Capitol Alert

Drug companies win round over pricing in California Legislature

SB 1010 hearing in Assembly Appropriations Committee

Assemblywoman Lorena Gonzalez, D-San Diego, describes Assembly Appropriations Committee amendments to SB 1010 on Thursday, Aug. 11, 2016. The measure's author, state Sen. Ed Hernandez, D-Azusa, pulled the bill Wednesday, complaining that the chang
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Assemblywoman Lorena Gonzalez, D-San Diego, describes Assembly Appropriations Committee amendments to SB 1010 on Thursday, Aug. 11, 2016. The measure's author, state Sen. Ed Hernandez, D-Azusa, pulled the bill Wednesday, complaining that the chang

Legislation meant to discourage sharp increases in drug prices is dead for the year after the author pulled the measure Wednesday, blaming recent amendments that “have made it more difficult for us to accomplish our fundamental goal.”

The action caps weeks of intense lobbying over Senate Bill 1010. The legislation had emerged as a major end-of-session fight pitting politically influential labor unions, health plans and other groups against the powerful pharmaceutical industry. More than 100 drug companies, unions, health plans and others had reported lobbying on the bill during the first half of 2016.

“I introduced SB 1010 with the intention of shedding light on the reasons precipitating skyrocketing drug prices,” state Sen. Ed Hernandez, D-Azusa, said in a statement. “The goal was transparency, making sure drug companies played by the same rules as everyone else in the health care industry.

“After consulting with a broad coalition of working families, health advocates, health care providers, businesses, community organizations, and many others, I have decided to delay moving this legislation forward,” Hernandez said.

Health insurance companies have to report rate information to the state. Hernandez’s legislation was intended to detail the impact of prescription drug prices on health care premiums. In addition, drugmakers would have had to provide more information describing price increases.

The measure passed the full Senate in June and cleared the Assembly Health Committee earlier this month. But it ran into trouble in the Assembly Appropriations Committee, where it passed last Thursday only after significant amendments overseen by the panel’s chairwoman, Assemblywoman Lorena Gonzalez, D-San Diego. Those finally became public Wednesday.

The changes scaled back requirements for notifying the Legislature about price increases, kept pricing information confidential until manufacturers reveal it, and raised the threshold that would trigger price increase disclosure, among other changes.

Hernandez and backers of SB 1010 said they will try again. The current legislative session ends Aug. 31.

“It is hugely disappointing that Big Pharma’s avalanche of lobbying led to a bill stripped of meaningful provisions that was ultimately useless in shining a spotlight on drug pricing,” Art Pulaski of the California Labor Federation said in a statement.

Drug industry critics, though, said the measure would have led to stockpiling of drugs and noted that a drug’s shelf price often does not reflect the actual cost paid because of various purchase discounts.

California voters will see a separate drug price proposal on the ballot in November.

Proposition 61 would prohibit the state from paying more for prescription drugs than the U.S. Department of Veterans Affairs. Supporters of the measure, sponsored by the Los Angeles-based AIDS Healthcare Foundation, had raised $9.1 million through Monday. Drug companies have given more than $70 million to the opposition campaign.

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