Governor Brown Signs Legislation to Increase Transparency in Prescription Drug Pricing


10-9-2017

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SACRAMENTO – Working to increase transparency in prescription drug pricing, Governor Edmund G. Brown Jr. today signed legislation – SB 17, authored by Senator Ed Hernandez (D-West Covina) – requiring pharmaceutical companies to give notice before hiking prices.

“Californians have a right to know why their medication costs are out of control, especially when pharmaceutical profits are soaring,” said Governor Brown.

SB 17 requires drug manufacturers to provide a 60-day notice if prices are raised more than 16 percent in a two-year period. The bill applies to drugs that have a wholesale price of more than $40 for a 30-day supply. SB 17 also requires health plans and insurers to file annual reports outlining how drug costs impact health care premiums in California.

“Drug companies abuse their market power by jacking up prices, and the public is looking to their government for help,” said Senator Hernandez. “Requiring drug companies to provide advance notice and some explanation for large price hikes is a step toward a more stable and predictable prescription drug marketplace. Sometimes even a modest change brings about big results. Transparency will make drug companies pause and consider whether drastic price increases are appropriate. I want to thank Governor Brown for signing this bill.”

“Senator Hernandez has been a tenacious author who understands that escalating drug costs are an immediate crisis that needed solutions this year, regardless of other health care challenges we face,” said Assemblymember Jim Wood (D- Healdsburg), a principal co-author of SB 17. “Once we knew that for the first time, as a percentage of health care premiums, drug costs exceed what we pay for doctors, something had to be done. I was honored to play a role in this bill’s passage and am inspired to continue the fight on behalf of patients.”

“Today we are one step closer to helping patients, governments, and businesses understand why drug prices are so high - and to using that information to bring those costs down,” said Assemblymember David Chiu (D-San Francisco), a principal co-author of SB 17. “I applaud the leadership and courage of Governor Brown, Senator Hernandez, my fellow co-author Assemblymember Jim Wood, and the broad coalition of patients, consumers, employers, businesses, labor, and health advocates who worked tirelessly in recent years to get this legislation across the finish line. We need answers for the child who needs an Epi-pen, the Hepatitis C patient who needs Sovaldi, and the AIDS patient who needs Daraprim.”

“No longer will pharmaceutical companies get to spike our prescription prices by double digits without advance notice or explanation,” said Anthony Wright, executive director of Health Access California, a co-sponsor of SB 17. “This new California law sets national policy, breaking new ground to benefit patients and purchasers against unfair and unjustified prescription drug price hikes.”

“Senate Bill 17 being signed today is a resounding victory for working families across California, and the result of everyday Californians joining together to beat some of the most entrenched and powerful drug companies in the world,” said D. Taylor, president of UNITE HERE, an SB 17 co-sponsor. “This new law is the strongest prescription drug transparency law in any state in the country, and UNITE HERE won’t stop working until every person has the quality, affordable healthcare that every human has a right to.”

"We commend Governor Brown for signing into law the strongest bill in the country to bring much-needed transparency to prescription drug pricing," said Art Pulaski, executive secretary-treasurer of the California Labor Federation, a co-sponsor of SB 17. “Labor unions led the fight for SB 17 because skyrocketing prescription drug prices hurt working people, patients, the chronically ill and cost taxpayers billions of dollars. SB 17 isn’t just important for California, it’s a model for the rest of the country.”

“This pivotal moment marks a major victory for patients, healthcare providers, and local governments alike in the battle to rein in spiraling prescription drug prices,” said California Association of Health Plans president and CEO Charles Bacchi. “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. SB 17 will help us understand why so we can prepare for and address the unrelenting price increases.”

For full text of the bill, visit: http://leginfo.legislature.ca.gov.

Photo caption:

1.) Governor Brown signs SB 17. Photo Credit: Joe McHugh, California Highway Patrol. For a high-resolution copy of this photo, please contact Danella Debel, Office of the Governor at Danella.Debel@gov.ca.gov.

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