California Governor Jerry Brown on Oct. 9 signed a legislation aimed at making drug pricing transparent.
Senate Bill 17, which was passed by the state Senate on Sept. 13, requires drugmakers to provide a 60-day notice to purchasers if prices are raised more than 16% in a two-year period. It applies to drugs that have a wholesale price of more than $40 for a 30-day supply.
The bill also requires health plans and insurers to file annual reports outlining how drug costs impact healthcare premiums in the state.
"Californians have a right to know why their medication costs are out of control, especially when pharmaceutical profits are soaring," said Brown.
The pharmaceutical industry has opposed the bill with the Pharmaceutical Research and Manufacturers of America, or PhRMA, strongly advocating against it.
"The legislation the Governor signed into law seriously jeopardizes the future of California's leadership in this innovative industry. Despite its intent, this law will neither provide meaningful information to patients nor lower prescription drug costs," said Gary Andres, senior executive vice president for public affairs at the industry trade group Biotechnology Innovation Organization.
Andres said the bill would delay or prevent future biopharmaceutical innovation by driving investment toward other industry sectors that are not "burdened with this type of misguided government intrusion."
Priscilla VanderVeer, deputy vice president of public affairs at PhRMA, wrote in August that the bill "calls for mounds of red tape and government reports that look only at the list price of a prescription drug rather than considering actual patient spending after negotiated discounts and rebates."