Under the auspices of increased transparency, on May 13, 2015, state senator Ruben Diaz (D-NY) introduced the “Pharmaceutical Cost Transparency Act of 2015” [Bill 5338] to the New York State Senate. The legislative intent is “to make pharmaceutical pricing as transparent as the pricing in other sectors of the health care industry.”

If passed, the proposed § 278-a to the New York Public Health Law, entitled “Prescription Drug Cost Transparency,” would be effective immediately and require each manufacturer of a prescription drug made available in New York and with acquisition costs of $10,000 or more annually, or per course of treatment, to file a report to the New York State Department of Health (Department) by May 1 of each year.  The report would be filed on a specific form and would have to be audited by an independent third party prior to submission to the Department. The manufacturers would be required to share the following information annually:

  1. Total cost for the production of the drug, including research and development, clinical trials, purchase of patents, marketing and advertising costs;
  2. Cumulative annual history of the average wholesale prices and the whole-sale acquisition cost increases for the drug;
  3. Total profit attributable to the drug in total dollars and as percentage of total company profits; and
  4. Total amount of financial assistance the manufacturer has provided through patient prescription assistance programs.

The Department would subsequently issue a cumulative report to the legislature and would post it on its website for the public to review.

If passed, this bill will certainly provide an additional source of information for the state (and potentially for federal governments and consumers) related to the costs and pricing of expensive drugs.  However, this bill takes a more aggressive (and intrusive) approach by requiring companies to disclose confidential and proprietary data related to profits as a percentage of a company’s total income.  This proposed bill bears watching as it goes through the legislative process.