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Drug Costs, Restrictions Get Hearing

Specialty pharmaceuticals took the stage at the Assembly Committee on Health yesterday with discussion — and approval — of two bills addressing the rising costs of prescription drugs.

Prices for specialty drugs for the treatment of serious or chronic conditions have soared in recent years. Specialty drugs represent 3% of brand name drugs dispensed over the past five years, but they have accounted for 73% of drug spending growth, according to a committee bill analysis.  

AB 339, by Assembly member Rich Gordon (D-Menlo Park), would place limits on how much health plans can charge enrollees for outpatient prescriptions. Under the bill, outpatient drug costs paid by members would be capped at 1/24th of the annual out-of-pocket limit for a 30-day supply. AB 339 also requires health plans to use specific formulary tiers. The committee approved the bill with a vote of 11-5.

Gordon said the bill would “ensure Californians are able to better afford prescription drugs.” He conceded that while the bill could lower drug costs in the short-term, it doesn’t address the underlying root causes of rising drug costs.

Supporters include Consumers Union, Health Access California and patient advocacy groups. Opponents include health plans, drug manufacturers and pharmacy benefit managers.

Opponents said the influx of newly insured because of the Affordable Care Act is disrupting the health insurance marketplace to such a degree that more time is needed before setting further limits on drug cost-sharing.

“We need to let the dust settle before we go forward,” said Assembly member Rocky Chavez (R-Oceanside).

The committee also passed AB 374, by Assembly member Adrin Nazarian (D-Van Nuys), that would allow prescribing physicians to “override” health plan rules on so-called step therapy — the term used for trying less expensive drugs before prescribing brand name or more expensive drugs. Nazarian said the duration of each step can last 90 days in some cases, preventing patients from getting medications in a timely manner. The bill passed on a 14-4 vote.

An anticipated bill, the Pharmaceutical Cost Transparency Act, AB 463, by Assembly member David Chiu (D-San Francisco), was changed to a two-year bill and will be heard next year. That bill would have required pharmaceutical companies to publicly disclose the details on the factors that go into pricing expensive prescription drugs, including the costs of marketing, research and development.

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