PhRMA lawsuit against drug pricing transparency dismissed

On Thursday a US District Court judge dismissed a lawsuit filed by PhRMA that challenged the constitutionality of SB 17, the drug pricing transparency law passed last year by the California Legislature.

The law, which was introduced by Senator Ed Hernandez, requires prescription drug companies to provide 60 day advance notice and explanation for any price hike of more than 16% in a two year period.  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.

SB 17 passed last year in response to consumer outrage over spiking costs for some prescriptions, including Hepatitis C medications and EpiPens to control allergic reactions, some prices increasing as much as 400%. PhRMA fiercely opposed the law before its passage as an over reach of the state’s power to regulate trade and commerce.

In the lawsuit, PhRMA argued that SB 17 is an unconstitutional attempt to dictate national health care policy related to drug prices, 2) singles out drug manufacturers as the reason for high drug costs, and 3) will lead to drug stockpiling and reduced competition. The judge dismissed the lawsuit based on PhRMA’s failure to show the court had jurisdiction to hear the case.

Several supporters of SB 17 pointed to the law’s success when in July four prominent pharmaceutical manufacturers announced out in a three week period that they were rescinding or reducing previously announced price increases after having given the notices required by the law. Prescription drug price transparency laws have been enacted in Oregon and Vermont and are pending in several other states.

In a statement  Sen. Hernandez praised the dismissal.

“I have spent my entire Legislative career working towards access to affordable, quality health care for every Californian. Towards this goal, SB 17 shines a light on prescription drug spending and will help normalize prices for one of the biggest drivers of health care costs.

“That’s why I’m extremely thankful that PhRMA’s lawsuit was just thrown out by the U.S. District Court. As I have said time and time again – Big Pharma should simply lower the cost of prescription drugs so that everyone can afford life-saving medicine.”

Anthony Wright, Executive Director of Health Access California, added,

“The judge was right to dismiss PhRMA’s quest to keep consumers in the dark about their prescription drug prices. Instead of working to implement the law, they instead chose to spend millions to file a lawsuit to prevent Californians from knowing when and why their prescription drugs prices keep skyrocketing. We’re glad the court saw their arguments as baseless as California consumers do.

“While PhRMA rakes in huge profits, working families are struggling to pay for their necessary medications. It’s time for PhRMA to stop hiding and start doing what’s right for the people who need access to affordable, life-savings prescription drugs.”