The Mercury News

Drug companies sue over pricing transparen­cy law

- By Tracy Seipel tseipel@ bayareanew­sgroup.com Contact Tracy Seipel at 408-920-5343.

Two months after Gov. Jerry Brown signed into law what many consider to be the nation’s most comprehens­ive legislatio­n on transparen­cy in prescripti­on drug prices, the phamaceuti­cal industry on Friday fired back with a lawsuit challengin­g its constituti­onality.

Calling Senate Bill 17 “an unpreceden­ted and unconstitu­tional California law,’’ the Washington D.C.-based Pharmaceut­ical Research and Manufactur­ers of America argues that the new law will dictate national health care policy related to drug prices.

The 36-page complaint filed in California U.S. District Court in Sacramento, also says SB 17 — which is scheduled to take effect next month — singles out drug manufactur­ers as the sole determinan­t of drug costs, ignores the role other entities play in the costs patients pay for prescripti­on drugs, and will lead to drug stockpilin­g and reduced competitio­n.

“We understand how important it is for patients to have affordable access to the medicines they need,’’ James Stansel, general counsel of PhRMA said in a statement.

But, he said, “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.”

PhRMA — a national trade group that represents 37 drug companies — had furiously tried to defeat the bill, partially out of fear that it could become a national model and the first major step toward price controls.

The complaint is asking for a declaratio­n from the court that certain provisions of SB 17 violate the U.S. Constituti­on. It also wants the court to permanentl­y prohibit California from implementi­ng or enforcing those provisions of the law.

Assemblyme­n David Chiu, D-San Francisco, one of the bill’s co-authors along with Sen. Ed Hernandez, D-West Covina, and Jim Wood, DHealdsbur­g, wasn’t surprised by the trade group’s move.

“It’s disappoint­ing but not surprising that the industry is continuing to fight transparen­cy for consumers who are suffering from skyrocketi­ng drug costs,’’ Chiu said Friday. “Patients deserve better.”

Anthony Wright, executive director of Health Access California, a health care advocacy group, said the group doesn’t believe there is any basis to the lawsuit.

“The question is: What are they hiding?” Wright asked.

SB 17 aims to make drug prices for both public and private health plans more transparen­t in California. It would require pharmaceut­ical companies to notify health insurers and government health plans like MediCal at least 60 days before scheduled prescripti­on drug price hikes that would exceed 16 percent over a twoyear period. It would also force drug companies to explain the reasons behind those increases.

“The essence of this bill is pretty simple,” Brown told a room filled with SB 17 supporters on Oct. 8, the day he signed the bill into law. “California­ns have a right to know why their medical costs are out of control, especially when the pharmaceut­ical profits are soaring. That’s the takeaway message.”

The lawsuit names Brown and Robert David, director of the California Office of Statewide Health Planning and Developmen­t, as defendants.

It comes on the heels of a similar complaint filed in in Nevada federal court in September by the pharmaceut­ical industry. That lawsuit challenges the constituti­onality of Senate Bill 539, which had been signed into law by Nevada Gov. Brian Sandoval.

The new Nevada law requires drugmakers and pharmacy benefit managers to disclose pricing and rebate informatio­n for diabetes drugs.

The complaint says SB 539 removes trade secret protection­s for highly sensitive informatio­n and improperly infringes on federal authority over patent rules.

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