Connecticut Governor Proposes Price Restrictions on Prescription Drugs

Earlier this year, Connecticut Governor Ned Lamont proposed to set a maximum price on prescription drugs, drawing criticism from pharmaceutical companies and insurers. Lamont has proposed holding drug prices to the rate of inflation plus 2%. Last year, similar legislation was proposed in the state, and it failed.

Under the legislation, companies who do not comply with the price cap rules are subject to penalties, 80% of the difference between the revenue received from selling a drug outside of the bill’s price caps and the revenue that would have been made if the company had complied with the law (effectively making it so the companies only receive 20% of any price increase over the increase permitted in the legislation).

Additionally, manufacturers are not permitted from withdrawing drugs for sale in Connecticut to avoid price caps and requires 180 days of notice before a manufacturer can cease sale of any drug in the state.

Connecticut’s largest business group is opposed to the measure, pointing to the rapid way drug companies were able to bring the COVID-19 vaccines to market. The Connecticut Business & Industry Association realizes that lowering healthcare costs is a “laudable goal,” but pushed back on the idea that this proposal is the way to do that. The group noted that “an academic, private sector, or government-sponsored study demonstrating the effectiveness of price controls does not exist” and that “no matter the product…price controls cause shortages, delays in the introduction of new products and incentivize high introduction prices.”

The pharmaceutical industry is also opposed, pointing a finger at the insurance companies, saying that they need to do more to reduce drug costs. Jasmine Gossett, director of public affairs at Pharmaceutical Research and Manufacturers of America (PhRMA), noted that, “It’s really important to note that this proposal does not address the root cause of patients’ biggest concern — rising out-of-pocket costs.”

While Susan Halpin, executive director of the Connecticut Association of Health Plans, disagreed with PhRMA’s comments that insurance companies are to blame, she noted that, “We’re still digesting the governor’s proposal but agree with his focus on drug pricing and look forward to working with him and the legislature on the best ways to address the issues.”

Paul Pascatello, executive director of the Connecticut Bioscience Growth Council said price controls don’t work and are often counterproductive. He also pointed out that price controls often stifle innovation and “you’d think after biopharma stepped up to the plate in COVID, the R&D machine really worked. Why would you want to gum up that machine?”

Lamont has simultaneously proposed to authorize import drugs from Canada, believe that pharmaceutical costs would drastically drop “if we bought at the same prices as in Canada.”