California Passes Drug Price Transparency Law

Drug makers will be required to report some prescription product price increases in California.

California governor Jerry Brown has signed state legislation that requires drug manufacturers to provide 60-day notices for price increases of 16% or more over 2 years, effective January 2019. It also calls for manufacturers to give explanation for large price hikes, Senator Ed Hernandez, bill author, said.

The bill applies to drugs priced wholesale for more than $40 for a 30-day supply, and requires health plans and insurers to report annual outlines as to how current market drug costs affect California healthcare premiums.

State residents have a right to know why medication costs are out of control, Brown said, “especially when pharmaceutical profits are soaring.”

“This measure is a step at bringing transparency, truth and exposure to a very important part of our lives,” Brown said.

The bill was given backing by the state senate last month. It does have immediate dissent, however.

Biotechnology Innovation Organization (BIO), the world’s largest biotechnology trade association, responded to the bill by noting it ignores biopharmaceutical development realities. As such, it will “delay or prevent future biopharmaceutical innovation by driving investment toward other industry sectors that are not burdened with this type of misguided government intrusion."

“This law will neither provide meaningful information to patients nor lower prescription drug costs,” the BIO statement read.

BIO — which along with the Pharmaceutical Research and Manufacturers of America (PhRMA) filed a lawsuit against Nevada legislation requiring drug plan administrators to reveal diabetes drug rebates last month — have not made indications towards legal action against the bill yet.

There have been at least 176 bills pertaining to pharmaceutical pricing and payments introduced in 36 states in 2017, according to the National Conference of State Legislatures.

A press release regarding the bill was made available.