Court Halts Big Pharma Efforts to Stop California’s Landmark Prescription Drug Price Transparency Law

In a win for consumers, the U.S. District Court, Eastern District of California today dismissed a lawsuit brought by the Pharmaceutical Research and Manufacturers of America (PhRMA) to halt California’s landmark drug price transparency law, SB 17, authored by Senator Ed Hernandez in 2017. Last year, PhRMA filed this lawsuit alleging the law as unconstitutional and seeking a permanent injunction preventing its implementation. The U.S. District Court dismissed the suit as PhRMA did not produce enough facts to substantiate their claims or standing.

The law that SB 17 implemented requires all drug price hikes over 16% over a two-year span to be subject to transparency requirements, which would discourage double-digit price increases and better negotiations between drug companies and purchasers. This advance notice would be given to public purchasers like Medi-Cal and CalPERS and private purchasers including health plans and insurers. It also enhances public disclosure of information about drug pricing by requiring drug manufacturers to file information about the rationale for pricing increase, marketing costs, and other specifics with the Office of Statewide Health Planning and Development. The bill also requires health plans and insurers to disclose information about drug pricing through existing rate review processes at the Department of Managed Health Care and Department of Insurance.

SB 17 was strongly backed by a broad coalition of consumer, labor, business, insurer, and other health organizations, but opposed by the pharmaceutical industry who hired dozens of lobbyists, ran radio and newspaper ads, and otherwise spent significantly in their campaign against the transparency protections of the legislation.

The judge was right to dismiss PhRMA’s quest to keep consumers in the dark about their prescription drug prices. Instead of working to implement the law, they instead chose to spend millions to file a lawsuit to prevent Californians from knowing when and why their prescription drugs prices keep skyrocketing. We’re glad the court saw their arguments as baseless as California consumers do. While PhRMA rakes in huge profits, working families are struggling to pay for their necessary medications. It’s time for PhRMA to stop hiding and start doing what’s right for the people who need access to affordable, life-savings prescription drugs.

Senator Dr. Ed Hernandez, author of Senate Bill 17 commented:

“I have spent my entire Legislative career working towards access to affordable, quality health care for every Californian. Towards this goal, SB 17 shines a light on prescription drug spending and will help normalize prices for one of the biggest drivers of health care costs. That’s why I’m extremely thankful that PhRMA’s lawsuit was just thrown out by the U.S. District Court. As I have said time and time again – Big Pharma should simply lower the cost of prescription drugs so that everyone can afford life-saving medicine.”

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