James Douglas signed into law over the weekend prescription drug legislation passed by the general assembly this year, ending speculation that he might veto the measure.
The bill was the last major piece of legislation awaiting Douglas's signature.
The bill restricts "data mining" operations that gather information on what prescription drugs doctors dispense, which is then used by pharmaceutical makers for marketing purposes. The bill also seeks to increase the use of generic drugs, cheaper alternatives to some name-brand medication.
"I am delighted he signed it," said Rep. Harry Chen, D-Mendon, an emergency room doctor and a key supporter of the bill. "I think it is another important step in health care reform. It will save some money and it will improve quality. It will do all of those things we were trying to do for all Vermonters."
Vermonters spend, on average, $1,000 a year on prescriptions, according to some estimates, of which 38 percent is directly out of their own pockets.
Lawmakers were concerned because pharmaceutical and data gathering companies are using information about doctors' prescription writing habits to target the marketing of medicines. That leads to more prescriptions of brand name medicines, which are more expensive.
Lawmakers were most of the way through the legislative session in late April when a federal court judge in New Hampshire struck down a similar law as unconstitutional.
The decision by federal Judge Paul Barbadoro left legislators scrambling to re-write their bill and try to avoid a similar fate in Vermont. Barnadoro raised issues of freedom of speech for the drug companies.
"We certainly tried to address the issues raised by the court in the New Hampshire law," Chen said. "I think we did a pretty good job, despite the narrow timeline."
The Vermont law is narrower in scope than the New Hampshire statute, expressly sets out why it is in the state's interest to limit that kind of data collection and allows doctors to opt into the data collection system.
Steve Kimbell, a lobbyist for IMS Health Inc., the largest of the data gathering companies, said the company is now reviewing and studying the law, he added.
"They did it in a very short time frame," Kimbell said. "There is great risk of not getting it right when you work under that kind of pressure. There would be for anybody."
In addition, there is a risk in not making information on the prescription writing habits of doctors available to those studying differences in the approach to treatment with an eye to saving money.
"That data is very important to that kind of analysis," Kimbell said.
But Chen said that limiting targeted marketing of drugs benefits the state, when the high cost of prescription drugs is helping to push health care spending.
"Health care costs are spiraling out of control. Prescription drug spending is the area of the highest increase," Chen said.
The Vermont Medical Society also supports the legislation.
"Companies are coming out with new medications and these new medications are quite expensive. They are getting physicians, through their marketing efforts, to prescribe these medications for more and more of their patients," said Steve Larose of the association.
"They do address many of the health problems that people have," Larose said. But there are often cheaper alternatives. "The idea is to get people the medications they need, but do it in the least expensive way possible."
Doctors "will still be marketed to, but they won't have their prescribing information used by the marketers in this way if they decide not to opt in," Larose said. "That should allow for cost savings down the road."
The bill also raises roughly $550,000 in a fee on pharmaceutical manufacturers. That money will be spent on efforts to educate doctors about generic drugs and encourage them to prescribe them.
That will be done through the University of Vermont's Area Health Education Centers program, and by passing out generic "samples." Sellers of brand-name prescription drugs give doctors samples of their medications in the hope that patients who see improvement will continue to use the drugs.
Under the bill, S.115, the state will make vouchers for similar samples of generics available to doctors as well, Chen said.
"We heard over and over again that samples were a powerful tool," Chen said. "We said 'if we can't beat 'em, join 'em'".
Finally, the bill requires more transparency of pricing information from pharmacy benefit management companies, or PBMs. Those companies contract with businesses or governments to manage their prescription drug supplies, and the new law will force them to give more information about their practices, for instance how much they are paying for the medicines they are passing on to their clients, Chen said.
"The PBM provisions in Vermont S.115 are unnecessary," Charles Cote of the national Pharmaceutical Care Management Association said in a statement. "We remain concerned that the enforcement provisions call for an unnecessary intrusion of the Attorney General into private contractual disputes between sophisticated business entities."
Douglas was concerned that the bill, if made into law, might run into the same problems as the New Hampshire legislation, said Jason Gibbs, a gubernatorial spokesman.
"The governor does not make a judgment of the constitutionality of bills, but the Legislature did make an effort to address that concern," Gibbs said. "The governor believes this is a measure that could help control the cost of prescription drugs," Gibbs added. "The practice of acquiring and selling data on prescriptions to marketing companies in the end increases drug costs and therefore health care costs in general."
Chen said the law has the potential to save state residents a substantial amount of money on medicine in the long run.
"Hopefully it will save Vermonters millions of dollars on prescription drugs," Chen said.
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