Price gouging and drug price transparency

House committee tackles drug pricing

The House Health Policy Committee started work on legislation that would require drug manufacturers to file an annual report detailing their expenses related to producing drugs that cost $10,000 or more for an annual course of treatment. The bill was introduced by the committee chairman Rep. Hank Vaupel (R-Handy Township). HB 5223 was met with strong resistance by drug manufacturers who claimed that reports of their costs are already filed federally and that it is too difficult to assign research costs to specific drugs on the market. Manufacturers tried to pin the high cost of prescription drugs on Pharmacy Benefit Managers (PBMs) and others in the distribution chain that help get drugs to consumers. They claimed that the rebates given by manufacturers don’t reach consumers and that costs are higher in the U.S. because our entire healthcare system is more advanced than other countries.

Health plans and other groups support the legislation and pushed back that manufacturers with exclusivity have no limits on what they can charge. A lobbyist with Blue Cross Blue Shield pointed out that drug price increases, set by manufacturers not PBMs, have outpaced inflation and outpace hospital, retail and clinical costs collectively. These groups pointed out that multiple states have passed similar legislation and that long, exclusive patent rights have led to higher prices that sky rocket just prior to generics entering the market.

The annual report proposed in HB 5223 would require the following information be submitted to the state to be published in a searchable, electronic database:

  • Total manufacturing and distribution costs
  • Research and development costs (including any grants or government funded support)
  • Purchase of a patent, licensing, or property rights costs
  • Marketing and advertising
  • Increases in the average wholesale price or wholesale acquisition cost
  • Total profit expected from drug sales
  • Prices charged to foreign consumers

The information required in the report must be authenticated by an independent auditor approved by the state. Drug manufacturers who fail to file an annual report would be subject to an administrative fine of $100,000. The committee chairman said a workgroup will be formed to discuss details and reach a product nearly everyone can support. Next step: House Health Policy Committee vote. MRA Position: Monitoring.

Anti-price gouging bills introduced

Legislation that would prohibit price gouging during a state of emergency, local emergency or disaster was introduced last week as HB 57145715. The bills would modify the Michigan antitrust reform act to prohibit a contractor or business from charging a price that exceeds the highest price charged by that business over the previous 180 days. Building materials, food and beverages, gasoline, goods, medical supplies and housing would all be covered. The price restrictions would remain in place for the 30 days following the emergency or disaster. The definition of emergency includes warnings of terrorist attacks and severe weather. Violators would be subject to a civil fine of up to $25,000 for each violation.

The bills do allow for price increases if a business can prove the increase comes from costs passed on by the supplier and the increase in price charged to consumers is not more than the actual cost incurred by the business and/or the business’ normal markup. It’s clear these bills are an attempt to prohibit bad actors from taking advantage during an emergency but they could create a regulatory nightmare for any business that must verify a price increase is due to factors outside of its control. MRA will monitor these bills closely and encourages members to submit comments related to these proposed regulations. Next step: House Commerce and Trade Committee. | MRA Position: Monitoring.

Drone bills move onto next target: full house

The House Communications and Technology Committee reported legislation last week that would codify several of the recommendations made by the Unmanned Aerial Taskforce last fall. HB 54945498 would clarify that a drone is an extension of self for purposes of any crimes committed, prohibit using them in a manner to interfere with key facilities (certain manufacturing facilities, refineries, utility facilities, water treatment facilities and others as defined under the Michigan Penal Code) and establish an aeronautics commission. Knowingly using a drone to interfere with the operations of a key facility would be a felony punishable by four years in jail and/or a $2,500 fine.

The committee adopted substituted versions of HB 5495-5495 and HB 5497-5498 that further clarify definitions used in the bills. Other changes to the bills include the addition of corrections facilities and employees, sites identified by the FAA as fixed sites and an exemption from these prohibitions for commercial operators following FAA guidelines. Next step: House floor. MRA Position: Neutral.

  • Beer and wine license quotas in rural areas: HB 5719 introduced last week seeks to address what is considered an oversight in current law. Currently businesses in cities, villages and townships with less than 1,000 residents cannot obtain a SDM license to sell beer and wine. HB 5719 would add a quota of one license per small town. Next step: House Regulatory Reform Committee. | MRA Position: Support.
  • Latex glove use: Restaurants and delicatessens (businesses with a food service establishment license) that use latex gloves may be required to post a notice to consumers if HB 5724 is approved by the legislature. The bill was introduced last week and would require a posted allergy notice visible to consumers. Next step: House Agriculture Committee. | MRA Position: Monitoring.
  • On-premises alcohol sales: SB 902 introduced last week would allow businesses that sell alcohol for consumption on site in a central business district in the City of Detroit to apply for a license to sell alcohol until 4:00 a.m. on weekends and holidays. The city would have the ability to reject the license and applicants must have a security person on site between 2:00 – 4:00 a.m. Next step: Senate Government Operations Committee. | MRA Position: Monitoring.

