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California state senator introduces new drug price transparency bill


A state senator has re-introduced a bill that would shine a light on some prescription drug price hikes.

The bill authored by State Sen. Ed Hernandez (D-West Covina) would require pharmaceutical companies to notify state health programs and private insurance companies at least 90 days in advance before significantly raising drug prices. They would also have to describe any changes or improvements to the effectiveness of the drug that explain the increase, or state if there were none.

The regulations would apply to drugs with a wholesale cost above $600 a month whose price increased by more than 25 percent in the previous three years, and to drugs with a wholesale cost less than that amount whose price increased by more than 10 percent over the same time period.

SB 17 would also require health plans to report information about their most prescribed and most expensive drugs, and the percentage of premiums spent on drugs.

Hernandez carried similar legislation last year, but dropped it because he was dissatisfied with some amendments.

"When we've made price information publicly available in other sectors of the health care market, prices have normalized," Hernandez said.

"Make no mistake: This bill may not have passed last year, but it's already having an effect," he said, pointing to other states that have introduced similar legislation. One state – Vermont – has passed a bill that requires drug makers to justify certain price hikes.

The drug industry is committed to working with lawmakers to ensure patients can afford medications, but it opposes the approach laid out in Hernandez' legislation, said Priscilla VanderVeer, spokeswoman for the Pharmaceutical Research and Manufacturers of America.

"Rather than creating a new bureaucratic system that creates layers of red tape, Californians would be well served if we focus on market-based solutions that better align payment with the value to the patient," she said in a statement.

"Just as a one-size-fits all doesn’t work in caring for patients, neither should we use that strategy in pricing medical care," said VanderVeer.

The California Association of Health Plans supports the bill. In a statement, CEO Charles Bacchi said the state has been a leader in health care, and "we must again step into a leadership role and enact much needed reforms to finally bring prescription drug pricing out of the dark."

Anthony Wright, executive director of Health Access California, a bill co-sponsor, said he thinks the legislation has a strong chance of passing on its second try.

He noted that there have been more controversial high-profile increases in drug prices since Hernandez dropped the previous bill, such as the drug firm Mylan's decision to raise the price of the EpiPen.

A ballot measure on last November's statewide ballot offered a more aggressive approach to high drug prices. Proposition 61 would have capped the amount the state pays for prescription drugs. The pharmaceutical industry contributed more than $100 million to the No on 61 campaign; the measure went down to defeat, as 53 percent of Californians voted against it.