Virginia bill that would create drug price review board fails to advance in General Assembly

Jillian Goodwin was 3 when she was diagnosed with cystic fibrosis. She’s benefited from breakthroughs in drug research and paid high prices for them.

“I’ve been on prescription medications my entire life,” said the Norfolk woman, who’s now 31. “That’s all I’ve ever known. I take about 15 to 16 different medications a day. At times, that’s been as high as 25 a day and some of them are pretty big ticket drugs that there’s not alternatives to.”

Though Goodwin has good insurance, it sometimes can be difficult when her prescriptions will available and for how much.

“It’s terrifying to contemplate that you have this medicine that is available to you that helps so much but can I even get it and can I afford it?” Goodwin said.

A bill that would attempt to change that failed again to advance in the General Assembly on Thursday. It would would create a drug pricing board that could review the costs of prescription medications.

Those supporting the bill include Senate Democrats, some rural Senate Republicans, retirement and health care organizations such as Virginia AARP for reasons including affordability for patients, viability of rural hospitals and taxpayer savings for Virginia Medicare and the state health plan.

“Drug prices are out of control,” said Sen. Chap Petersen, D-Fairfax, who introduced the bill this year and a similar bill last year. “They’ve been out of control both for senior citizens and really across the board and it’s getting harder and harder to afford it.”

However, the bill did not move forward after a short discussion by a House of Delegates commerce and energy subcommittee with all four Republicans voted to lay it on the table versus the two Democrats, including Del. C.E. Cliff Hayes, Jr. of Chesapeake. A similar drug pricing board bill introduced in the House of Delegates earlier this session was also laid on the table by a House of Delegates subcommittee with most of the same members, with all Republicans voting to table it.

Opponents included industry groups that maintain the bill would not address the root causes of high drug prices and will unintentionally lead to less money spent on research and development of new drugs.

“Everyone wants to make sure everyone can get reasonably priced drugs or therapies to help extend their lives and make their lives better. Everyone wants to do that,” said John Newby, CEO of Virginia Bio, a state industry group of medical drug companies. “With an artificial price control on the ultimate product, the drug will reduce the availability of those drugs to the very people who you’re trying to help.”

If signed into law and funded in the budget, the governor would appoint members and the board would meet at least four times a year and decide which drug prices to review for their affordability, especially drugs that have high-out-of-pocket costs and are expensive for the state to buy. Appeals of the board’s decision would be allowed.

Decisions of the board about drug prices would apply to state-sponsored and -regulated health plans and programs, though Medicare Part D plans would not be bound by the state board’s decisions.

Jared Calfee, state advocacy director for Virginia AARP, said he believes the price of drugs is the number one concern the group hears from seniors.

“We’re not out to bankrupt drug manufacturers or anything like that,” he said. “What we want is for prescription drugs to be affordable and what we mean by affordable is that the people who need them can access them and pay for them.”

In 2019, roughly one in four Americans said they were having trouble affording their drugs, according to a poll by the Kaiser Family Foundation. Nearly one fifth of respondents said the opted not to fill a prescription because of cost and 29% said they didn’t take drugs as often as prescribed because of cost, according to the survey of 1,440 adults.

It costs a company about $2.8 billion to bring a new drug to market, according to Newby.

“And when you come to realize more than 90% of drugs that enter clinical trials fail, that only leaves a 10% success rate and only that 10% can be used to recoup an investor’s investment,” he said.

He said if an investor cannot recoup costs, then they will invest elsewhere, drastically slowing or stopping the creation of new drugs available to the public in what he described as a “vicious circle.”

A 2021 University of Chicago study on the effects of the Inflation Reduction Act, which allowed Medicare to negotiate drug prices with companies found that every 1% decrease in revenue leads to a 1.5% drop in investment in research and development. Therefore, it estimated the potential 12% reduction in revenue from the IRA for drug companies would result in a reduction in investment of $663 billion up to 2039, meaning 135 fewer drugs reaching the market over that period. However, the Congressional Budget Office review estimated there would be a much smaller effect on revenue and investment and the change would only result in five fewer drugs reaching the market over the same period.

Additionally, prices of drugs are not simply set by manufacturers, but others in the sector including pharmacy benefit managers, called PBMs, insurance companies, hospital systems and others, according to Newby.

“Those costs are the distribution costs for the drug which are over half the cost of the drug,” Newby said.

A lot of the similar drug pricing bills across the country also reflect this lack of context about the myriad moving parts, according to Priscilla Vanderveer, vice president of public affairs for Pharmaceutical Research and Manufacturers of America.

“So in most industries, when you have a bunch of supply chain folks in the middle, they might be getting a small percentage here and there,” Vanderveer said. “But it’s way worse when we’re talking about pharmaceuticals.”

Additionally, she said typically prices for drugs tend to fall as generics become available. The CBO found that the average net drug prices decreased, driven by generics, but the price of name brand drugs had risen substantially between 2009 and 2018, according to a January 2022 release.

“We are the only part of the health care system where generics and biosimilars come to market, which means the initial price of a product drops sometimes up to 90%, 95%,” Vanderveer said.

The state Senate approved the measure on Feb. 3 on a 26-13 vote.

Some rural Senate Republicans support the bill, such as Sen. Mark Peake of Lynchburg and Bill Stanley of Franklin County, agreed with the need for the drug pricing board.

Stanley called his vote in favor of the bill a “no-brainer” in an emailed statement as the constituents he represents in Southwest Virginia tend to have lower incomes and older populations on fixed incomes in need of affordable medicine.

“My district is medically underserved already, so it goes without saying that higher prescription prices have a significant impact on our rural hospitals and health care providers in providing quality care at an affordable price,” he wrote.

On the potential Virginia drug pricing board, Peake said another reason he supports the bill is that many of the drug companies recently made large profits off the COVID vaccines which the government paid them for.

“I figure they’ve made enough off that vaccine they can take it a little easier on the consumer for a while,” Peake said.

For Goodwin, the Norfolk cystic fibrosis patient and advocate, the plan is a step forward.

“Yes, it takes money to get there and you don’t want to deincentivize the pharmaceutical companies from taking risks with their research and development,” she said. “But I think that my point is we’ve got to find a middle ground where you’re still able to take the risks for research and development and bring new, innovative things to market but not withhold what is absolutely a critical resource to the patient themselves.”

Ian Munro, 757-447-4097, ian.munro@virginiamedia.com