Prescription Costs Transparency Bill Fails in Assembly Health Committee, But Fight Continues

Earlier today the California Assembly Health Committee failed to pass AB 463 (Chiu), a bill introduced last session that would have required greater transparency around the pricing of high-cost medications. Bill author David Chiu pulled the bill because he did not have enough votes, like last year, to get it through committee.  But, as he stated, this issue is not going away and additional efforts are expected this year.

Specifically, AB 463 would have required each manufacturer of a prescription drug costing more than 10,000 per year or per course of treatment to file a report each year with OSHPD (Office of Statewide Health Planning and Development) on the factors underlying the final price of the given drug, including:

  • production costs (research and development, costs of clinical trials and other regulatory costs, materials, manufacturing, administration and other costs like patents;
  • marketing and advertising costs (direct-to-consumer and focused on prescribers)
  • History of AWP and other pricing standards used by major payers
  • Total profit
  • Amount of financial assistance provided through patient assistance programs
  • Total costs of drugs that failed to succeed through the approval process—added in 2016.

For consumer, labor, and other groups backing the measure, including Health Access California, the quest for a more rational approach to prescription drug pricing has only just begun. From new treatments costing $1,000 a pill to huge price spikes for decades-old medications, Californians, too, are asking hard questions about why drugs costs so much. In recent polling by Kaiser Family Foundation this issue actually comes out on top, along with other issues we are working on like surprise bills and adequate provider networks.

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For CalPERS, the state’s largest buyer of prescription drugs and thus in best position to negotiate favorable pricing, specialty drug prices soared 32% just in the last year (for details see recent LA Times feature). With trends like this, the issues of pharmaceutical costs is clearly too big to just go away with one committee’s failure to act.

Health Access expects to see, and support, other policy efforts this year. Politicians ignore public anger over prescription drug costs at their peril.

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