Why Colorado health-care transparency efforts face major hurdles

Denver Business Journal, March 10, 2016

At a Colorado Consumer Health Initiative luncheon Thursday, a bipartisan panel of state legislators agreed on the need to increase transparency around health care costs.

Greater transparency would help consumers understand what they are paying to hospitals, physicians and drug companies and, in turn, to try to bend the upward cost curve of care, the lawmakers concurred.

But just three hours later, Republicans and Democrats on the House Health, Insurance and Environment Committee worked together to kill a bill aimed directly at that goal.

The measure would have required manufacturers of the most-expensive prescription drugs to explain to the state all of the costs that go into the final pricing of those medications.

The seemingly conflicting messages show the difficulty of taking a universally respected big-picture concept and coming up with the details that could turn it into an actual policy in a way that would not hurt businesses, consumers or the furthering of medical discovery.

House Bill 1102, sponsored by state Rep. Joann Ginal, D-Fort Collins, originally required any company producing a drug that costs consumers at least $50,000 per year to provide a report to the Colorado Commission on Affordable Health Care laying out the costs of developing the drug, including research, clinical development, patent, marketing and administration costs — and company profit numbers.

When committee members complained that the bill sought to make proprietary information public and piled too much work on the volunteer commission, Ginal tweaked it to keep the cost breakdown from being posted and to have an independently funded research group analyze and report on the findings rather than leaving it in the hands of the commission.

But in addition to the expected complaints from pharmaceutical-industry leaders, a surprising coalition of organizations opposed HB 1102.

Some patient advocates said it was too intrusive and worried that it could scare companies away from developing and selling drugs in Colorado. Others said that merely seeking the information was toothless unless the state had the opportunity to bring down the cost of drugs via negotiation or regulation.

(Ginal herself referred to the bill as a “first step,” though she didn’t cite what the next step would be.)

Some members of the Legislature who opposed the bill are people who are pushing price-transparency efforts of their own.

Rep. Lois Landgraf, R-Fountain, told the CCHI luncheon that she would like for hospitals to list the prices of common procedures on their websites and insurers to list the cost of common drugs for potential customers on theirs.

Landgraf, in fact, is getting ready to introduce a measure with Democratic Rep. Beth McCann of Denver that would require free-standing emergency rooms to post notices that the cost of their services will be higher than those of urgent-care centers.

But when it came down to the nuts-and-bolts details of trying to open up the cost of high-dollar drugs, three Democrats joined with all six Republicans on the committee to kill the bill over the objections of four Democrats.

Nearly all of the dissenting voters said they admired Ginal’s intent, if not her methods.

The death of HB 1102 will in no way put an end to efforts to let consumers know more about the cost of the health services they buy, even if insurers, rather than individuals, are typically the entities who pay for those services. Similar bills have been proposed in 10 other states, according to the Pew Charitable Trusts.

But it demonstrates that any efforts to compel private health-care providers and pharmaceutical producers to open up their books to the public are going to have to thread a needle that respects both the businesses’ interests and the needs of consumers.

“We all want to make sure health care costs come down. We want to make sure the consumer knows why the costs are what they are,” said Rep. Danya Esgar, D-Pueblo, at the CCHI event before becoming one of the four committee members to back the drug-transparency bill. “Close to all of us truly want to improve Colorado and make Colorado a better place. The difference is in how we get there.”