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Legislative Memo

Lev Ginsburg
Director of Government Affairs
T 518.465.7511
www.bcnys.org

BILL:

S.6407/A.9007, Part B, Section 5

Support

SUBJECT:

“Critical Drug” Transparency and Price Fixing

 

DATE:

February 1, 2016

 

The Business Council strongly opposes the Article VII provision that allows the Department of Health (“DOH”) under the Medicaid program to identify “critical prescription drugs” where the Department deems that there is a significant public interest in ensuring “rational pricing” by drug manufacturers, as found in S.6407/A.9007, Part B, Section 5.

As major taxpayers in the state, our members certainly recognize the need to save Medicaid dollars but this proposal is certainly not the proper way to do so. By mandating that pharmaceutical companies report proprietary information such as costs, including, the research, development, manufacturing of the drugs and cost impact and profit margin, and then authorizing DOH to use an actuary to determine a price ceiling, the proposal is setting a precedent of intrusion into industry and dissolution of free markets in a way that has not been done before.

The pharmaceutical industry is already one of the most highly regulated industries in the state.  Medicaid programs already dictate the price for many drugs. The demand for proprietary information and ceiling price setting for drugs could mark the beginning of a very disturbing trend of state-interference with manufacturing in general and in the end will not even provide the comprehensive account of actual costs the budget language purports to seek. More likely, this over-reaching mandate will result in misleading assumptions that fail to take into account many factors involved in manufacturing.

Most importantly, The Business Council opposes any mandate that forces a private business to unnecessarily divulge trade secrets and proprietary information, especially in order to impose further price controls on those same private employers. This cavalier provision is precedent-setting and short-sighted. A competitive marketplace is the only basis for our state’s economic success and New York should be encouraging a system that strives for continued innovation through research and development of new products not draconian price control measures.

For these reasons, The Business Council strongly opposes this proposal, and urges its rejection by the Senate and Assembly.