Lawmaker Calls for Increased Transparency of Drug Costs

Legislation would require manufacturers to provide notice prior to increasing costs.

California state Senator Ed Hernandez (D-West Covina) recently proposed new legislation focused on increasing drug pricing transparency. This bill has garnered support from fellow Democrats and advocacy organizations.

Senate Bill 17 would promote drug pricing transparency by requiring manufacturers to provide notice prior to increasing prices, according to a press release. The legislation would also require health plans to report premiums spent on prescription drugs.

“We deserve transparency in drug prices because the prices drug companies charge for their products have nothing to do with effectiveness, research costs or even to changes in manufacturing costs,” Hernandez said. “The market for prescription drugs is badly broken. Patients who need access to a particular drug don’t have the option to forgo treatment or find another option when the price gets too high.”

Throughout the country, patients have faced financial barriers to accessing necessary prescription drugs. While drug manufacturers provide patients with rebates and discounts, Hernandez said that this practice does not allow patients to see the true cost of the drug.

In the latest drug pricing scandal, Marathon Pharmaceuticals placed an $89,000 price tag on their drug deflazacort (Emflaza) that was recently approved to treat Duchenne muscular dystrophy. However, this drug was long available as a generic in other countries, costing around $1000 per year.

“Californians deserve to know why their medicine costs so much,” said state Assemblymember David Chiu (D-San Francisco). “With the ACA’s health care gains under attack in Washington, DC, we must do everything we can in California to fight real health care challenges like the skyrocketing costs of prescription drugs. This bill will help lift the veil on soaring drug prices so we can identify meaningful strategies to ensure access to life-saving treatments. I look forward to working this year with Sen Hernandez and the broad coalition of advocates supporting SB 17.”

SB 17 is a reintroduction of SB 1010, with some alterations based on findings from last year, according to the release.

"Behind closed doors, corporate pharmaceutical executives make life-and-death decisions for millions of Californians,” said Tom Steyer, NextGen Climate president. “This important legislation will help protect our families by introducing transparency and fairness to pricing of essential, lifesaving medicines. It is an essential first step to rein in skyrocketing prescription drug prices."

The bill has also gained support from the California Labor Federation and Health Access California to ensure that residents are paying fair prices for their prescription drugs.

“Skyrocketing prescription drug prices are hammering working people and driving up the cost of health care for everyone,” said Art Pulaski, California Labor Federation executive secretary-treasurer. “When someone is struggling with a life-threatening disease, like cancer or diabetes, they should not have to make the choice between paying for treatment and paying rent. SB 17 brings much-needed transparency to prescription drug pricing to help lower drug prices and contain health care costs.”

Placing these constraints on pharmaceutical manufacturers through this bill would likely reduce costs due to increased transparency, according to the release.

“Pharmaceutical drug costs comprise a growing proportion of the more than $45 billion our members are spending on health care every year,” said Kristof Stremikis, Pacific Business Group on Health senior policy manager. “SB 17 will help us promote value-based purchasing strategies that will return significant savings to millions of California consumers.”

Similarly, HB 161 was introduced by Pennsylvania state Assemblyman Tony DeLuca (D-Allegheny), and would increase transparency among pharmaceutical companies. The law would require manufacturers to provide cost data for drugs that are more than $5000 per year/course of treatment, or those that have had more than a 25% price increase in 1 year.

Increased focus on drug costs has caused many legislators to introduce drug pricing transparency bills. However, targeting 1 group within the pharmaceutical supply chain may not have a substantial impact on drug costs as is expected. Due to the complex nature of the industry, many players are involved, which can drive up costs. Implementing more widespread transparency measures would likely drive down costs even further.

“As a physician I see the impact high drug prices have on patients first hand. The price of prescription drugs continues to rise in the United States and has become a strain on patients and families. The reality is that the current market for drugs in the US is broken” said Sameer Awsare, MD, FACP, Kaiser Permanente. “Price gouging in the prescription drug market has made prescription drugs less affordable and accessible. We view this as a threat to the health of our patients. This bill will bring much needed transparency to a broken market.”