system is difficult to navigate, and any increase in transparency will help ease the burden of dealing with hidden fees and unplanned increases, particularly for low-income families.”

“Long Island working families and seniors are struggling due to the Coronavirus recession and the impact of inflation on their daily needs including prescription drugs,” said Eric Alexander, Director, Vision Long Island and Co-Chair, LI Lobby Coalition. “Vision Long Island supports proposals in Albany to spotlight drug price increases and anti-consumer practices that we hope will lead to more affordable medications.”

AARP New York will continue working with our collaborators to stand up for consumers and start opening the books on the big drug companies.

About AARP

AARP is the nation’s largest nonprofit, nonpartisan organization dedicated to empowering people 50 and older to choose how they live as they age. With a nationwide presence and nearly 38 million members, AARP strengthens communities and advocates for what matters most to families: health security, financial stability and personal fulfillment. AARP also produces the nation’s largest circulation publications: AARP The Magazine and AARP Bulletin. To learn more, visit www.aarp.org, www.aarp.org/espanol or follow @AARP, @AARPenEspanol and @AARPadvocates, @AliadosAdelante on social media.

RE: The Prescription Drug Price and Supply Chain Transparency Act of 2023

March 20, 2023

Honorable Andrea Stewart-Cousins Honorable Carl Heastie
Senate Majority Leader Speaker of the Assembly
907 Legislative Office Building 932 Legislative Office Building
Albany, NY 12247 Albany, NY 12248

Dear Majority Leader Stewart-Cousins and Speaker Heastie:

Thank you for your past leadership in standing up for millions of New Yorkers and working to make prescription drugs more accessible and affordable.

As budget negotiations proceed, we respectively request you include in the final 2023-24 state budget Part Y, Subpart B, Sections 3003, 3004 and 3005 of “The Prescription Drug Price and Supply Chain Transparency Act of 2023” in the Health and Mental Hygiene Article VII budget legislation proposed by the Governor to increase prescription drug price transparency.

Our organizations were very encouraged to see that the Senate one-house budget proposal accepted the majority of the Governor’s prescription drug price transparency language. We sincerely hope the Assembly will be supportive at the budget table as the process moves forward.

List prices on more than 1,200 prescription drugs rose by an astounding 31.6% on average – far higher than the general rate of inflation – between July 2021 and July 2022, according to a new report from the U.S. Department of Health and Human Services (HHS).[1] In addition, a recent AARP national survey of registered voters 50 and older found cost is the primary reason for deciding not to fill a prescription.[2]

The Governor’s proposal represents one of the most comprehensive prescription drug price transparency initiatives in the nation as it combines far-reaching drug price increase reporting requirements with mandatory disclosure of “pay for delay” agreements, which keep consumers from accessing cheaper generic versions of drugs for 17 months on average, according to the U.S. Federal Trade Commission (FTC).[3]

Manufacturers would be required to report their planned price increases to the Department of Financial Services (DFS) well in advance to help consumers prepare for any potential rise in drug costs at the pharmacy counter and to arm them with the information they need to choose the best health plan for their particular needs. The leading cause of the rise in health care premium costs is the increase in prescription drug prices. Under the Governor’s proposal, New York would be empowered to investigate manufacturers’ assertions as to reasons for increases, building upon the authority you granted to DFS in 2020 to investigate price spikes.

Already, 19 states have enacted over 26 drug transparency laws. Vermont, the first such state to do so, reported an almost 80% decline in the number of drugs with price increases of at least 15% in its Medicaid program between 2016 and 2020. Oregon’s transparency law resulted in 70% fewer reports of price increases over their threshold of 10% or higher for drugs priced at $100 or more between 2019 (the program’s first year) and 2020.

The second piece in the Governor’s proposal would require reporting of “pay-for-delay” agreements between brand name drug manufacturers and generic manufacturers. A pay-for-delay agreement is an arrangement between a brand name drug manufacturer and a competing generic drug manufacturer by which the generic drug manufacturer agrees to delay the release of a generic equivalent drug in exchange for something of value from the brand name drug manufacturer.

These pay-for-delay agreements provide financial benefits to drug manufacturers at the expense of consumers: the brand-name manufacturer can continue to charge monopoly prices, and the generic company is compensated for its inaction.

The FTC report has estimated that pay-for-delay agreements cost American consumers $3.5 billion per year but a 2021 Columbia Science and Technology Law review article found the cost could be as high $37 billion annually.[4] Delaying generic drugs market entry for an average of nearly 17 months means consumers must continue paying brand-name drug prices, rather than the prices of their generic drug counterparts, which can be as much as 85% lower.

Our organizations strongly believe The Prescription Drug Price and Supply Chain Transparency Act of 2023 would shine a light on the ever-increasing prices of prescription drugs, which impact consumers filling their prescriptions and paying insurance premiums, as well as all New York taxpayers, who underwrite New York State’s $9 billion pharmacy budget.

This transparency would not only provide important information about prescription drug prices but could change behavior to the benefit of all New Yorkers. For the above reasons, we the undersigned respectively request prescription drug price transparency language be included in the final 2023-24 state budget.

AARP
Asian American Federation
Brain Injury Association of New York State
CaringKind
Center For Elder law and Justice
Center for Independence of the Disabled, NY
Chinese-American Planning Council, Inc.
Citymeals on Wheels
Community Service Society of New York
Consumer Reports
District Council 37
Empire Justice Center
Entertainment Community Fund
Gray Panthers NYC
Health Care for All New York coalition (HCFANY)
Health, and Welfare Council of Long Island (HWCLI)
Hispanic Federation
Human Services Council of New York
Lifespan of Greater Rochester
LiveOn NY
Long Island Lobby Coalition
Medicare Rights Center
Metro New York Health Care for All
NAACP New York State Conference
New York Memory Center
New York Oncology Hematology
New York State Association of Health Care Providers, Inc.
New York State Public Health Association
Northwest Bronx Community and Clergy Coalition
NY StateWide Senior Action Council
NYPIRG
Physicians for a National Health Program – New York Metro Chapter
Pride Center of Staten Island
R.A.I.N. Total Care, Inc.
RPEA
SAGE
Schuyler Center for Analysis and Advocacy
Share The Care
South Asian Council for Social Services (SACSS)
Spanish Speaking Elderly Council – RAICES
Vibrant Emotional Health
Vision Long Island