California passed a law requiring pharmaceutical companies to explain their price increases, escalating the state-by-state battle between lawmakers trying to bring more transparency to the industry's practices and drugmakers that oppose the efforts.
The California measure, signed Monday by Gov. Jerry Brown, is among the most aggressive state efforts to peel back the secretive process of setting drug prices in the United States. The law requires pharmaceutical companies to notify insurers and government health plans at least 60 days before a planned price increase of more than 16% during a two-year period, and to explain the rationale for the increase. The information will be available on a government website.
"Californians have a right to know why their medical costs are out of control," Brown said at a signing ceremony in Sacramento. "This measure is a step at bringing transparency, truth, exposure, to a very important part of our lives."
The law — like measures in other states — is expected to be a legal target by the industry.
Last month in Nevada, the industry's two major lobbying groups — Pharmaceutical Research and Manufacturers of America, of PhRMA, and the Biotechnology Innovation Association, or BIO — sued the state over a law requiring drug plan administrators to reveal rebates they get on diabetes drugs. In Maryland, the Association for Accessible Medicines, the trade association for generic drugmakers, challenged a state "price gouging" law, although a judge allowed it to take effect on Oct. 1.
Industry Opposition
In California, BIO and a lobby group for drug plans, the Pharmaceutical Care Management Association, opposed the legislation and spent millions of dollars on lobbyists and advertising as it worked its way through the state legislature.
