Colorado has passed an interesting piece of legislation that went into effect last month.
At first glance, a requirement that pharmaceutical manufacturers provide physicians with information about not only their own product pricing, but also generic alternatives, seems like a positive public benefit. A closer look, however, suggests that this legislation may be characterized as more than a harmless jab at the manufacturers.
The new Colorado law requires that pharmaceutical manufacturers communicate wholesale average cost (WAC) pricing details to prescribers through either primary detailing or non-personal promotion (NPP) such as email or third-party messaging. This will change the way the pharmaceutical industry communicates in Colorado, the way it interacts with its ecosystem partners, and even the way it takes products to market. While many other states have passed or have proposed pricing legislation in some form, this takes the trend to a new level, while aligning with the broader national desire for drug price transparency.
As of March, 2019, there are 1,005,295 prescribing physicians (excluding NP/PAs) in the US, of which approximately 480,000 are primary care and 525,000 are specialists. Of this total, Colorado accounts for 1.4 percent. On the surface this may seem trivial; it really isn’t.
This legislation effectively restricts and severely challenges traditional communication to HCPs in Colorado, be that sales rep detailing or targeted digital messaging.
First, it not only requires retail pricing in communications, but it also requires presentation of wholesale average cost, or WAC. This is pharma’s wholesale cost before retail. By providing this information, anyone in almost any jurisdiction beyond Colorado can more closely estimate margins for distributors and retailers, study competitive pricing structures, and adjust negotiations (managed markets, payors) and go-to-market strategies. It positions pricing as a key consideration of the drug value proposition. This impacts everyone from pharmacy benefit managers (PBMs) to pharmacies and distributors, as well as patients, who are caught in the line of sight between legislators, who are suggesting it’s all about price, and manufacturers, who are trying to convey the value of potentially life-saving medicines. Value often goes beyond the straight therapeutic value, but also the patient support, coaching, and educational programs that they support. This is not to mention the cost of research that goes into development and future improvement.
Additionally, the law requires manufacturers to provide educational materials with the name and acquisition cost of at least three generic prescription drugs in the same therapeutic class. The pharmaceutical manufacturers may not even have access to the proprietary pricing information from generic manufacturers. If there are not three generic prescription drugs available, the manufacturer is to provide the names and acquisition cost information for as many as are available for prescriptive use. Imagine if generic pricing is not available; could promotional materials or even whole launches be delayed? If so, Colorado may get left out of receiving important drug efficacy, safety, and access updates.
Effectively, this forces the pharmaceutical manufacturer to:
- Disclose proprietary wholesale prices to the HCP and virtually all other ecosystem players who can access these materials
- Require the manufacturer to promote competitors
- Provide educational material that effectively compares the efficacy or “value” of generics vs. a branded product, which may not be scientifically valid
In effect, a branded manufacturer is now tasked with promoting and positioning alternative products in front of their own branded products. The question begs to be asked, why would pharmaceutical manufacturers even talk to HCPs in Colorado?
This totally changes the nature of an HCP detail, the design and content of any NPP (digital and otherwise), and the entire Medical Legal Regulatory (MLR) review process. If the law is too complicated to execute, will the branded pharmaceutical industry simply stop detailing or promoting to HCPs in Colorado? Possibly. The law of unintended consequences may very well play out as local lawmakers try to address a symptom of a much larger national debate.
This is a big deal, and one that could have an unintended, far-reaching impact on the pharmaceutical industry in the US and beyond.