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New California law forces Pharma to justify price hikes

Written by Diane Archer

Kaiser Health News reports that last week, California Governor Jerry Brown signed a major drug transparency law for the state. The goal is to help the public get a handle on why it is necessary for pharmaceutical companies to be raising drug prices so much each year as well as to address increasing income inequality. But, unlike the laws in New York and Maryland, the California law does not empower the state to rein in drug prices.

The law forces Pharma publicly to justify price hikes of 16 percent or more over two years. The law applies to all drugs with a wholesale cost of $40 or more. ¬†Pharmaceutical companies must give state agencies and insurers 60 days’ notice of their proposed price hikes.

The piece of the law requiring notice to state agencies and insurers takes effect on January 1, 2018. The piece of the law requiring public justification of price hikes does not take effect until 2019.

The law also requires insurers to report how much of the year’s premium increase is attributable to drug prices.

Pharma’s response to the law–which drug manufacturers spent millions of dollars and hired 45 lobbyists to oppose–is to point the finger at health insurers¬†and pharmacy benefit managers as the businesses responsible for high drug prices. Drug companies would like to pretend that they are somehow not responsible for the big rebates they pay businesses and insurers to promote their drugs over other often less costly drugs. Pharmacy benefit managers and insurers pocket these rebates, as much as they can, and do not pass them on to patients.

If you’d like Congress to rein in drug prices, please sign this petition.

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