Transparency Legislation Targeting Drug Manufacturers and Health Plans in California Senate Appropriations Committee

One of the more aggressive pieces of price transparency legislation introduced this year is currently before the Appropriations Committee in the California State Senate.  Under SB17, manufacturers of drugs that have experienced three-year increases in WAC greater than either 10% (for drugs with WAC over the Medicare Part D specialty drug threshold) or 25% (for drugs with WAC under the threshold) would be required to give 90 days’ advance notice of the increase to purchasers (including state purchasers, licensed health care service plans, health insurers, and PBMs).  Subsequently, manufacturers must report detailed information justifying the price increase to California’s Office of Statewide Health Planning and Development (OSHPD).  Reported information includes the drug’s marketing budget, its 5-year WAC increase history, and whether the drug provides advantages in clinical efficacy over existing drugs.

For new drugs introduced at a WAC exceeding the Part D specialty drug threshold, manufacturers must also report to OSHPD the expected marketing budget for the drug and the increased clinical efficacy of the drug compared to existing treatments (or a statement that the drug has not improved clinical efficacy), as well as domestic and international pricing plans relating to the launch of the drug.

OSHPD would publish the reported information on its website – quarterly for increases in WAC and monthly for new drugs.  OSHPD must also publish the information in a manner that permits identification on a per drug basis, and prohibits the aggregation of the information that would prevent such identification.

In late April, SB17 passed the California Senate Health Committee and was re-referred to the Senate Appropriations Committee.  The Health Committee made minimal amendments to the legislation, but changed the reporting date for new high-WAC drugs to three days after FDA approval rather than within three days of commercial availability.  A hearing on the legislation before the Appropriations Committee was held May 15, and the legislation was set aside on the Appropriations Committee Suspense File.  It is set for hearing again May 25.

Leave a Reply

Your email address will not be published. Required fields are marked *