In the fight to keep health care costs down, this bill would drive up drug costs

Lawmakers and lobbyists are fighting over drug prices.
Lawmakers and lobbyists are fighting over drug prices. AP

In the debate over health care, employers, unions and many government officials agree on the need to provide affordable prescription drug coverage while increasing the quality of pharmacy benefits.


The Legislature is considering Assembly Bill 315 by Assemblyman Jim Wood, D-Healdsburg, which could lead to higher drug prices and reduce pharmacy benefit managers’ ability to offer the best services to employers.

The state Department of Finance opposes this bill, citing increased costs and possible unintended consequences. It notes that AB 315 could increase costs due to lower drug rebates secured by pharmacy benefit managers when they disclose price information in negotiations with pharmaceutical companies. The Federal Trade Commission also expressed concerns with this type of bill, noting disclosure requirements may result in less aggressive pricing or even collusion among pharmaceutical manufacturers.

Pharmacy benefit managers reduce drug costs by negotiating rebates and discounts from drug companies and drugstores. It’s too expensive and complicated for employers to match benefit managers. Drug manufacturers set drug prices, and pharmacy benefit managers keep drug costs down. Discounts, rebates and other price concessions on brand-name drugs reduced drug spending by about 28 percent in 2016.

As a clinician representing insurers and pharmacy benefit managers for more than 25 years, I know firsthand the importance of leveraging savings while ensuring that patients have the medications they need. Pharmacy benefit managers offer a variety of cost savings options, including home delivery of chronic medication, which helps consumers avoid multiple drugstore visits, and private counseling from pharmacists

As the debate unfolds on health care, it’s important to remember pharmacy benefit managers are part of the solution to lower drug costs and improve quality.

Edmund J. Pezalla, a consultant on payer strategy for pharmaceutical and device manufacturers, is a scholar at the Duke-Margolis Center for Health Policy in Washington. He can be contacted at