The Mercury News – Editorial: Californians deserve transparency in prescription drug pricing

September 7, 2017
By Mercury News Editorial Board

Californians now pay more for their prescription drugs than they do for their doctors. The state spent a whopping $4 billion on drugs in 2015, and pharmaceutical companies are pushing another 12 percent increase in 2017.

The skyrocketing costs are unsustainable. The Legislature has to pass state Sen. Ed Hernandez’ SB 17 and force drug makers to provide information about how they price their products.

The bill passed the Senate in May and faces a key vote on the Assembly floor Monday. The powerful Big Pharma lobbying arm is working overtime to kill the legislation, as it did in 2016: If California passes the bill, it will provide momentum for other states, and possibly the federal government, to pass similar legislation.

A close vote is expected. Hernandez has used the past year to attract bipartisan support for his common-sense approach. Billionaire Tom Steyer is providing financial support, and both labor unions and business groups have jumped on board, an impressive coalition.

Drug makers argue that the bill is a first step toward price controls that will decimate their research and development work. Pharmaceutical companies certainly deserve a reasonable return on their substantial investments in research and development.

But if they reveal a pricing strategy that seems justified, it could have the opposite effect, relieving the pressure for price controls. If the figures confirm that   companies now spend more on marketing than they do on actual R & D, well, that could be a problem for them. Much as we are amused by those ads with the twin tubs on a cliff.

Hernandez’ bill would require prescription drug companies to notify state health programs and private insurance companies 60 days before they raise the price of a prescription drug. The measure also requires that health plans and insurers notify state regulators of pricing information for the most costly drugs.

“We aren’t limiting how much they can charge,” said Hernandez. “What I’ve learned in the past two years working on this bill is the drug companies don’t tie price increases to value, effectiveness, research costs or even changes in manufacturing costs of a drug. We just want to give consumers a greater understanding of the costs.”

To read the rest of the editorial, click here.