RELEASE: Drug Pricing Transparency Bill Heads to the Senate Floor for a Vote

May 27, 2016

SB 1010 Shines a Light on Drug Prices 

SACRAMENTO – Authored by Senator Ed Hernandez, O.D. (D-West Covina), Senate Bill 1010, which provides transparency in drug pricing, passed out of the Senate Appropriations Committee today.

“Shining a light on drug prices is crucial in order to drive change in the health care system,” said Senator Hernandez. “When drug companies raise drug prices in the shadows, everyone is impacted, from consumers to purchasers. The public deserves access to affordable health care and SB 1010 is one mechanism to make that happen.”

Sponsored by the California Labor Federation and Health Access California, SB 1010 requires drug makers to give prior notice to purchasers before raising prices and requires health plans to report the proportion of the insurance premiums that is spent on prescription drugs.

-      Ensures Advanced Notice for Pricing

o   Drug makers must notify public and private purchasers before significant increase in prices

o   Drug makers must justify those price increases and provide previous price increases for their products.

-      Records Drug Spending Information

o   Health plans must report information on drugs purchasing trends, including the most prescribed, the most expensive, and the highest increases in spending.

o   Health plans must report the percentage of premiums spent on drugs and premium changes related to drug spending

-      Offers Access to Spending Data

o   Regulators must issue public reports on cost drivers and drug spending

o   Lawmakers must hold annual hearings on drug pricing

Millions of Californians now have access to coverage under the Affordable Care Act (ACA), which makes controlling costs in the healthcare system critical. Lawmakers and stakeholders recognize that requiring people to have healthcare coverage comes with the responsibility to make it affordable, and that means shedding some much needed light on drug prices.

“Other sectors of the healthcare system, such as hospitals, plans and providers, are required to be open with pricing in order to help control cost increases,” said Senator Hernandez. “The pharmaceutical industry is the only major sector of the healthcare system that doesn’t follow the same rules. SB 1010 levels the playing field by requiring drug companies to have the same transparency requirements.”

For more information on SB 1010, please visit http://sd22.senate.ca.gov/sb1010.

What Others Are Saying

Organizations representing a diverse set of Californians are standing up in support of SB 1010:

“Every dollar that goes to pay for health care benefits for workers is a dollar that is not going into their pockets in wages. Prescription drug price increases are driving health care costs and we have to address this problem now.” – California Labor Federation (Sponsor)

“Public anger is building on the issue of prescription drug costs -- whether it is hiking the prices for decades-old drugs, or the extreme costs of some new medications. More and more patients and payers are questioning these drug costs, and politicians will ignore that public anger at their peril." – Anthony Wright, Health Access California (Sponsor)

 “California has made significant gains in reducing our state’s number of uninsured over the past several years, but to sustain this progress we must address affordability and the underlying costs that impact the price of coverage.” – Los Angeles Area Chamber of Commerce

“SB 1010 is a greatly needed and long overdue piece of legislation.” – California School Employees Association

“Access to quality MS care is currently hampered by high and escalating prices of disease modifying drug treatments.” National Multiple Sclerosis Society

“This bill will help our trust funds, our members, and all Californians better understand pharmaceutical pricing and provide them with the tools to diminish or avoid price-gouging.” – Laborers' International Union of North America

“Spending increases driven by high and growing drug prices will eventually affect all Americans in some way. Those with private health insurance will pay higher premiums and cost sharing for their health care coverage. Over time, it could also lead to higher taxes and/or cuts to public programs to accommodate increased government spending.” AARP

“The 90,000 nurses of the California Nurses Association are pleased to support SB 1010 (Hernandez) Drug Pricing Transparency, to promote transparency in the health care system...” California Nurses Association

“SB 1010 protects competition and offers a reasonable level of transparency while also ensuring drug manufacturers can keep proprietary information confidential.” Small Business Majority