California drug pricing transparency law hailed as success

Supporters of SB 17 are hailing the drug pricing transparency law a success today after several manufactures sent required notices in the last few weeks that they are rescinding previously announced price increases. As reported by Bloomberg.com, NovartisGilead Sciences Inc.Roche Holding AG, and Novo Nordisk A/S sent notices to California health plans in the last three weeks rescinding or reducing previously announced price hikes on at least 10 drugs.

In response to the news, Health Access CA tweeted,

“Thanks to the hard work of many, including @SenatorDrEd22 @healthaccess @CaliforniaLabor @unitehere, #SB17 is yielding some reductions in prescription drug prices! But there is still plenty of work to make our prescriptions more affordable for all consumers.”

Prescription drug cost advocacy group RunawayRX joined stating,

“New data shows that #SB17 and the nationwide fight for #Rx transparency is working. Following #SB17 passage drugmakers have cancelled/reduced planned price hikes on at least 10 drugs. Transparency works.”

The law was signed by Governor Jerry Brown on October 9, 2017, and requires drug manufacturers to notify purchasers of prescription drugs at least 60 days in advanced if they plan to increase a drug price by more than 16 percent in a two year period.  Additional reporting requirements of the bill are still being implemented, but as of January 1, 2018, the Office of Statewide Health Planning and Development (OSHPD) has maintained a registry of over 150 public and private purchasers for purposes of the 60-day advance notice requirement. Beginning January 1, 2019, OSHPD will begin collecting pricing information on new drugs and will begin publishing reports of the reported information later in the year.

Opponents of the law, fought fiercely to prevent its passage hiring lobbyists and spending a reported $16.8 million. Following its passage, national prescription drug lobby group PhRMA filed suit challenging the constitutionality of the bill claiming that it unfairly targets drug manufacturers as the principle drivers in high prescription drugs costs. However, the court did not halt the law’s implementation.

The news of the rescissions comes a day after drug manufacturer Pfizer announced it would delay planned price increases after being called out by President Trump. Critical of the rising costs of prescription drugs, the President announced his Blueprint to Lower Drug Prices on May 30, 2018, which includes some new transparency measures.

Prescription drug price transparency laws have been enacted in Oregon and Vermont and are pending in several other states. Despite supporters’ claims of success, it remains to be seen if transparency reporting requirements will have a long-term effect on rising drug prices.