California Moves to Increase Transparency of Prescription Drug Pricing

Governor Brown signs the Healthcare: Prescription Drug Costs legislation. 

Before pharmaceutical companies can raise prescription drug prices in California, they are now required to give notice according to Senate Bill (SB) 17, titled Healthcare: Prescription Drug Costswhich was recently signed by Governor Edmund G. Brown Jr.

Specifically, the bill requires drug manufacturers to notify the state 60 days in advance of any increase in the price of prescription drugs with wholesale prices greater than $40 for a 30-day supply if the price will be hiked more than 16% in a two-year period. Health plans and insurers are also required to file annual reports detailing out drug costs impact health care premiums in California. 

The bill was authored by California State Senator Ed Hernandez (D-West Covina), along with support from several other legislators, including California State Assembly members David Chiu (D-San Francisco) and Jim Wood (D- Healdsburg).

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

Principle Co-author Chiu added that “Today we are one step closer to helping patients, governments, and businesses understand why drug prices are so high - and to using that information to bring those costs down,” said Chiu in a statement. “I applaud the leadership and courage of Governor Brown, Senator Hernandez, my fellow co-author Assembly member Jim Wood, and the broad coalition of patients, consumers, employers, businesses, labor, and health advocates who worked tirelessly in recent years to get this legislation across the finish line. We need answers for the child who needs an Epi-pen, the hepatitis C patient who needs Sovaldi, and the AIDS patient who needs Daraprim.”

Principle co-author Wood commented that “Senator Hernandez has been a tenacious author who understands that escalating drug costs are an immediate crisis that needed solutions this year, regardless of other health care challenges we face. Once we knew that for the first time, as a percentage of health care premiums, drug costs exceed what we pay for doctors, something had to be done. I was honored to play a role in this bill’s passage and am inspired to continue the fight on behalf of patients.”

 

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