  • Interview questions: Legislation to add the interview process to the list of labor and benefit issues local governments cannot regulate was approved by the House and was presented to the governor last week. SB 353 would prohibit local units of government from adopting, enforcing, or administering local ordinances, policies, or resolutions regulating the information an employer must request, require, or exclude during the interview process. The bill was introduced after local governments in New York attempted to prohibit employers from asking job applicants their previous salary during the interview process. Next step: Governor’s desk. | MRA Position: Support.
  • Work Comp Insurance posting requirement: A recently introduced bill would require employers to post proof of up-to-date workers compensation insurance coverage in a conspicuous place. HB 5698 has 55 bipartisan cosponsors, which is a sign the bill will get traction. Under the bill, employers who fail to post proof of insurance could be charged a penalty of up to $7,000 enforced by county prosecutors. Next step: House Commerce and Trade Committee. | MRA Position: Monitoring.

  • Tianeptine sodium: SB 801, which would add tianeptine sodium as a Schedule II drug, was recently reported by the House Law and Justice Committee. Tianeptine is used as an antidepressant with anxiety-reducing and mood elevating properties. The drug has been banned in some countries because of high levels of abuse and is not Food and Drug Administration-approved. It is not available for purchase in the United States but can be ordered online and imported. Next step: House floor. | MRA Position: Monitoring.

  • Credit freeze: The Senate recently approved legislation that would prohibit a consumer reporting agency from assessing fees to place or remove a credit freeze. HB 5094 is in response to the Equifax data breach and subsequent fees that are assessed to freeze or unfreeze credit reports. Next step: Governor’s desk. | MRA Position: Neutral.
  • Local dog breed restrictions: The Senate Judiciary Committee recently reported legislation (SB 741) that would prohibit local units of government from enacting or enforcing ordinances, policies, resolutions or rules regulating a dog based on breed or perceived breed. Next step: Senate floor. | MRA Position: Support.
  • Nitrous oxide canisters: HB 54635464, legislation that would prohibit the sale or delivery of nitrous oxide canisters to minors, was recently approved by the House. The bills attempt to solve the problem of teens using “whip-its” to get high. Misused nitrous oxide can cause brain damage and even death. The canisters are most commonly used to make whipped cream. Next step: Senate Judiciary Committee. | MRA Position: Monitoring.
  • Pyramid schemes/direct selling entities: Legislation that clarifies what is and what is not considered a pyramid scheme was introduced as HB 57265729 last week. The bills strengthen state law to stop bad actors and will help clear up public confusion over which direct selling companies are legitimate. Next step: House Commerce and Trade Committee. | MRA Position: Support.
  • Ransomware: The Senate Judiciary Committee recently reported two bills that would prohibit the unauthorized possession or use of ransomware. HB 52575258 would also add new penalties for anyone who intends to use it to harm, steal or prevent access to another person’s electronic data. Next step: Senate floor. | MRA Position: Support.
  • Right-of-way permitting fees: HB 5097, approved recently by the Sen Energy and Technology Committee helps promote broadband access by limiting the fees county road commissions can charge. By setting reasonable limits on fees, Michigan businesses and consumers should see greater investment in and access to broadband and high speed internet services. Next step: Senate floor. | MRA Position: Support.
  • Secondhand dealer hold process: HB 5256, recently approved by the House would create a formal process for law enforcement to request an additional 90-day hold on items purchased by a secondhand dealer. Next step: Senate Commerce Committee. | MRA Position: Monitoring.


  • PPT exemption clarification: The Senate Finance Committee heard testimony on Tuesday on a bill that would modify the current process for filing the commercial Personal Property Tax (PPT) exemption for commercial personal property with a true cash value of less than $80,000. Under current law, taxpayers must file an exemption form with the local unit of government each year. HB 5261 would only require an exemption to be filed the first year and would not require any additional filings unless the property is no longer eligible for the exemption. Next step: Senate Finance Committee vote. | MRA Position: Support.
  • TIFA roll-up: SB 393, legislation that would roll all of the state-allowed tax increment finance authorities (TIFA) into a single act, was signed into law last week as Public Act 57 of 2018. The new law hopes to address the lack of compliance in the reporting process and set uniform reporting rules for all TIFAs. The changes take effect on Jan. 1, 2019. Next step: None. | MRA Position: Neutral.