- Industry body PhRMA is fighting against a drug pricing transparency law dubbed California's State Bill 17. PhRMA describes the law, which is designed to limit unnecessary drug price hikes, as "unprecedented and unconstitutional," and claims that it will distort the market.
- The complaint also claims that SB 17 attempts to dictate national healthcare policy relating to drug prices and therefore violates the constitution, and focuses solely on drug companies rather than other players in pricing.
- PhRMA is asking the United States District Court to permanently enjoin the state from implementation or enforcement of the law.
State Bill 17, which was authored by Senator Ed Hernandez, D-West Covina and signed by California Governor Edmund G. Brown Jr., requires pharma companies to give 60 days' notice for price hikes of 16% or more above the nationwide list price over two to three calendar years. The bill also asks for annual reports from health plans and insurers, stating the impacts of drug costs on California healthcare premiums. While this is something that payers and patients have been asking for, perhaps not unsurprisingly the biopharma industry isn't so happy.
Because this would essentially mean applying California's rules to a federally-defined and country-wide price, PhRMA argues that "SB 17 attempts to dictate national health care policy related to drug prices in violation of the United States Constitution, singles out drug manufacturers as the sole determinant of drug costs despite the significant role many other entities play in the costs patients pay, and will cause market distortions such as drug stockpiling and reduced competition."
"In this time of great innovation and advancement in therapies, we understand how important it is for patients to have affordable access to the medicines they need, but SB 17 is not only poorly conceived, it also misses the mark with its myopic focus on manufacturers and provisions that are in clear violation of the Constitution," said James C. Stansel, PhRMA EVP and general counsel. "The law creates bureaucracy, thwarts private market competition, and ignores the role of insurers, pharmacy benefit managers and hospitals in what patients pay for their medicines."`
In fairness to the industry, this could lead to complex pricing requirements that differ from state to state, making it hard for companies to remain compliant, and placing extra bureaucracy and administrative burdens onto companies.
It also does not address concerns about rebates and discounts given to insurance companies and pharmacy benefit managers that PhRMA contests are not always passed on to patients. This has been a debate between the two groups that has been ongoing for some time.