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Legislative Memo

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

BILL:

S.2007/A.3007, Part D

Support

SUBJECT:

“High-Priced Drugs”, Transparency and Price Fixing

 

DATE:

February 3, 2017

 

The Business Council strongly opposes the Article VII provision that allows the Department of Health’s (“DOH”) Drug Utilization Review Board (DURB) to review proprietary information to identify “high-priced drugs” both inside and outside the Medicaid program, mandating rebates within Medicaid and imposing a draconian 60% surcharge on the first sale of such drugs in New York State.

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 price set, this proposal is setting a precedent of intrusion into industry and dissolution of free markets in a way a that has not been seen before.  While the imposition of rebates within the Medicaid system has been attempted, never has there been such a flagrant attempt to manipulate prices through the mandate of a 60% tax on a private-pay system.  Such an attempt would have dangerous consequences on business of all kinds who do business in the state.

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 outrageous price control measures.   

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