Minnesota Attorney General Keith Ellison releases sweeping report on drug prices

State Attorney General Keith Ellison released sweeping recommendations for addressing prescription costs Wednesday, including the creation of a commission that could investigate industry practices and cap the prices of some drugs.

The 14 proposals Ellison highlighted were developed by a bipartisan task force that he led. The group's 93-page report is going to the Legislature early in its annual session. Other proposals by the group include efforts to identify a prime vendor for several critical drugs and developing legislation to prevent manufacturers from overcharging for drugs.

The fate of the drug pricing commission and other potentially controversial recommendations remains unclear.

"Today is a critical moment on the debate around the affordability of prescription drugs," Ellison said. "This is not a Democratic or Republican issue. It's not a party issue. It's a people issue."

He called the task force report the first of its kind in laying out comprehensively the roles of all major players in the pharmaceutical drug industry in Minnesota. Prior studies and reports have focused on specific segments of that market and how they contribute to high prices, he said.

The House Commerce Committee heard a bill later Wednesday outlining how the 11-member Prescription Drug Accountability Commission would function. A similar bill introduced last year by Sen. Scott Jensen, R-Chaska, didn't receive a hearing. He wasn't given a reason but said he is confident his bill can get a hearing this session in the Republican-led Senate.

The commission would have the power to investigate, review and publish information on prescription prices. It would be able to take action to hold drug companies accountable for unreasonable or unlawful pricing practices, including by capping or setting maximum reimbursement prices for drugs under certain circumstances. The commission could also refer matters to Ellison's office for potential enforcement action.

Several legislators raised concerns about the proposal during Wednesday's committee hearing. Rep. Marion O'Neill, R-Maple Lake, questioned whether politics would play a role in the makeup of the commission because the governor is allowed to appoint three members.

She was also concerned by the lack of an appeals process for drug companies and the amount of time commissioners would have to work without pay.

"I see the commission as similar to the Public Utilities Commission, which sets energy rates," she said. "That commission does a lot of rigorous and important work, and they get compensated."

Other legislators cautioned that the bill might affect a company's trade secrets and patent issues and also hamper the market. Rep. Tama Theis, R-St. Cloud, said restricting prices might cause a company to do less research and development, which she called a "scary proposition."

While Ellison said the commission is the task force's key recommendation, the report also called for reforming state and federal drug laws and reviewing government spending on prescription drugs and patient access to pharmacists. Several of the recommendations will be introduced in other bills.

Ellison presented the recommendations flanked by members of the year-old task force, which included legislators, citizen activists, health professionals and patient advocates. The group also included task force co-chair Nicole Smith-Holt, a Richfield woman whose 26-year-old son Alec died in 2017 after rationing insulin he couldn't afford.

Ellison said the report underscores the dysfunctional nature of a highly complex and opaque pharmaceutical-drug market and the principal factors that contribute to a lack of transparency and accountability for driving up prices. He also cited factors that contribute to high drug prices, including abuse of federal drug patent and exclusivity laws, a variety of anticompetitive practices — some seemingly illegal — and the business practices of pharmacy benefit managers.

Ellison joined a multistate lawsuit last year alleging a massive price-fixing scheme by some of the nation's biggest drugmakers that could affect an estimated one in five Minnesotans who buy generic prescription drugs.

Dr. Stephen Schondelmeyer, the task force's other co-chair, said he has been studying the local drug marketplace for 45 years. While most studies tackle one issue at a time, he said the marketplace has to be dealt with in its totality.

"We aren't trying to knock any of the players out of the market; we just want to bring more patients into it so they can get the drugs they need," he said.

In the first six weeks of 2020, he said 2,800 drugs saw price increases, with 200 going up more than 10%. A common pill to treat coughs and colds went from $22 to $213 per pill.

"We need to track this information," said Schondelmeyer. "We are looking at the outliers."

Minnesota spends $50 billion a year on health care, and prescription costs are a driving force, Jensen said.

Rose Roach, executive director of the Minnesota Nurses Association, said it's the bedside nurses who see the ravaging effect of people being hospitalized because they can't afford medication.

"High drug prices impact everybody," she said. "This isn't about supply and demand. It's about life and death."

David Chanen • 612-673-4465