Skip to main content

CA State Senator Unveils Drug Price Transparency Bill

News  |  By Doug Desjardins  
   March 20, 2017

Senate Bill 17 focuses on the most expensive prescription medications, the most commonly prescribed drugs, and those with the greatest price increases year over year.

This story originally appeared in California Healthfax.

California Senator Ed Hernandez introduced a bill that would require health plans to provide more transparency to the public regarding prescription drug prices.

Senate Bill 17 would require health plans to report annually on pricing for the 25 most commonly prescribed drugs, the 25 most expensive drugs, and the 25 drugs with the highest year-over-year increases in price.

The state Department of Managed Health Care and the Department of Insurance would receive the reports.

The bill would also require health plans to report on the percentage of premiums that are spent on prescription drugs.

"We deserve transparency in drug prices because the prices that drug companies charge for their products have nothing to do with effectiveness, research costs, or even changes in manufacturing costs," said Hernandez.

Recent increases in healthcare premiums have been driven in part by price hikes on prescription drugs and state legislators "have a responsibility to protect consumers" from predatory pricing, Hernandez said.

Back for 2017: CA Prescription Price Transparency Bill

SB 17 is endorsed by the California Association of Health Plans (CAHP), which said pharmaceutical manufacturers need to be held accountable for price hikes.

"Escalating drug prices are posing a clear threat to California families, to state programs, and to the overall affordability of our healthcare system," said CAHP President and CEO Charles Baachi.

PhRMA: It's Complicated
Officials with the Pharmaceutical Research and Manufacturers of America (PhRMA) said their organization looks forward to "working with policymakers on solutions" but expressed reservations about SB 17, calling it a "one-size-fits-all solution" for a complicated issue.

"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," said Priscilla VanderVeer, deputy vice president of public affairs for PhRMA.

SB 17 is a follow-up to Senate Bill 1010, a 2016 bill that would have required manufacturers to justify price increases that exceeded 10% of total costs or more than $10,000 in a single year.

Hernandez tabled that bill when it was amended to require justification only for price hikes that exceeded 25% of a drug's total cost or more than $10,000 per year, changes he said would have made the bill ineffective.

Get the latest on healthcare leadership in your inbox.