In November, California voters defeated a聽聽that would have given state government more control over drug prices. It was a聽聽for pharmaceutical companies, which spent more than $100 million campaigning against the measure.
Now the industry is fighting new efforts by state lawmakers to impose regulations. Drugmakers are watching聽in particular. Instead of direct price controls, it calls for price transparency. Drug companies would have to announce large price hikes and give detailed justifications to explain why the prices are going up.
鈥淚f you can鈥檛 understand what鈥檚 going on, how could you possibly make efforts to change that?鈥� said Democratic Assemblyman聽, who chairs the Assembly Health Committee. Wood voted in favor of a similar drug price聽 last year that stalled.
Both last year鈥檚 and this year鈥檚 drug transparency measures were authored by the Senate Health Committee Chair, Sen. Ed Hernandez (D-West Covina). SB 17 is scheduled for a hearing in the聽聽on April 19.
Pharmaceutical manufacturers frequently argue that drug prices are high because it鈥檚 expensive to conduct the scientific research and development necessary to bring a drug to market.
But Wood says we can鈥檛 simply take their word on that.
鈥淚 would personally love to know how much they spend on advertising and marketing, versus how much they spend on R&D,鈥� he said.
Drug industry representatives and researchers visited the state Capitol last Wednesday to meet with lawmakers and underscore their contributions to the California economy. The pharmaceutical industry employs more people in California than in any other state, with 145,880 jobs, said Priscilla VanderVeer, a spokeswoman with聽
VanderVeer said SB 17 won鈥檛 do anything to help consumers.
鈥淚f the problem is that patients are having a hard time affording their medicines, which we know they are, then let鈥檚 come to the table and talk about solutions that can actually help them,鈥� she said.
VanderVeer said one problem is that consumers often must pay the full list price of a drug, even if they are insured.
鈥淥ftentimes when a patient goes to the pharmacy counter and they haven鈥檛 reached their deductible, or they have a coinsurance on their drugs, they鈥檙e paying that off the list price, not the negotiated rate their insurance has,鈥� she said.
VanderVeer says that doesn鈥檛 happen to insured patients in other parts of the health care system.
鈥淚 give the example of the hospital. You know the $350 X-ray that your insurance brings down to $50, and then you pay your cost-sharing off the $50. That鈥檚 not happening with your drugs, that鈥檚 not happening at the pharmacy counter,鈥� she said.
VanderVeer criticized the bill for ignoring other parts of the pharmaceutical supply chain that also affect prices.
鈥淵ou鈥檝e also got pharmacy benefit managers and insurers who negotiate the price significantly down 鈥� and then you also got wholesalers who purchase drugs directly and keep them in their warehouses and disseminate them to pharmacies. And then you鈥檝e got pharmacies,鈥� VanderVeer explained. She said those links in the supply chain account for one-third of the final price.
Assemblyman Wood agrees that California should pay more attention to聽. These companies act as middlemen, negotiating purchase contracts with drug manufacturers on behalf of health plans.
Wood has introduced a聽聽in the Assembly that would require pharmacy benefit managers to be licensed in California. The legislation would require the managers to disclose information about their business practices, including rebates and hidden聽arrangements that bring profit to them and force patients to unwittingly pay more for drugs.