Gov. Abigail Spanberger vetoed legislation Tuesday that would have created a state advisory panel focused on lowering prescription drug costs and imposed new pricing restrictions on pharmaceutical manufacturers.
The legislation would have established a Prescription Drug Affordability Advisory Panel within the Secretary of Health and Human Resources’ office to study prescription drug pricing trends, recommend policies to lower costs and improve transparency, and collect pricing data from pharmacy benefits managers.
The bill also would have prohibited drug manufacturers and wholesale distributors from charging more than the “maximum fair price” negotiated by the federal government for certain drugs under Medicare. Violators could have faced civil penalties of at least $10,000 per violation.
Additionally, the measure would have imposed penalties on manufacturers that withdrew drugs from the Virginia market to avoid the pricing restrictions without advance notice to the state.
In her veto statement, Spanberger said she supported efforts to lower prescription drug costs and pointed to other healthcare affordability bills she signed into law this year targeting pharmacy benefit managers and insurance costs.
But she argued that prescription drug affordability boards in other states have proven expensive and ineffective.
“Evidence from other states clearly show that Prescription Drug Affordability Boards do not achieve this goal,” Spanberger wrote. “They are expensive undertakings that other states have either repealed or are considering repealing due to costs and ineffectiveness.”
Spanberger said she had proposed amendments that would have directed the panel to study a reference-based pricing system before the state committed “millions of dollars on implementation.”
She also said her amendments would have expanded drug pricing transparency requirements and strengthened the attorney general’s authority to investigate anticompetitive behavior involving pharmaceutical manufacturers and insurance carriers.
The General Assembly rejected those amendments.
Advocates for the legislation sharply criticized the veto and disputed Spanberger’s characterization of the bill. Rhena Hicks, co-director of Freedom Virginia, said on social media that the legislation was distinct from traditional prescription drug affordability board proposals enacted in other states.
“This would have been first in [the] nation policy that builds upon the federal Medicare negotiations — moving away from the traditional ‘PDAB,’” Hicks wrote on social media. “This is a veto statement for a bill that doesn’t exist.”
Will May, the senior director of state public affairs at PhRMA praised Spanberger for the veto.
“Her action reflects an understanding of the complexity of the pharmaceutical supply chain and the real risks of advancing a state-level approach rooted in federal price-setting policies in Medicare that have already raised significant concerns.”