Testimony on HB 1252

Re: Prescription Drug Legislation HB 1252

To: Representatives Frangas, Madden and Speaker Romanoff

We oppose a discount program that is entirely voluntary for drug companies. A discount program needs negotiating leverage to get the best price from drug companies. Without such tools, drug companies have complete control over the program and suffer no consequences if they fail to participate or fail to offer sufficient discounts. Drug companies can simply dictate price terms to the state on a take-it-or-leave-it basis.

Giving control over a state discount program to the industry responsible for the high cost of prescription drugs makes no sense to our organizations. Instead, we would support a bill that creates strong incentives for drug companies to give meaningful discounts in a bulk purchasing and a consumer discount program. Without this tool, the state will have little to offer the companies in exchange for the rebate and the companies will have little incentive to negotiate significant discounts.

We oppose a bill that ties discounts to an inflated and unknown price. Using the price paid by state health plans for public employees is a bad idea. Instead, the state should use the prices paid by the state’s Medicaid program, which are lower than the state health plan price. The Medicaid price is also known to the Department of Health Care Policy and Financing. In contrast, prices paid by state health plans are not known to the state. In Ohio, which has a similar pricing provision, health plans refused to disclose their prices to the state and a lawsuit had to be filed in order to get that information.

Further, a discount program should have generous eligibility, so that it actually benefits those without access to alternative programs such as Medicaid, Medicare and private insurance. Thus, we oppose a bill that benefits too few people in Colorado. An eligibility level of 250% of the federal poverty level is too low. Maine sets eligibility at 350% of the federal poverty level. Maine also has “hardship” eligibility for those who spend more than 5% of their income on unreimbursed prescription drug costs or more than 15% for unreimbursed health care expenses. We also oppose the waiting period before someone becomes eligible to participate. It is unclear what the benefit of such a waiting period is. However, independent studies comparing programs with such waiting periods and those without show that they operate as a roadblock to coverage. Much of the financial benefit of any discount program will be negated by the lengthy waiting period, during which patients must pay the full price of prescriptions.

In conclusion, consumers demand real reform on prescription drug prices, not a plan created and controlled by the drug companies.

CoPIRG – Rex Wilmouth, Director
Consumers Union – Earl Lui, Senior Attorney, West Coast Office
National Legislative Association on Prescription Drug Prices – Sharon Treat