Price of (Legal) Drugs Subject of Bipartisanship in Madison

By James Wigderson
Special Guest Perspective for the MacIver Institute

The legislature may soon be on drugs. As a topic, I mean. A bipartisan group of legislators wants to repeal the minimum markup law for prescription drugs in Wisconsin, making Wisconsin the 46th state in the country to allow retailers to sell drugs for below cost. It would be a free market approach to lowering health costs for many in Wisconsin.

In other states, large retailers like Target and Walmart are able to sell commonly prescribed prescription drugs for only four dollars. Under Wisconsin’s Unfair Sales Act that price for many drugs is illegal because the four-dollar price is below the retailer’s cost.

The proposed bill, SB 360, would exempt prescription drugs from the Unfair Sales Act. The bill passed the state assembly last year only to die from inaction by the senate. This time around, the assembly is waiting to see if the senate will take up the bill before they act on it. There has been a public hearing on the bill in the Senate Committee on Health.

In a very tense political season, it’s rare to see a bill that has such bipartisan support. Republicans State Representative Bill Kramer (Waukesha) and State Senator Leah Vukmir (Wauwatosa), and Democratic State Senator Tim Carpenter (Milwaukee) and State Representative Jon Richards (Milwaukee), are the sponsors of the bill.

In an interview Monday night, Kramer explained that they took provisions to protect “mom and pop” retailers from predatory pricing from his proposed legislation to end the Unfair Sales Act and added it to Richards’ and Carpenter’s bill from last year that would have repealed the Unfair Sales Act for prescription drugs.

“We’re taking a play out of the liberal playbook. We’re doing a little incrementalism. Last term it passed it passed the Assembly on a voice vote but it wasn’t taken up by the Senate,” Kramer said. “So this year we’re going to have the Senate act first. And then once they pass it we should have no problem in the Assembly.”

Asked if he was concerned if the recalls could bog the bill down, Kramer said, “Always concerned what the Senate is going to do. That’s why we’re not going to waste our time in the Assembly until we know that the Senate has passed it.”

At the public hearing, Kramer said that most of the questions seemed to come from Democratic Senator Jon Erpenbach who was “hung up on” the question of what happens when an insurance company’s co-pay is more than the cost of the prescription drug.

“I said, ‘Well, then I’m probably going to pay four dollars and I’m not going to tell my insurance I’ll send them another six.’ He was really, really hung up on that.”

When Erpenbach raised the question came up how the smaller pharmacy retailers would not be able to match the economies of scale of the larger retailers and therefore would not be able to compete, Kramer did not dispute the point.

However, Kramer said the law wasn’t helping anyone anyway. “Later testimony from one of the ‘mom and pop’ pharmacies basically said, ‘When I started there were 17 independent pharmacies,’ in the county he was from, ‘and now there’s two.’

“So Leah (Vukmir) asked him, ‘So, how is the current law helping you?’

“He said, ‘It’s really not.’”

Kramer said Vukmir asked, ‘So if we repeal it, you’re not losing anything? But we’re putting in these other protections about predatory pricing and using loss leaders to drive up the price on everything else. Don’t you think that would be better?”

“He replied, ‘Yeah, actually it does sound like it would be better.’ So if that testimony means anything then it sounds like the opposition does not have a leg to stand on.

“Walmart and Target have $4 generic prescription drug plans in 45 states, and I think hopefully by the end of the year Wisconsin could be the 46th,” said Kramer.

Asked who else would be opposed to the bill, Kramer said the Wisconsin Petroleum Marketers & Convenience Store Association is registered against the bill. “They’re afraid of a slippery slope,” he said. “If we get prescription drugs then next we’ll go after gasoline.”

Asked if that wasn’t ultimately the goal, Kramer said, “That’s my goal. It would be my goal to go after gasoline and alcohol and tobacco and everything else right now. But I just don’t think we have the votes to get it done so this we get something.”

“We took a lot of the language from the bill that we’ve had in the last two terms so we get to try it on this one (issue),” Kramer said. “So it will be a little familiar I would think when we bring it back again when we think we can get more.”