Vermont has become the first state to require drug manufacturers to justify the prices of expensive prescription drugs.

Vermont Gov. Peter Shumlin on Friday signed into law S. 216, which requires makers of the prescription drugs that the state spends the most money on to explain why they cost so much.

According to the bill, the state will identify up to 15 prescription drugs that cost the state a “significant” amount of money and whose prices have increased by at least 50% in the past five years or by 15% in the past year.

The makers of those drugs will be required to submit information to the state's attorney general's office explaining what drove the increase in the drug price. That information will be presented to the Vermont General Assembly on Dec. 1 of each year and made public. Drugmakers who fail to submit required information will be fined, according to the bill.

The bill also requires health insurers to explain out-of-pocket prescription drug costs to health plan members. Under the law, health insurers that offer benefit plans in Vermont through the state's public heath exchange must provide information to enrollees, potential enrollees and health care providers by Jan. 1 about the exchange plans' prescription drug formularies, including drugs covered, cost-sharing amounts, drug tiers, prior authorization, step therapy and utilization management requirements.

“This bill is about accountability. The reality is that we have pharmaceutical companies raising prices on lifesaving drugs five thousand percent. When asked about those outrageous increases, CEOs are literally laughing in front of Congress. That needs to change,” Gov. Shumlin said Friday in a statement.

A spokeswoman for the Washington-based trade group America's Health Insurance Plans said in an email that “while we support efforts to increase transparency around drugmakers' prices, we did not take a formal position on this legislation given some of the potential regulatory implications on health plans' formularies.”

The Washington-based trade group Pharmaceutical Research and Manufacturers of America, which lobbies on behalf of drugmakers, did not immediately respond to a request for comment.

Similar drug pricing transparency bills have been introduced in several other states, including California, Virginia, New York, Massachusetts, Pennsylvania, Texas, North Carolina and Oregon.