The California Assembly will be considering legislation in just a few weeks holding drug makers accountable by demanding greater transparency in decisions leading to price increases. It’s a small, but necessary, step toward making health care more affordable, so pay attention when you hear about Senate Bill 17.
America’s Other Drug Problem, namely consumers all-too-often being gouged on the price of prescription drugs, has proven to be a tough nut to crack. “Everybody knows” drug prices are ridiculously high. Other developed nations average 41% of U.S. net drug prices (for the 15 companies marketing the 20 top-selling drugs).
Given that prescription drugs account for almost 10% of overall domestic health spending– totaling $263 billion annually– it’s no wonder 33 states have looked at legislation this year addressing some aspect of prescription drug pricing. Most bills will go nowhere. A much heralded 2016 law passed in Vermont requiring drugmakers to provide justification for drug price hikes has turned out to be a dud, thanks to poor wording companies have been able to exploit.
The Trump administration has ideas of its own in this area, namely rolling back limited drug price discounts for the poor thru for restrictions on the Medicaid 340B Drug Pricing Program. Populist solutions like negotiating Medicare prices and allowing U.S. citizens to buy drugs thru Canada are nowhere to be found in the administration proposal.
Senate Bill 17, introduced by State Senator Ed Hernandez, asks pharmaceutical companies to notify state health programs and private insurance companies at least 90 days in advance before significantly raising drug prices, along with describing any changes or improvements to the effectiveness of the drug causing the increase. It will not, as the drug companies will gladly tell you, lower any specific prices. It will, however, offer the public a glimpse into the processes leading up to drug prices.
Other components in health care have safeguards and transparency requirements concerning costing increases, but the pharmaceutical industry, with no such mechanisms in place, has been responsible for unsustainable increases in the cost of prescription drugs.
SB 17 has diverse support, with over 80 consumer, business, labor, local government and health care professional organizations advocating for its passage. Big Pharma is resolutely opposed, and spouting the usual hollow promises of gains to be had through private negotiations.
This legislation was approved by the State Senate in May and is awaiting consideration by the Assembly Appropriations Committee, headed up by San Diego Assemblywoman Lorena Gonzalez, when the Legislature returns to Sacramento later in August.
An attempt in 2016 to pass a similar law, SB 1010, ended with the bill being pulled from consideration by Sen. Hernandez after it went through the Assembly’s sausage grinder. Fundamental differences between consumer advocates and industry reps over implementation, on top of Big Pharma’s don’t-you-dare-regulate-us lobbying dollars, proved to be an insurmountable stumbling block.
Voters in 2016 also rejected Proposition 61 (54-46%) prohibiting State of California health care operations from buying any prescription drug from a drug manufacturer at price over the lowest price paid for the drug by the United States Department of Veterans Affairs.
Pharmaceutical companies (and their allies) coughed up more than $110 million to oppose Prop 61. They were able to exploit weaknesses in the actual legislation (and there were some ) to create enough doubt to overcome endorsements by Senator Bernie Sanders and an aggressive ground operation led by the California Nurses Association.
I looked up Prop. 61 in Ballotpedia as I was writing this morning and was surprised to find myself quoted:
San Diego Free Press and OB Rag endorsed Proposition 61 and cited Doug Porter, who said, “I think I’m gonna send a message to Big Pharma and go with the protest vote. The chances of the legislature or congress doing anything that would offend their financial overlords are slim and none. Still, I doubt Proposition 61 will have the effect it promises.
A problem with trying to rein in Big Pharma is the complexity of the processes through which drugs are researched, tested, and marketed. The industry likes things the way they are and has a folder full of excuses at the ready designed to make us all very afraid any changes will have unintended consequences. Bottom line: despite the warm & fuzzy ads, there’s way too much evidence these folks could care less about anything other than the almighty dollar.
We’re supposed to believe Pharma knows best, ignoring the 127% increase in U.S. prices for top brand-name drugs between 2008 and 2014, compared with an 11 percent rise in a basket of common household goods, according to Express Scripts (ESRX.O), the largest U.S. manager of drug plans.
The argument about lower drug prices outside the U.S. hurting research has been thoroughly debunked: High U.S. prices have been proven to be fueling corporate profits, not industry research.
And how can we forget the marketing? A recent ProPublica story on NPR concerns drug companies peddling their wares directly to sitting judges in drug courts. In Kentucky, OxyContin maker Purdue Pharma is fighting attempts to reveal secret records regarding the marketing of the powerful prescription opioid.
Big pharma is not your friend. And in case you didn’t notice, they were silent when it came to TrumpCare versions 1, 2 & 3, even though millions upon millions of Americans would lose access to care, as the Fresno Bee pointed out in an editorial supporting California’s legislation:
Back in Sacramento, drug companies fight to kill Senate Bill 17, which would force some transparency in drug pricing. The bill by Sen. Ed Hernandez, D-West Covina, is expected to face a final vote when legislators return in August. It would apply to drugs that cost more than $40 a month and would require drug companies to issue 60-day notices when they intend to raise prices by more than 10 percent over a two-year period. It seems perfectly reasonable, so much so that Sen. John McCain, R-Ariz., working with congressional Democrats, has introduced similar legislation.
In a letter supporting SB 17, the California Public Employees’ Retirement System wrote that it spent $2.1 billion on prescription drugs in 2015, 26 percent of the $8 billion it spent on health care. More alarming, CalPERS’ cost of specialty drugs, generally high-priced and complex biologics, more than doubled to $587 million in 2015 from $270 million in 2012. Greater transparency “will help large group health plan purchasers like CalPERS understand the impact of drug pricing on overall health care costs,” the letter says.
Drug companies contend SB 17 would do nothing to reduce prices. Legislators should listen to their critique. They should also take it for what it’s worth, knowing that on the most critical health care issue of our time, the future of the Affordable Care Act, drug companies have nothing to say.
The Pharmaceutical Research and Manufacturers of America is warning legislators directly, saying in a letter that the bill would do nothing to help patients and could lead to drug shortages that would harm “rural and disadvantaged communities.”
The drug industry’s op-eds opposing SB 17 rely upon sowing fear about a quarter million California jobs being jeopardized, venture capital going elsewhere, and legislators’ fundamental misunderstanding of the drug development process.
The Sacramento Bee op-ed, penned by Paul Hastings (CEO of OncoMed Pharmaceuticals in San Francisco) and Steven Mento (CEO of Conatus Pharmaceuticals in San Diego) ends with the industry’s Kumbaya plea:
If the key players sit down and work together, we can craft a solution that addresses drug affordability without killing investment, jobs and hope for patients who rely on our state’s bioscience companies to discover the next miracle cure.
Riiight. The drug industry seems oblivious to the issue of trust, as in ‘Why should we?’ Big Pharma’s proven track record of directing their dollars into marketing, lobbying and breathtakingly high CEO pay tells me all I need to know for now.
NextGen California is among those leading the push to make sure SB 17 gets through the Assembly. Do take a moment to to use their handy-dandy letter writing tool to let your Assemblyperson know their support for SB 17 is important to you.
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