New Law Challenges ‘Evils’ Of Pharma Profits, California Governor Claims



New Law Challenges ‘Evils’ Of Pharma Profits, California Governor Claims


“Health coverage premiums directly reflect the cost of providing medical care, and prescription drug prices have become one of the main factors driving up these costs,” said Charles Bacchi, CEO of the California Association of Health Plans. “SB 17 will help us understand why, so we can prepare for and address the unrelenting price increases.”

Drug companies criticized the governor’s move, saying the new law focuses too narrowly on one part of the drug distribution chain — and ultimately won’t help consumers afford their medicine.

“There is no evidence that SB 17 will lower drug costs for patients because it does not shed light on the large rebates and discounts insurance companies and pharmacy benefit managers are receiving that are not always being passed on to patients,” said Priscilla VanderVeer, spokeswoman for the Pharmaceutical Research and Manufacturers of America.

Indeed, some experts have said transparency alone is not enough to bring down drug prices, and that California’s law may lack the muscle being applied in other states to directly hold drug prices down.

This year, at least two states have passed laws that may have a more immediate effect on consumer costs than the California measure. Maryland and New York, for example, adopted bills that use a variety of legal levers to impose financial penalties or require discounts if prices are too high.

But other policy experts argue that California’s law is part of a broader campaign to adopt stronger drug price measures across the country. So it makes sense to start with the source of the drug prices: the drugmakers themselves, said Gerard Anderson, a health policy professor at Johns Hopkins Bloomberg School of Public Health who tracks drug legislation in the states.

“The manufacturers get most of the money — probably about three-quarters or more of the money that you pay for a drug, and they’re the ones that set the price initially,” he said. “So they are not the only piece of the drug supply chain, but they are the key piece to this.”

California Healthline Sacramento correspondent Pauline Bartolone contributed to this report. 

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