What Will Happen when Drug Prices are Forced to be Disclosed in Colorado?

A new Colorado law recently came into effect on August 2nd 2019 which requires the disclosure of the wholesale acquisition cost.  This law was intended to reduce the costs of prescription drugs for consumers. Despite this, the overall benefit that it has provided patients seems negligible.  

The ruling will likely end up changing the way pharmaceutical companies interact with patients, market their products, and interact with the state of Colorado.  

What does the law require?

The newly released law requires drug manufacturers to provide the wholesale acquisition cost of prescription drugs in writing to prescribers.  Additionally, they also must provide the names of three generic prescription drugs that occupy the same therapeutic class.  

If three of these drugs are not available, then the names for as many drugs as possible need to be provided.  However, the law remains vague about the definition of what constitutes a therapeutic class. This makes it potentially difficult for drugmakers to navigate as they attempt to remain compliant.

An advocate’s perspective

Advocates assert that the Colorado law is set up to aid physicians in choosing cheaper prescription drugs.  The law offers them an opportunity, for the first time, to compare the costs of these drugs. Physicians would also end up having a fuller range of information about the drugs they are prescribing due to the new regulation.  The new law would allow physicians to consider costs before choosing a certain prescription drug. Despite how helpful the law may be for advocates, it still might not be helpful for patients. This is because the majority of the drug cost ends up being subsidized by patients’ insurance companies.  In turn, this means that a change in physician prescribing behavior does not necessarily lead to lowered drug costs for patients.

Performing an ethical analysis

Bioethics is the application of ethics to the field of life sciences and health, and it can be broken down into several primary categories.  When examined from an ethical perspective, the Colorado disclosure law does not appear to meet the standards of ethics. This can be attributed to its failure to lower drug costs for patients.

Beneficence

One of the standards of bioethics is beneficence.  This principle deals with the potential benefits that a patient may receive as a result of the experiment or medical trial.  From an ethical standpoint, forcing companies to disclose the list price does not appear to be valuable in helping patients.  

There is no evidence that the disclosure of the wholesale acquisition cost (WAC) to physicians translates into lowered costs for patients.  This means that there is little to no potential benefit that a patient will receive as a consequence of the new law.  

Justice

Another component of bioethics, justice, deals with equality in the distribution of research benefits.  Because the new regulation does not provide much benefit to patients, it seems to fail to meet the requirements for justice, as well.

Respect

Another principle of ethics is respect.  Respect requires that autonomy of patients is acknowledged, and that those with diminished autonomy are protected. Forcing companies to disclose the wholesale acquisition cost of their drugs does not translate into helping patients make decisions about what type of drug they want.  

The majority of patients are not paying for the full cost of the drug.  In turn, the disclosure of the wholesale acquisition cost becomes irrelevant to their purchasing decisions.  Therefore, it seems that the Colorado law does not manage to meet this principle.

Conclusion

Will the benefit of disclosing the wholesale acquisition cost outweigh the burden that is placed on pharmaceutical companies?  This does not seem to be the case, because there is little correlation between the list price of a drug and the price that the majority of patients end up paying. This suggests that the Colorado law may be more of a burden to pharmaceutical companies than it is a resource for patients.

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The opinions stated in this blog are the sole and present opinions of the blogger and do not necessarily represent the opinions of the Kulkarni Law Firm, PC and/or its attorneys. Such opinion(s) may change over time. Such opinion(s) should not necessarily be attributed to the institution for which these individuals may work or otherwise represent in any capacity. These blogs do not constitute legal advice and should not be construed as such.