PhRMA files lawsuit over drug transparency bill

Last Friday, PhRMA filed a lawsuit in US District Court challenging the constitutionality of Senate Bill 17. The lawsuit names Governor Brown and Robert David, Director of the Statewide Health Planning and Development Office as defendants.

SB 17 aims to make drug costs more transparent, requiring pharmaceutical companies to notify the Department of Managed Health Care or the Department of Insurance if the price of a drug will increase by 16 percent over a two-year period. The departments must be notified at least 60 days before the scheduled price increase and the pharmaceutical company must explain the reasons behind the increase.

In a press release, PhRMA argues:

SB 17 attempts to dictate national health care policy related to drug prices in violation of the United States Constitution, singles out drug manufacturers as the sole determinant of drug costs despite the significant role many other entities play in the costs patients pay, and will cause market distortions such as drug stockpiling and reduced competition.

PhRMA wants the court to permanently prohibit California from enforcing certain provisions of SB 17 that it believes are unconstitutional.

The bill’s author Senator Ed Hernandez said in a statement:

This lawsuit is just another example of Big Pharma refusing to accept any responsibility for the skyrocketing costs of prescription drugs. The idea that anyone other than drug companies is responsible for price increases is absurd. I’m confident the law will be upheld.

James Stansel, PhRMA’s Executive Vice President and General Counsel said:

In this time of great innovation and advancement in therapies, we understand how important it is for patients to have affordable access to the medicines they need, but SB 17 is not only poorly conceived, it also misses the mark with its myopic focus on manufacturers and provisions that are in clear violation of the Constitution. The law creates bureaucracy, thwarts private market competition, and ignores the role of insurers, pharmacy benefit managers and hospitals in what patients pay for their medicines.

Governor Brown signed the bill into law in October and the bill is scheduled to go into effect next month.