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Volume 0, Issue 0
A second state is looking to hold down drug costs by going after data collectors.
Vermont is considering a new bill that would make it the second state in the country to ban the sale of physician prescribing data. The state would be keeping up with its next-door neighbor--New Hampshire's eight-month-old Prescription Confidentiality Law is currently being challenged in a court case there. Data companies IMS Health and Verispan brought the suit, arguing that law compromises their freedom of speech.
Like the New Hampshire law, Vermont's bill would bar third-party entities like pharmacists, insurers, and data-collection companies from selling prescription data "for any commercial purpose"--namely the marketing and promotion of prescription drugs. The bill is intended to keep the data away from drug reps, who use it to tailor their sales calls to individual physicians.
But Vermont is also adding another provision to prevent "unconscionable pricing" of prescription drugs. "Unconscionable" is defined as a wholesale price that is more than 30 percent higher than the price available to federal agencies, the state's Healthy Vermonters program, or the "most favored purchase price."
The state's Senate Finance Committee has so far endorsed the bill, and the Health and Welfare Committee will review it next. The Vermont Medical Society--like its counterpart in New Hampshire--is also backing the bill. On the other side of the fence, a team from PhRMA is lobbying against the restrictions on drug marketing and price caps. The New Hampshire suit, which is awaiting a decision, could also have an impact on the bill's future.
"It seems like the state government is almost engaging in price controls," said Art Woolf, a professor of economics at the University of Vermont and a principal at Northern Economic Consulting. "Price controls never serve a good purpose." But Woolf noted that his primary concern is that the data would be unavailable to public health researchers, who often get it free of charge from data-collection companies. "There is a only very small chance that the government would [pay to] collect this data," he said, calling it "prohibitively expensive."
David Meltzer, a physician and professor of economics at the University of Chicago, similarly called the data "incredibly important for public policy reasons. One of the hidden consequences of these laws is that they will make research harder to do." And he added that the bill is unlikely to make a major dent in healthcare costs. "Pharmaceuticals are only about 10 percent of healthcare expenditures," he said.
Detailing, moreover, has become less effective in an era when insurance and other patient incentive programs dictate which drugs are most cost-effective, he noted. "Drug promotion is changing dramatically anyway. A lot of companies are reducing the size of very large sales forces. My guess is that [detailing] would be replaced by another form of advertising."