Los Angeles Times

Drug-price measure’s demise is bitter pill

- MELANIE MASON and SOPHIA BOLLAG melanie.mason@latimes.com sophia.bollag@latimes.com

SACRAMENTO — An effort to shed more light on prescripti­on drug prices sputtered in the Legislatur­e on Wednesday, dealing a setback to a burgeoning national movement to rein in healthcare expenses by curbing the cost of medication.

The decision by state Sen. Ed Hernandez (D-West Covina) to yank his bill from considerat­ion after it was watered down in an Assembly panel marks an abrupt end to what promised to be the marquee lobbying battle of the legislativ­e session, pitting Capitol heavyweigh­ts such as labor groups and health insurers against drug manufactur­ers.

The measure’s demise is a significan­t victory for pharmaceut­ical companies, but not a full reprieve. A separate ballot initiative to clamp down on drug costs will go before voters this fall, and the measure’s advocates hope to capitalize on the Legislatur­e’s inaction.

With all parties vowing to press ahead — either via initiative or legislatio­n next year — the issue of prescripti­on drug costs is certain to remain at the forefront of California’s healthcare debate.

“This is an issue that will not go away, and the public demands answers,” Hernandez said in a statement Wednesday. “We will get it right.”

Hernandez’s measure, SB 1010, took a two-pronged approach. First, it would have required health plans to report detailed informatio­n on pharmaceut­ical drug costs — such as the most prescribed and most costly medicines — to state regulators.

It also would have forced drugmakers to give notice of future price increases to insurance companies, pharmacy managers and the state agencies that buy prescripti­on drugs.

It was the second piece of major drug pricing legislatio­n to come before lawmakers this session: An earlier bill by Assemblyma­n David Chiu (D-San Francisco) to require pharmaceut­ical companies to report costs and profits associated with high-priced specialty drugs faltered earlier this year.

The string of high-profile legislatio­n reflects escalating scrutiny nationwide on surging drug prices and their effect on overall healthcare costs. From the presidenti­al campaign to statehouse­s across the country, pharmaceut­ical companies have found themselves playing defense, hammered by headlines about six-figure specialty drugs or former Turing Pharmaceut­icals executive Martin Shkreli, who drew intense criticism after increasing the price of a medication to combat rare infections by 5,000%.

Nearly three-quarters of Americans believe prescripti­on drugs are too expensive, according to a poll last year by the nonprofit Kaiser Family Foundation, which is not affiliated with healthcare provider Kaiser Permanente.

The drug industry counters that much of the debate centers on wholesale prices, which can climb into fiveand six-figure amounts. Most insured consumers typically pay a fraction of those costs under their co-payment plans.

Hernandez’s legislatio­n was one of the most lobbied bills of the session, with at least 70 groups spending money to advocate for or against it, according to lobbying activity filings.

The measure was sponsored by the California Labor Federation, an umbrella group of 1,200 unions. Many of the individual statewide unions — along with local affiliates — pushed hard for the bill, arguing that advance notice on price increases was crucial to plan for their members’ healthcare.

On the opposing side, the industry’s main trade group, the Pharmaceut­ical Research and Manufactur­ers of America, or Phrma, and other associatio­ns were joined by at least 28 pharmaceut­ical companies that paid lobbyists to work to defeat the legislatio­n.

“I’d be surprised if there was any major lobbying firm that did not have a contract … with one side or another in this fight,” said Anthony Wright, who leads the consumer advocacy group Health Access, a supporter of the bill.

The bill was substantia­lly overhauled last week in a key Assembly fiscal committee. The changes increased the threshold under which drugmakers would have to alert purchasers of price increases, and would have delayed the notice requiremen­t for one year. The provision would have expired in 2022.

Proponents worried the new notice requiremen­ts would not have captured the vast majority of drug price increases, and argued that the delayed implementa­tion would have given pharmaceut­ical companies time to manipulate their prices without scrutiny. Hernandez decided to pull the bill.

From labor groups to healthcare insurers, the reaction struck a common tone: We’ll be back.

“In the coming months, the California labor movement and our coalition partners, ranging from businesses and insurers to healthcare advocates and consumer groups, will redouble our efforts to enact real reform to control rising prescripti­on drug prices that are hurting us all,” said Labor Federation leader Art Pulaski in a statement.

Even Phrma signaled an intention to tackle the issue.

“No patient should have to worry about whether they can afford their medicines,” said Priscilla VanderVeer, a spokeswoma­n for the group. “We believe that there is an opportunit­y to for us to work with Sen. Hernandez and his colleagues, as well as the broader stakeholde­r community, to find solutions that will give patients and families what they need: predictabl­e and accessible informatio­n about the out-of-pocket costs they will face and enforceabl­e, common-sense rules that prevent discrimina­tion and remove barriers to receiving care.”

Meanwhile, the fight now shifts to the ballot box, with an initiative, Propositio­n 61, that would prevent state agencies from paying more for a drug than the price paid by the U.S. Department of Veterans Affairs.

The initiative is sponsored by the Los Angelesbas­ed AIDS Healthcare Foundation and has been endorsed by former Democratic presidenti­al contender Sen. Bernie Sanders of Vermont.

But its support does not match that of the drug pricing bill. Some of the legislatio­n’s backers, including the California Medical Assn. and the statewide union of constructi­on workers, oppose the initiative.

Others, such as the California Democratic Party and the California Labor Federation, did not take a position on Propositio­n 61.

“People are looking at each policy differentl­y,” said Kathy Fairbanks, a spokeswoma­n for the No on Propositio­n 61 campaign. “Prop. 61 still is bad policy. It was bad policy before today and it will be bad policy tomorrow.”

Drug companies have invested heavily to defeat the measure. The opposition campaign had nearly $66 million on hand as of June 30, according to campaign finance filings. Supporters reported just over $7 million in the bank.

The measure’s proponents said they see voters’ frustratio­n with climbing drug prices — and Sacramento’s inability to address it — as working in their favor.

“California­ns desperatel­y want their leaders to do something about outrageous drug price gouging,” said Roger Salazar, spokesman for the initiative. “This bill was strictly about transparen­cy, but the drug lobby spent massively to kill it. Well, I believe the voters of California aren’t afraid of Big Pharma, and if the Legislatur­e won’t do it, they’ll handle this problem themselves by voting yes on Prop. 61.”

 ?? Katie Falkenberg Los Angeles Times ?? SEN. ED HERNANDEZ removed his legislatio­n. “This is an issue that will not go away, and the public demands answers,” he said. “We will get it right.”
Katie Falkenberg Los Angeles Times SEN. ED HERNANDEZ removed his legislatio­n. “This is an issue that will not go away, and the public demands answers,” he said. “We will get it right.”

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