Pharma lobby group sues Calif. over law requiring notice of drug price increases

By Ray Downs  |  Dec. 10, 2017 at 6:59 PM
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Dec. 10 (UPI) -- A lobbying group for pharmaceutical companies sues the state of California Friday over a law that requires drugmakers to notify the state and health insurers of drug price increases.

The Pharmaceutical Research and Manufacturers of America argues that California's Senate Bill 17, which was signed into law by Gov. Jerry Brown in October, "attempts to dictate national health care policy related to drug prices in violation of the United States Constitution, singles out drug manufacturers as the sole determinant of drug costs despite the significant role many other entities play in the costs patients pay and will cause market distortions such as drug stockpiling and reduced competition," according to a statement by the lobbying group.

SB 17 is scheduled to go into effect Jan. 1, 2019. The bill is intended to provide more transparency about drug price hikes by requiring drug manufacturers to give notice and justification when they raise prices more than 16 percent over a two-year span.

James Stansel, the vice president of PhRMA said Friday that the "law creates bureaucracy, thwarts private market competition, and ignores the role of insurers, pharmacy benefit managers and hospitals in what patients pay for their medicines."

According to NPR, the bill passed in September with broad support from consumer groups, hospitals and health insurers.

But pharmaceutical groups strongly opposed the bill, spending more than $16 million in a losing effort to defeat it.

Upon signing the bill in October, Brown hailed the legislation as a way to keep pharmaceutical price-gouging in check.

"Californians have a right to know why their medical costs are out of control, especially when pharmaceutical profits are soaring," the Democratic governor said. "This measure is a step at bringing transparency, truth, exposure to a very important part of our lives, that is the cost of prescription drugs."

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