Victory in California! Drug Price Transparency Bill Becomes Law

After a long, tough fight with drug companies, consumers in California can rejoice. Yesterday, California Governor Jerry Brown signed SB 17, a drug price transparency bill, into law.

In his statement, Brown said there is "real evil when so many people are suffering so much from rising drug prices...The essence of this bill is pretty simple. Californians have a right to know why their medical costs are out of control, especially when the pharmaceutical profits are soaring...This measure is a step at bringing transparency, truth, exposure to a very important part of our lives -- that is the cost of prescription drugs." The new law will go into effect on January 1st, 2018.

The law's goal is make drug prices for both private and public health plans more transparent in California. It would do so by requiring drug companies to give health insurers and government health plans at least sixty days' warning before prescription drug hikes that would exceed 16% over a two-year period. Drug companies will also have to provide reasons behind the price increases. Big Pharma strongly opposed the bill and spend millions of dollars on lobbyists and advertising to defeat it, partly because of a fear that it will be the first step toward drug price controls, and partly because they don't want consumers to have accurate information.

But all their efforts were in vain, and consumers will be much better off. Drug prices have been skyrocketing over the past decade, and policymakers want to take action to reduce them. One of the major problems has been a great lack of information on drug prices, what contributes to their increase, and who is responsible for the harm to consumers. The passage of SB 17 shows that transparency bills are not doomed to defeat, it will give officials and consumers helpful tools for further reforms, and it will shine a spotlight on egregious abuses by Big Pharma.