NTU to NY Senators: Stop Governor's Drug-Price Scheme

Honorable John J. Flanagan
Majority Leader, New York State Senate
State Capitol Building
Room 330
Albany, NY 12247

Dear Majority Leader Flanagan and Republican Members of the Senate:

On behalf of National Taxpayers Union’s (NTU) thousands of supporters across New York, I urge you to strongly oppose a new regulatory scheme included in Governor Cuomo’s 2017-2018 budget that has precedent-setting disclosure requirements and price controls for the biopharmaceutical industry. Just like the onerous tax policies NTU works to reform, burdensome government mandates on businesses can drive up compliance costs, deter economic development, and in turn affect the finances of families across the state.

The disclosure powers contained in the Governor’s proposal would essentially allow the government to micromanage the basic business decisions of private companies.  Biopharmaceutical firms will be required to report proprietary pricing information, research and development costs, and administrative and marketing outlays. The state would be given broad powers not only to slap a “high-priced” designation on certain drugs, but also to demand surcharges from insurers and extra rebates from manufacturers that supply New York’s Medicaid program for drugs failing to stay under the state’s “per-unit benchmark price.” The result will be a diversion of critical resources that are currently supporting jobs, innovative research, and even buyer discount programs. The bureaucracy required to pursue these dictates – incidentally, without the vital safeguard of an appeals process – will lack sufficient checks and balances.

Furthermore, potential start-ups in any field considering New York for their location will be tempted to look elsewhere, opting for states that do not impose such capricious market controls on private businesses. The Empire State can ill afford to be re-taught this hard lesson. New York already has the highest state and local tax burden in the U.S. as a percentage of personal income, and remains mired in second-worst place on Tax Foundation’s 50-state comprehensive business tax climate index. Given these indicators, New York officials should be working to tear down impediments to prosperity for residents rather than building new ones.

The General Assembly has decided to include the Governor’s price control, disclosure, and rebate regime in its budget. It is now up to the Senate to stand up for responsible public policy by opposing this destructive and intrusive plan. The future health of all sectors in the state’s economy, and by extension the well-being of taxpayers, is at stake.

Pete Sepp, President