Consumer Groups Cheer New Bill to Prevent “Pay-for-Dealy” PhRMA Efforts that Keep Prescription Drug Prices High

Assembly Health Committee Chair Jim Wood introduces legislation to counter harmful "pay-for-delay" practices of PhRMA. AB 824 (Wood) announced today alongside Attorney General Xavier Becerra discourages drug companies from paying generic manufacturers to delay the entry of competitive drugs and thus keeping the price of medications artificially high.
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For Immediate Release: Wednesday, February 20th, 2019

CONTACT:

Anthony Wright, executive director, Health Access California, awright@health-access.org, 916-870-4782 (cell)

Rachel Linn Gish, director of communications, Health Access California, rlinngish@health-access.org, 916-532-2128 (cell)

CONSUMER GROUPS CHEER NEW BILL TO PREVENT “PAY-FOR-DELAY” PHRMA EFFORTS THAT KEEP PRESCRIPTION DRUG PRICES HIGH

  • Assembly Health Committee Chair Jim Wood introduces legislation to counter harmful “pay-for-delay” practices of PhRMA.
  • AB 824 (Wood) announced today alongside Attorney General Xavier Becerra discourages drug companies from paying generic manufacturers to delay the entry of competitive drugs and thus keeping the price of medications artificially high.
  • This initiative joins recent efforts by California to lead on prescription drug prices, including Governor Newsom’s push for a state prescription drug purchasing pool, and 2017’s SB 17 (Hernandez) which required advance notice of drug price hikes over 16% over two years.

SACRAMENTO, CA — Consumer advocates cheered the introduction of a bill to address the outrageous pharmaceutical company practice of “pay for delay,” where drug manufacturers offer patent settlements to pay generic companies to delay the introduction of lower-price medication to the market. According to an FTC study, “these anti-competitive deals cost consumers and taxpayers $3.5 billion in higher drug costs every year.” The new bill, AB 824, was announced today by Assemblymember Jim Wood and Attorney General Xavier Becerra at a joint press conference.

Here is a comment from Anthony Wright, Executive Director of Health Access California, the statewide health care consumer advocacy coalition on the introduction of this new bill and how it impacts consumers:

“When drug companies pay to prevent a lower-price medication from entering the market, we all pay more, at the pharmacy and in our premiums. With this bill, California can take the lead in preventing this problematic, price-gouging practice of pay-for-delay by the prescription drug companies.”

“It’s bad enough that the drug companies abuse the patents they get by charging sky-high prices, it’s worse when they pay to keep cheaper options off the market and engage in other problematic pricing policies to make patients pay more for longer. While a solution to prevent this prescription drug company practice has been discussed for in DC for years, if the federal government won’t act, then California must to protect consumers and our health system overall.”

BACKGROUND

California has been a national leader is confronting the issue of prescription drug prices. In 2017, SB 17 (Hernandez) was signed into law to require all drug price hikes over 16% over a two-year span to be subject to transparency requirements, which discourages double-digit price increases and encourages better negotiations between drug companies and purchasers. This advance notice is 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 law 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.

Other recent legislation around prescription drug have included AB 315 (Wood) to regulate pharmacy benefit managers and SB 1021 (Wiener) to maintain co-pay caps to keep life-saving drugs affordable.

Last month, Governor Newsom proposed a statewide prescription drug purchasing pool, to consolidate the purchasing power of various state agencies, and ultimately other payers, to negotiate the best possible deal on pharmaceutical prices for Californians.