Illinois Democrats seek to rein in drug prices; Republicans say it will backfire

SPRINGFIELD - Democrats in the Illinois House are pushing a package of bills they say would help control the spiraling cost of prescription drugs.

Republicans, however, are arguing that the entire issue of prescription drug costs is beyond the scope of state government, and that some of the Democrats' proposals could actually end up costing taxpayers and making lifesaving medications less available to people in the state.

The package of bills is largely based on recommendations from Families USA, a national consumer health advocacy group based in Washington that has been working with lawmakers to develop the bills.

Those bills call for regulating some drug prices in much the same way the state regulates utility rates, taxing drug price increases that exceed the rate of inflation, and requiring drug companies to disclose more information about their prices.

One bill by Rep. Anna Moeller, an Elgin Democrat, would create a mechanism for the state to become a licensed wholesaler of cheaper drugs from Canada.

"People in Illinois are being crushed by the high cost of essential medicines," said state Rep. Will Guzzardi, a Chicago Democrat who chairs the House Prescription Drug Affordability and Accessibility Committee.

At a hearing Friday in Chicago, Illinois lawmakers heard stories about how the rising cost of prescriptions is endangering the lives of the poor, the elderly and people with HIV.

"Current prescription drug trends are not sustainable. The current system is simply shifting costs onto patients and taxpayers, while drug companies remain free to set incredibly high prices and increase them pretty much anytime they want to," said Andre Jordan, associate state director for advocacy of AARP Illinois.

Drug manufacturers, insurance companies and others fought back, proclaiming their innocence and, at times, blaming one another for putting lifesaving medicine out of reach for many Americans.

Families USA's Justin Mendoza laid most of the blame for spiraling prices on pharmaceutical manufacturers, who are granted long-term patents on new drugs that can prevent lower-cost generic drugs from entering the market for years, and on pharmacy benefit managers, or PBMs, who act as a kind of middleman between manufacturers and insurers to negotiate prices and devise "formularies" that determine which drugs the insurers will pay for.

He also said the federal government, and federal taxpayers, fund much of the research that goes into developing new drugs, even though, he argued, they don't necessarily see a return on that investment once the drugs hit the market under a patent owned by a pharmaceutical company.

"Illinois has an opportunity to act on all these pieces, and to act on drug prices with substantial reforms that will make changes in people's lives today and help direct the conversation forward all over the country," Mendoza said.

Republicans on the panel said they were skeptical the state of Illinois had the ability to control what happens in a national, or even international pharmaceutical market.

And Rep. Deanne Mazzochi, an Elmhurst Republican, argued that regulating prices in the private sector could end up costing taxpayers in the form of higher prices in Medicare and Medicaid. That's because those programs buy drugs at below wholesale prices, and drug companies make up the difference by charging private insurance plans more.

"If you set a ceiling on reimbursement on the private side, then the net effect of that is that prices for Medicare and Medicaid are going to have to go up to compensate," she said. "Because if you can't charge higher prices on the private-sector side, then you're going to have to boost up everything on the Medicaid-Medicare side. So it kind of winds up being a bit of a wash."

The legislation pending in the House includes:

• House Bill 2880, by Guzzardi, imposing a tax on some drug price increases that exceed the rate of inflation.

• House Bill 3493, by Guzzardi, establishing a state board to regulate drug prices in a way similar to utility rate regulation through the Illinois Commerce Commission.

• House Bill 156, by Rep. Mary Flowers, a Chicago Democrat, requiring drug companies to disclose information about their pricing systems, including how much they spend on marketing.

• And House Bill 1441, by Moeller, allowing the state to be a licensed wholesaler of imported drugs from Canada.