Eyes Fixed On California As Governor Ponders Inking Drug Price Transparency Bill

Insurance, health advocates, and insurers are anticipating Gov. Jerry Brown giving drug lobbyists a defeat they haven’t seen before. He will sign a legislation that forces pharmaceutical organizations to explain why large medication price hikes are necessary in California.

This bill would force drug manufacturers to give the state two months’ notice if a price increase is on the horizon. Health insurers and state agencies would be notified if prescription costs were set to rise by over 16% over the next 24 months. Manufacturers would need to also explain why such hikes are required. Further, health insurers will be forced to disclose what premium increase percentages happen because of drug expenditures.

$16.8 million was spent by drug makers on lobbying expenses over the last five years. Drug makers intended to end California drug legislation, based on data obtained from the office of the State Secretary. For the invoice alone, 45 firms or lobbyists were hired by the industry to contest it. Against this particular opposition campaign’s backdrop, Brown needs to make a decision whether he should veto or sign the bill by October 15.

Other states, such as New York, Nevada, Vermont, and Maryland, have passed very similar laws intended to bring greater transparency to costs (and curb price gougingoutright). However, Big Pharma has been fighting back the most in the state of California. With that said, if drug manufacturers do not care for disclosure laws enforced by small states, they can simply opt not to provide their medications there. However, the Californian market is too large to pass over.

This is take-two for a prescription price bill of this kind. Last year, a similar legislation didn’t pan out. The regulations that it intended to enforce were extensively gutted and eventually pulled. However, a couple of things transpired after that, which set the tone for a more successful go around this time.

Firstly, in the summer of 2016 – not even one week after the bill was pulled – controversy erupted across the country about the cost of EpiPens, after went up by almost 500%. The price hike outraged parents who relied on auto-injectors, which was preventing their kids from enduring allergic reactions, some of which were life-threatening.

Momentum started to grow among a number of federal lawmakers this past September. Hearings were called for. Several bills ended up being proposed throughout the nation that were intended to regulate drug costs.

However, once Donald Trump seized control of the Republican Party and Congressin November 2016, the main priority for health policies became repealing Obamacare.

Another chance for lawmakers who wanted to take action on drug costs opened up shortly afterward. This bill was reintroduced in 2017. Political support came to him a lot quicker this time, and from more people.

PhRMA (Pharmaceutical Research and Manufacturers of America), a trade group in the drug industry, claimed that the SB17 bill contained “false promises,” ones that would not help consumers cover the costs of medications they needed. They said it would repress innovation with regulatory compliances considered cumbersome.

Many experts believe price transparency itself is not enough to reduce costs. They say that more changes will be necessary.

While there is hope that the state governor will allow SB 17 to become law, there are no guarantees. On September 11, when the bill was to be voted on in the assembly, support for itbegan slipping away on the eleventh hour.

41 votes were needed for the assembly to pass the bill. The tally was stalled at 35 during a roll call. However, because drug lobbyists were surrounding the capital, certain legislators were apprehensive about being the deciding factor in voting.

The bill ended up crossing the threshold of 41 votes, and remaining lawmakers decided to join in. Ultimately, the bill had passed with a total of 66 votes. Every Democrat and 50% of Republicans that were in the assembly had voted in favor of it.

This is something that infuriated drug companies, as all their lobbying – including a flurry of ads released during the final week of the vote – were unsuccessful.

Experts believe Big Pharma does not want an influential state – such as California – telling them who their data should be shared with.

Drug makers are currently coming up with potential loopholes around the bill. Lawsuits have been filed by them to either stop or slow down the implementation of laws in various other states. Their attempts to weaken rules are also prevalent in the event that they come to pass. Policy experts have been keeping an eye out for the types of legal issues Californian law could be subjected to, and whether it’s capable of withstanding them.