Fair Warning Before Rx Price Increases?

State Bill Would Require Pharmaceutical Companies to Give 60-Day Notice

Paul Wellman (file)

Both of Santa Barbara’s representatives in the statehouse expressed support ​— ​albeit qualified ​— ​for a bill that would require pharmaceutical companies to announce 60 days in advance significant price increases for prescription drugs. Both State Senator Hannah-Beth Jackson and State Assemblymember Monique Limón have voted for Sentate Bill 17, authored by State Senator Ed Hernandez, an Azusa Democrat with aspirations to become lieutenant governor.

Both described the bill as a good first step, but both questioned how much real impact it would have on keeping pharmaceutical prices in check. “This is a very modest bill, but the insurance industry is fighting it tooth and nail,” said Jackson. “I wish it were stronger, but even in its modesty, it will make a difference.” Limón likewise commented she wasn’t sure there was evidence the bill “would” make a difference on prices, but she said “the evidence is there that it might.”

If signed into law, the bill would require pharmaceutical companies to announce in advance any price increases in excess of 10 percent over two years. This information, Limón said, could be helpful for insurance providers in negotiations with drug manufacturers. The public would not have direct access to this information, she said. Instead, the public would have access to an annual report that listed the impact of price increases in the aggregate, not for individual formulations.

Hernandez’s bill has been fueled by national spikes in pharmaceutical revenues of 12.4 percent and 9 percent in 2014 and 2015, respectively, not to mention a 535 percent spike in the price of EpiPen ​— ​medication crucial to those experiencing severe allergic shock ​— ​between 2007 and 2014. Pharmaceutical representatives claim the bill is the legislative equivalent of industry “shaming” and have objected that the prices listed for prescription drugs often have little to do with the discounted prices insurance providers actually pay.


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