CA Drug Pricing Bill Set to Pass Despite Generic Concerns

September 19, 2017

A California bill aimed at curbing drug prices is about to be signed, despite concerns it will raise generic drug prices.

A California bill aimed at curbing high prescription drug prices is heading to California Governor Jerry Brown (D) to sign-despite concerns from both consumers and health organizations that it will raise generic drug prices.

Senate Bill 17, approved by the state senate in mid-September, would require pharmaceutical companies to notify health insurers and government health plans at least 60 days before scheduling any prescription drug price hikes that would exceed 16% over a two-year period. If approved by Brown, it would require drug companies to explain the reasons behind price increases.

California Sen. Ed Hernandez, (D-West Covina), the main author of the bill, believes similar legislation should be passed nationwide.

“Although this state legislation was passed in California, it’s a monumental achievement for the entire nation. If signed into law, S.B. 17 will set national health-care policy, having impact for consumers and providers in other states,” Hernandez said, in a statement.

The bill was strongly opposed by the pharmaceutical industry-including generic drug manufacturers. A survey commissioned by the Association for Accessible Medicines (AAM) found that a majority of California consumers don’t support the legislation.

“It’s unfortunate that lawmakers chose to score political points instead of addressing patients’ concerns with access and affordability to medicine,” said Priscilla VanderVeer, spokeswoman for the Pharmaceutical Research and Manufacturers of America, in a statement.

The AAM

, conducted by Market Probe, found that 66% of California consumers oppose the legislation. A majority of consumers initially supported S.B. 17,  but when presented with statements about the potential impacts it would have on generic drug makers and therefore on the patients who rely on generic medications, “a substantial number of those initial supporters would no longer support the bill as is, and felt that generic and brand manufacturers needed to be treated differently,” Market Probe said in a memo.

“The primary reasons were the possible increase in generic medication because it will harm patients, especially the elderly and low-income, who rely on low-cost generic prescription medications,” Market Probe wrote.

“Generic drugs have been lowering health care costs in California for decades,” said Carrie Hartgen, Vice President of State Government Affairs for the AAM. “We all want to find ways to reduce the financial burden of health care, but S.B. 17 will likely increase that burden on the millions of Californians whose health and wellness rely on low-cost generic prescription drugs.”

S.B. 17 will increase generic drug manufacturers’ costs by requiring all drug makers to provide a 60-day notice for price increases over a specified threshold, among other regulations. Relying on percentage price increase policies, as S.B. 17 does, will place disproportionate burdens on the generics industry, AAM said.

“As it is written, the policy aims at branded drug makers, and does not take into consideration the unique pricing structures and market dynamics that shape the generics drug industry,” AAM said.

The generic pharmaceutical sector is already facing “enormous business challenges that undermine the industry’s ability to continue delivering the historical level of savings to date,” Hartgen said. “The fundamental premise and operational impact of S.B. 17 will only make this worse.”