Drug companies sue to block California drug price law

SACRAMENTO — Pharmaceutical companies on Friday sued to block a new California law that would require them to give advance notice before big price increases.

The law was approved this year in response to consumer outrage over a rise in drug spending and high costs for some prescription treatments, including new Hepatitis C medications and Epipens to control allergic reactions.

The Pharmaceutical Research and Manufacturers of America, a trade group for drug makers, said in its lawsuit that California’s law illegally tries to dictate national health policy. Because the law is tied to a national measure of drug prices, PHRMA argues that California’s advance notification requirement could restrict a drug maker’s ability to raise prices in other states.

The group also argued the law is unconstitutionally vague and violates the First Amendment by forcing drug companies to justify price increases.

The law, set to take effect Jan. 1, passed over fierce objections from PHRMA and California’s thriving medical research industry. It requires 60 days’ notice to raise national wholesale prices above a certain threshold. “The law creates bureaucracy, thwarts private market competition, and ignores the role of insurers, pharmacy benefit managers and hospitals in what patients pay for their medicines,” James Stansel, PHRMA’S executive vice president and chief counsel, said in a statement Friday.

The law doesn’t reflect the actual costs paid by major purchasers including insurers and the government, which negotiate prices and receive discounts, drug companies said. They also warn that advance notice will lead pharmacies and other drug purchasers to stockpile, creating shortages of medications.