A Setback for Consumers Worried about High Prescription Drug Costs

Yesterday a CALPIRG-backed bill that would have required the prescription drug companies to disclose some of the factors behind their skyrocketing prices failed to pass out of the Assembly Health Committee. The pharmaceutical companies had heavily lobbied against the bill. 

Yesterday a CALPIRG-backed bill that would have required the prescription drug companies to disclose some of the factors behind their skyrocketing prices failed to pass out of the Assembly Health Committee. The pharmaceutical companies had heavily lobbied against the bill. 

Assembly Bill 463 would have required each manufacturer of a prescription drug sold in California with a wholesale cost of $10,000 or more per course of treatment to publicly report information including research and development costs, marketing and advertising costs, and company profits derived from the sale of the drug.

We made the case in our letter of support to the legislature that the bill was one of the many needed steps to protect consumers from high prescription drug costs. From our letter:  

“While the Affordable Care Act has successfully expanded coverage to millions of Californians who previously didn’t have insurance, we are concerned that maintaining and expanding health care coverage depends on affordable costs.The prescription drug industry made headlines last year for skyrocketing prices on new and old drugs. A recent report by AARP noted that that the average annual cost of a specialty medication used on a chronic basis exceeded $53,000 in 2013.  The Centers for Medicare & Medicaid Services recently posted a new online database with information on agency spending for medicines. Of the 80 medications in their database, more than half cost their users more than $10,000 annually.  A June 2015 poll from the Kaiser Family Foundation found that a large majority of the public (72 percent) view the cost of prescription drugs as unreasonable.”

We’re disappointed that this bill didn’t move forward, but don’t expect that the prescription drug companies are off the hook so easily. 

Assemblymember David Chiu promised to come back with a different bill, noting to the San Francisco Chronicle, “The need for action has become clearer with each shocking example of arrested drug company executives, congressional investigations and unsustainable retiree health expenses. Exploding specialty drug costs limit the availability of life-saving medication for people who are seriously ill and bust budgets for businesses and governments alike.”
 

We urge the legislature and Congress (who, unlike the state legislature, has the authority to regulate drug prices) to stand up to the prescription drug companies and adopt policies to end the price gouging of consumers. Those policies could include transparency measures like AB 463, an end to the practice of “pay for delay” – where drug companies pay off their competitors to delay the production of generic drug options, figuring out ways to give public and private entities greater negotiating power with the pharmaceutical companies, and rate regulation. 

Authors

Emily Rusch

Vice President and Senior Director of State Offices, The Public Interest Network

Emily is the senior director for state organizations for The Public Interest Network. She works nationwide with the state group directors for PIRG and Environment America to help them build stronger organizations and achieve greater success. Emily was the executive director for CALPIRG from 2009-2021, overseeing a myriad of CALPIRG campaigns to protect public health, protect consumers in the marketplace, and promote a robust democracy. Emily works in our Oakland, California, office, and loves camping, hiking, gardening and cooking with her family.