SACRAMENTO, Calif. — California Gov. Jerry Brown approved a measure Monday to increase disclosure on prescription drug prices, the focal point of growing efforts to clamp down on climbing pharmaceutical costs.
Supporters call the law the nation’s most sweeping effort to make prescription drug pricing more transparent. The measure would require drugmakers to provide notice to health plans and other purchasers 60 days in advance of a planned price hike if the increase exceeds certain thresholds.
The measure, SB 17 by state Sen. Ed Hernandez, will also require health plans to submit an annual report to the state that details the most frequently prescribed drugs, those that are most expensive and those that have been subject to the greatest year-to-year price increase.
The disclosure, backers say, would help shed light on how prescription drugs are contributing to overall healthcare costs.
“SB 17 speaks to the needs of all Californians who have felt the strain of nonstop prescription drug price increases,” Charles Bacchi, president and chief executive of the California Assn. of Health Plans, said in a statement. “Pharmaceutical prices have long played an outsized role in driving up the cost of health coverage across the board. SB 17 gives us the tools to address the issue by helping us prepare for price hikes and discouraging needless cost increases.”
But pharmaceutical companies strongly opposed the measure, arguing the information would paint an inaccurate picture of drug spending, since the disclosure centers on full sticker cost set by manufacturers. Purchasers rarely pay the full list price, either through negotiated discounts or through use of consumer rebates or coupons.
“It is disappointing that Gov. Brown has decided to sign a bill that is based on misleading rhetoric instead of what’s in the best interest of patients,” Priscilla VanderVeer, a spokeswoman for the Pharmaceutical Research and Manufacturers of America, said in a statement. She said the measure “ignores the reality that spending on prescription medicines remains a much smaller portion of overall health care spending.”
VanderVeer said the manufacturers’ group was ready to work to combat affordability issues but added: “It’s time to move beyond creating new, costly bureaucratic programs that don’t make a dent in patients’ costs for medicines.”
Escalating drug prices inspired a slate of measures from lawmakers this year.
The disclosure bill was seen as the centerpiece of the focus on drug prices, setting off a fierce lobbying battle in which the pharmaceutical industry squared off against coalition of backers that included health plans, labor groups and consumer advocates.