California Approves Prescription Drug Pricing Transparency Bill

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California Approves Prescription Drug Pricing Transparency Bill

Recently, State legislators have passed a bill with the intent on creating greater
Transparency around prescription drug pricing by forcing pharmaceutical manufacturers to provide prior notice and more detailed explanations for hiking the prices of prescription drugs. The bill, was co-written by David Chiu and Senator Ed Hernandez, was approved by the Senate on Wednesday following clearing the Assembly earlier this week. The proposal now will now make its way to Gov. Jerry Brown.

Under the legislation, SB 17, drug companies would have to provide notice to health insurers of a minimum 60 days before they plan to hike the price of a drug if the jump is at least 16 percent over a two-year period. The requirement would apply to drugs that have a wholesale price of a minimum of $40 for some form of therapy. Big pharmas would have to provide an in depth reasoning for the price hike.

The bill would also permit health insurers to report to the state details about their spending on the drugs, entailing a list of the 25 most used prescribed drugs, the 25 most expensive drugs by yearly spending and the 25 drugs with the largest year-over-year increase in total annual spending. The bill was endorsed by consumer groups but faced push back from Pharmaceutical Research and Manufacturers of America (PhRMA), the national trade group representing the pharmaceutical industry.

“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,” Anthony Wright, executive director of the consumer advocacy group Health Access California, stated.

PhRMA has reported the bill would not offer consumers significant enhancements on cost affordability, and would rather create “mounts of red tape and government reports that look only at the list price of a prescription drug rather than considering actual patient spending after negotiated discounts and rebates.”

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