California governor signs drug transparency bill News
California governor signs drug transparency bill

California Governor Jerry Brown [official profile] signed a bill [text] on Monday aimed at making drug prices for both public and private health plans more transparent.

Beginning October 1, 2018, the California Office of Statewide Health Planning and Development [official website] will be required to collect data from manufacturers and report to the California Research Bureau [official website] specified changes in manufacturing and distribution, including increased drug prices. For all prescription drugs, Senate Bill No. 17 requires all qualified pharmacies to report: (1) “the 25 most frequently prescribed drugs;” (2) “the 25 most costly drugs by total annual plan spending;” and (3) “the 25 drugs with the highest year-over-year increase in total annual plan spending.”

Information from health plans and insurers will be gathered and reported to California’s Congress, allowing legislators to review the affect of drug costs on healthcare premiums in California. Primarily, the bill targets large and highly profitable manufacturers by imposing on them strict reporting responsibility:

A manufacturer of a prescription drug with a wholesale acquisition cost of more than forty dollars ($40) for a course of therapy shall notify each [qualified] purchaser if the increase in the wholesale acquisition cost of a prescription drug is more than 16 percent, including the proposed increase and the cumulative increases that occurred within the previous two calendar years prior to the current year. The notice required by subdivision (a) shall be provided in writing at least 60 days prior to the planned effective date of the increase.

California is one of many states to propose bills concerning the pharmaceutical industries transparency with legislators. At least 176 similar bills in 37 states [Reuters report] have been proposed in 2018. As the first state to pass such a bill, California may have sparked the beginning of similar nationwide legislative efforts.