Vermont will require drug companies to justify large price increases

On June 3 Vermont Governor Peter Shumlin signed a bill that requires pharmaceutical companies to justify drug price increases.

The bill requires state health care regulators to identify fifteen drugs with the highest price increases each year. Manufacturers of those fifteen drugs must provide the state Attorney General with a justification for each price increase, which the state will publish online.

"The reality is that we have pharmaceutical companies raising prices on lifesaving drugs five thousand percent," said Shumlin. "When asked about those outrageous increases, CEOs are literally laughing in front of Congress. That needs to change." 

Drug price increases gained attention earlier this year after Turing Pharmaceuticals increased the price for the drug Daraprim from $13.50 a pill to $750 a pill.

Some argue that Vermont's law won't actually lead to lower drug prices, however. Without the ability to raise prices down the line, pharmaceutical companies may start introducing drugs at higher prices from the get go. Pharmaceutical companies also have ample resources to prepare detailed "pharmacoeconomic analyses" that justify the value of a drug. 

Pharmaceutical companies argue that drug price increases are necessary to fund new drug research, as well. High drug prices are balanced by savings for other treatments, particularly if a new drug can cure a disease.

UPDATE: Read our Citizen Voices℠ report and find out where New Hampshire stands on this issue.