California Poised to Set National Policy on Prescription Drug Prices

Earlier this week, SB 17, by Senator Ed Hernandez, passed off the Senate floor on a concurrence vote, putting California only a Governor’s signature away from enacting nationally impactful prescription drug price reform. After receiving overwhelming bipartisan support heading out of the State Assembly, the State Senate also affirmed that addressing drug prices increases is a bi-partisan issue, passing SB 17 on a 32-8 vote. SB 17, strongly backed by a broad coalition of consumer, labor, business, insurer, and other health organizations provides advance notice and disclosure of prescription drug prices in order to gain greater transparency for consumers and purchasers. Health Access California, the statewide health care consumer advocacy coalition was proud to be a co-sponsor of SB 17 with the California Labor Federation and UNITE HERE.

The bill has been opposed by the pharmaceutical industry who has hired dozen of lobbyists, running radio and newspaper ads, and otherwise spending significantly in their campaign against these protections.

California showed this week that Big Pharma is beatable, despite the obscene amount the drug companies have spent to oppose SB 17 and prevent any transparency or oversight of their unjustified price hikes. California California consumers are reminded of prescription drug price every time they visit a pharmacy, and they remembered every outrageous price hike from EpiPen to Daraprim. The drug companies’ own bad behavior compelled the legislature to insist on the transparency and oversight that is common in the rest of health care.

SB 17 requires advance notice of any price hike over 16% over two years for existing drugs 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.

If Governor Brown signs SB 17, California will set national policy on prescription drug prices, like we have on car emissions or other issues, where our law changes the industry’s practices across the country. No longer in our nation will Big Pharma be able continue to raise prices without notice or justification. The transparency would allow us to know why drug costs go up so much; the advance notice will provide health purchasers across the nation a better ability to bargain, prepare, and manage rising pharmaceutical prices.

Also passing this week, as part of a package of legislation supported by consumer groups on prescription drug prices, was AB 265 (Wood) to prohibit prescription drug manufacturers from offering discounts for name-brand drugs, if a less-expensive equivalent brand is available, preventing the use of higher priced drugs when unnecessary.

Both are not on their way to the Governor’s desk.