California passes Drug Price Reporting & Transparency Bill

The California State Assembly on Monday overwhelmingly approved Senate Bill 17, controversial legislation that could soon become the USA’s most comprehensive law aimed at shining a light on prescription drug prices, according to local media reports.

Among other things, the bill would require a manufacturer of a prescription drug with a wholesale acquisition cost (WAC) of more than $40that is purchased or reimbursed by specified purchasers, including state agencies, health care service plans, health insurers, and pharmacy benefit managers, to notify the purchaser of an increase in the wholesale acquisition cost of a prescription drug if the increase in the WAC for a course of therapy, as defined, exceeds a specified threshold. The bill would require that notice to be given at least 60 days prior to the planned effective date of the increase.

SB 17, authored by Senator Ed Hernandez, Democrat-West Covina, and co-authored by Assemblyman David Chiu, Democrat-San Francisco, aims to make drug prices for both public and private health plans more transparent. It would enable health insurers to negotiate lower prices for drugs or, in many cases, replace those drugs with cheaper alternatives, according to its supporters.