Gov. Brown to sign drug pricing transparency bill

2017-10-09 | San Jose Mercury News

Oct. 08--SACRAMENTO -- What is believed to be the nation's most comprehensive legislation aimed at shining a light on prescription drug pricing is expected to be signed into law Monday morning by Gov. Jerry Brown, according to an advisory issued by his office Sunday.

The announcement, which dealt a blow to the drug industry, did not include any comment from Brown, though he is expected to offer his thoughts and a signing statement at the ceremony Monday.

Senate Bill 17 aims to make drug prices for both public and private health plans more transparent in California. It would do so by requiring pharmaceutical companies to notify health insurers and government health plans like Medi-Cal at least 60 days before scheduled prescription drug price hikes that would exceed 16 percent over a two-year period. It would also force drug companies to explain the reasons behind those increases.

Authored by Sen. Ed Hernandez, D-West Covina, and co-authored by Assemblyman David Chiu, D-San Francisco, the bill has been strongly opposed by the pharmaceutical industry which has spent millions on lobbyists and ads to defeat it, partially out of fear that SB 17 could become a national model and the first major step toward price controls.

Calls and emails from the Bay Area News Group seeking comment Sunday afternoon from industry spokespeople were not immediately returned.

Hernandez welcomed Brown's advisory but remained cautious.

"I don't want to take anything for granted,'' he said. "A lot of things could happen between today and tomorrow -- or whenever."

A similar bill Hernandez introduced last year, SB 1010, was watered down with enough amendments that he pulled it from consideration in August.

But the uproar over stratospheric drug costs that has been building in the past few years rose exponentially last summer with headlines over the controversy like the $600-plus retail price for a two-pack of EpiPens, the lifesaving auto-injector that treats severe allergy attacks.

Hernandez's reintroduced bill, he said, is now backed by a broad coalition of supporters, including labor and business, health plans, consumer groups, hospitals and chambers of commerce.

"What has really changed is that the public is screaming for some kind of relief from the high cost of prescription drugs -- not just in California, but across the country,'' he said.

Hernandez believes SB 17 will "set a precedent and could become a national standard'' if it's signed into law.

"What I really hope is that at the Congress and the U.S. Senate level, they will look at this bill and use it as a blueprint for the entire country so we can have an honest conversation about controlling health care costs,'' he said.

Pharmaceutical companies have called SB 17 misleading because the list prices set by drug makers -- like those set by car manufacturers -- aren't what most health plans pay after negotiating discounts, or what consumers actually shell out after they use rebates and coupons.

"The bill, which claims to be about price transparency, is not going to do what it claims to do,'' Priscilla VanderVeer, spokeswoman for the Washington, D.C.-based Pharmaceutical Research and Manufacturers of America, told the Bay Area News Group last month.

If signed into law Monday, it would become effective Jan. 1, 2018.

Chiu, who is in Washington D.C. attending a conference for progressive legislators, was cheered by the advisory.

"With millions of Californians experiencing the challenges of paying for pharmaceuticals, we need transparency," he said. "And Californians who are suffering from cancer, HIV/AIDS, life-threatening and chronic diseases deserve answers.''

The bill does not actually control drug prices, per se, leading some critics to suggest it is toothless. But both Chiu and Hernandez strongly reject that argument.

"We have seen transparency in sectors in the health care world that have been successful in reducing costs,'' said Chiu. "So it is our hope that a similar approach will work with regard to pharmaceutical pricing.''

Anthony Wright, executive director of Health Access California, agreed.

He said the advance notice and information required under SB 17 "is invaluable" to large health care purchasers such as insurers, union trusts, and employers that would enable them to drive a better deal for consumers with that information.

"We require insurers, doctors and hospitals to provide this kind of transparency every year," Wright said. "It's finally time to ask the same of the drug companies."

Brown, who has until Oct. 15 to decide which bills will become law, on Sunday signed a related bill into law.

Assembly Bill 265, by Assemblyman Jim Wood, D-Healdsburg, will 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.

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