Bill seeks explanation, disclosure of drug prices
California legislators have passed a bill aimed at creating greater transparency around prescription drug pricing by requiring pharmaceutical manufacturers to provide advance notice and more detailed explanations for raising the price of a drug.
The bill, co-authored by Assemblyman David Chiu, D-San Francisco, and Sen. Ed Hernandez, D-West Covina (Los Angeles County), was approved by the Senate on Wednesday after clearing the Assembly this week. The proposal now heads to Gov. Jerry Brown.
Under the legislation, SB17, drug companies would have to alert health insurers at least 60 days before they raise the price of a drug if the increase is at least 16 percent over a two-year period. The requirement would apply to drugs that have a wholesale price of least $40 for a course of therapy. Drug companies would have to provide an explanation for the price increase.
The measure would also require health insurers to report to the state details about their spending on prescription drugs, including a list of the 25 most frequently prescribed drugs, the 25 costliest drugs by annual spending, and the 25 drugs with the highest yearover-year increase in total annual spending.
The bill was backed by consumer groups but faced opposition from Pharmaceutical Research and Manufacturers of America, the national trade group representing the pharmaceutical industry.
“California showed this week that Big Pharma is beatable, despite the obscene amount the drug companies have spent to oppose SB17 and prevent any transparency or oversight of their unjustified price hikes,” Anthony Wright, executive director of the consumer advocacy group Health Access California, said in a statement.
The pharmaceutical trade group has said the bill would not offer consumers meaningful improvements on affordability, and would instead create “mounds of red tape and government reports that look only at the list price of a prescription drug rather than considering actual patient spending after negotiated discounts and rebates.”