California Drug Price Transparency and PBM Bills Advance Out of Committee

State governments are growing more active on reducing drug prices. Last week, the California Senate Appropriations Committee passed two bills to encourage more affordable prescription drugs, and pharmaceutical companies and pharmacy benefit managers (PBMs) are running scared.

The first bill, SB 17, requires drug companies to to notify health plans and state purchasers such as the Prison Department of increases in the wholesale cost of drugs in writing at least 90 days before the new costs were to take effect. The bill also requires that health plans and insurers notify state regulators of pricing information for the most costly drugs. The second bill, AB 315, requires PBMs to obtain licenses from the Department of Managed Health Care, requires that PBMs have fiduciary duties to their health plan clients, and requires PBMs to disclose data regarding drug costs, rebates, and fees earned to their clients. Both bills are now headed to the Senate floor.

They have widespread support from consumer groups, union, and health care experts. Drug companies and PBMs are lobbying California legislators and urging them to vote against the bills. Similar bills have failed in the past, but Democratic State Senator Ed Hernandez thinks they have a better chance this year. Drug prices have continued to rise and harm Americans, drug companies and PBMs are unable or unwilling to do anything about it, and more Democrats and Republicans are interested in supporting the bills.

PRMA (Pharmaceutical Research and Manufacturers of America), the main drug lobbying group, is leading the opposition to SB 17. And PBMs claim the other bill, AB 315, will lead to higher drug costs and reduce the services PBMs can offer to employers. Their arguments are the same evasions and excuses we have heard before. They offer no solutions to the problem of skyrocketing drug prices, and make dire warnings about how these bills will destroy innovation.

State legislators should not fall for these old tricks. We hope the California legislature will pass both of these bills and take the first steps toward ensuring all Californians pay reasonable prices and get affordable medicines.