California Healthline Daily Edition

Summaries of health policy coverage from major news organizations

California Lawmakers To Revive Rx Drug Cost Transparency Bill

California lawmakers are working to revive a stalled bill (AB 463) that aimed to increase prescription drug cost transparency, KQED's "State of Health" reports (Dembosky, "State of Health," KQED, 1/12).

Background

AB 463, by Assembly member David Chiu (D-San Francisco), stalled after it became clear Chiu wouldn't get the 10-vote minimum needed to get the bill out of the Assembly Committee on Health (Lauer, California Healthline, 1/4).

Under the bill, drugmakers would have been required to report the production costs for any drug or course of treatment that is more than $10,000 to the Office of Statewide Health Planning and Development.

Specifically, drugmakers would have needed to report information on costs related to:

  • Acquisitions;
  • Clinical trials and other regulatory processes;
  • Financial assistance offered to patients through various programs;
  • Manufacturing;
  • Marketing and advertising;
  • Profits attributed to the drug; and
  • Research and development costs paid by the manufacturer or by grants.

OSHPD would have produced an annual report on the data to submit to the state Legislature, and the pricing information then would have been posted online (California Healthline, 2/26/15).

Comments

According to "State of Health," sponsors of the bill hope that growing concerns about high drug costs will be enough to garner support for a revived version.

Chiu said, "Discontent with drug prices has reached a real breaking point."

He added, "I think sunlight on costs will help control costs," noting, "The data that we do know of [suggest] that many of these companies are spending billions of dollars marketing and advertising their drugs, and not as much as they suggest on research and development."

Meanwhile, insurers have wanted to see the bill pass because they face limits in how much of drug costs they can shift to consumers, "State of Health" reports.

Charles Bacchi, president and CEO of the California Association of Health Plans, "When it comes to high priced specialty drugs, the elephant in the room is how much those drugs cost America." He added, "At the end of the day, we have to buy these drugs."

Drugmakers oppose the bill, noting that money needed to comply with reporting requirements would be better used for development costs.

Priscilla VanderVeer, a spokesperson for Pharmaceutical Research and Manufacturers of America, said, "It's unclear how the bill will actually help patients in the long run," adding, "Once all this information is compiled, then what?" ("State of Health," KQED, 1/12).

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