Dive Brief:
- State legislators in California will hold a hearing Wednesday to consider a bill requiring pharmaceutical companies to report price increases of 10 percent or more in any 12-month time period, Stat reports.
- Introduced by Democratic state Senator Ed Hernandez, the bill would also require companies to provide justifications 30 days ahead of time for price increases of drugs with list prices greater than $10,000.
- This is the latest example of states trying to force drug makers to adopt more pricing transparency. Other states, including New York and Massachusetts, have attempted similar efforts. A bill under consideration in Massachusetts would require drug makers to disclose both price and general pricing data.
Dive Insight:
Give the size and stature of California, legislation like this current bill could send signals to other state legislatures considering similar moves.
The California Labor Federation, along with the insurer trade group America's Health Insurance Plans, have both come out in favor of the proposed bill, according to Stat. Not surprisingly, the Pharmaceutical Researchers and Manufacturers of America (PHrMA) opposes the bill. In a letter sent to Senator Hernandez, the heavyweight industry group said the reporting requirement would be too broad and represent a "significant and disproportionate burden" on small and mid-size companies.
Meanwhile in Massachusetts, lawmakers have been debating the merits of a bill proposed by Democratic state Senator Mark Montigny. The bill aims to control costs and promote price transparency, and has sparked debate on pharmaceutical innovation, healthcare costs, and what constitutes proprietary information.
PhRMA has weighed in on each bill presented in state legislatures, and typically emphasizes how R&D costs also include the many drug development failures which balance out the notable successes. Bills like the ones under consideration in CA and MA are a legislative offshoot of the wider, and often contentious, debate between drugmakers, patients, and payers over appropriate drug pricing levels.