So-Called Drug Transparency Legislation in States Doesn’t Help Patients

As mentioned in an earlier blog, “Expropriating Manufacturing Innovation,” efforts are underway in several states attempting to require pharmaceutical companies to divulge information no other manufacturing sector is required to submit. While details can differ slightly from proposal to proposal, the basics are consistent and troubling. In states like Massachusetts, Oregon, California and Pennsylvania, legislators are pushing legislation that would require the following:

  • Total cost of production
  • Research and development cost
  • Advertising (to providers and consumers)
  • Marketing
  • Prices charged in foreign markets
  • Domestic prices

No other industry is subjected to this type of scrutiny, and as I mentioned in my post on October 8, manufacturers of all kinds oppose this unprecedented intrusion on what is federally protected proprietary information.

Whatever the motivation or goal of the authors, this type of legislation is a dangerous step in the direction of government-directed influence on the private economy and will not benefit patients in the long term. It is yet another example of well-meaning policymakers walking down a path toward a command-and-control health care system rather than one that takes advantage of the capability of the private sector to respond to market demands and pressures.

Indeed, the private sector does respond swiftly when actors overplay their hands. The most recent example is the announcement and retraction of price increases by Turing Pharmaceuticals for a drug that has been available since 1953. Even after making the announcement to reduce the increase from $750 a pill to an undisclosed amount, another company has indicated it will provide the treatment for slightly less than $1.00 per pill.

The lesson here is that the market can respond quicker and more effectively than the heavy, slow hand of government, and that is a benefit to patients.

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