Health advocates call the court’s dismissal a lawsuit brought against California’s first-of-its-kind drug price transparency law by Big PhRMA a win for consumers in California
The U.S. District Court, Eastern District of California on Thursday, Aug. 30 dismissed a lawsuit brought by the Pharmaceutical Research and Manufacturers of America to halt California’s landmark drug price transparency law.
California made history in 2017 by passing, SB 17, authored by Senator Ed Hernandez, which required advance notice of drug price hikes over 16 percent over two years and took effect on Jan. 1, 2018.
Health Access California, the California Labor Federation and Unite Here sponsored Senate Bill 17.
“The judge was right to dismiss PhRMA’s quest to keep consumers in the dark about their prescription drug prices,” said Anthony Wright, executive director of Health Access California, the statewide health care consumer advocacy coalition and co-sponsor of SB 17.
SB 17 was strongly backed by a broad coalition of consumer, labor, business, insurer, and other health organizations.
Last year, PhRMA filed the lawsuit in December of 2017 to block implementation of the law alleging the law as unconstitutional and seeking a permanent injunction preventing its implementation.
The U.S. District Court dismissed the suit as PhRMA did not produce enough facts to substantiate their claims or standing.
“Instead of working to implement the law, they instead chose to spend millions to file a lawsuit to prevent Californians from knowing when and why their prescription drugs prices keep skyrocketing,” said Wright. “We’re glad the court saw their arguments as baseless as California consumers do.”
The law that SB 17 implemented requires all drug price hikes over 16 percent over a two-year span to be subject to transparency requirements, which would discourage double-digit price increases and better negotiations between drug companies and purchasers.
This advance notice would be given to public purchasers like Medi-Cal and CalPERS and private purchasers including health plans and insurers.
It also enhances public disclosure of information about drug pricing by requiring drug manufacturers to file information about the rationale for pricing increase, marketing costs, and other specifics with the Office of Statewide Health Planning and Development.
The bill also requires health plans and insurers to disclose information about drug pricing through existing rate review processes at the Department of Managed Health Care and Department of Insurance.
“I have spent my entire Legislative career working towards access to affordable, quality health care for every Californian,” said Hernandez, D-West Covina. “Towards this goal, SB 17 shines a light on prescription drug spending and will help normalize prices for one of the biggest drivers of health care costs.”
“That’s why I’m extremely thankful that PhRMA’s lawsuit was just thrown out by the U.S. District Court,” said Hernandez. “As I have said time and time again – Big Pharma should simply lower the cost of prescription drugs so that everyone can afford life-saving medicine.”
“While PhRMA rakes in huge profits, working families are struggling to pay for their necessary medications,” said Wright. “It’s time for PhRMA to stop hiding and start doing what’s right for the people who need access to affordable, life-savings prescription drugs.”