State passes bill on drug price disclosure
Measure includes requiring health plans to report those that are most costly.
SACRAMENTO — Powered by increasing scrutiny of costly prescription drugs, a measure that would require sweeping new disclosure on how medicines are priced cleared its final legislative hurdle Wednesday.
The state Senate approved the bill with no debate, belying the fierce behind-the-scenes jockeying that pit pharmaceutical companies against health insurers, labor unions and liberal activists.
The measure, SB 17 by state Sen. Ed Hernandez (D-Azusa), requires health plans to report to the state the 25 drugs that are most frequently prescribed, those that are most costly and those that have had the highest year-to-year increase in spending. It also would require drugmakers to provide advance notice of planned price increases if the hikes exceed certain thresholds.
Proponents touted the measure’s disclosure requirements, which they called the most comprehensive in the country, shedding light on how drug costs contribute to overall healthcare spending.
“California will soon be able to bring some much needed information regarding drug pricing by pharmaceutical companies,” Hernandez said in a statement. “Although this state legislation was passed in California, it’s a monumental achievement for the entire nation. If signed into law, SB 17 will set national healthcare policy, having impact for consumers and providers in other states.”
But the bill was strenuously opposed by drug manufacturers, who argued that by focusing the disclosure on list prices — the sticker price that is often sharply discounted for insurance companies and consumers — the information would paint an inaccurate picture.
Two other transparency measures, including a nearly identical bill by Hernandez, had failed in the past. And the bill’s success was far from guaranteed when it hit the Assembly floor earlier in the week. The measure initially fell 10 votes short, setting off a dogged arm-twisting effort by Hernandez and other bill supporters.
Ultimately, the “yes” votes came in a rush, giving the bill an ample margin of passage.
Drugmakers argued that focusing on list prices would paint an inaccurate picture.