[Ip-health] PhRMA/BIO, etc delay action on AB 463, and LA Times editorial supporting the bill

Jamie Love james.love at keionline.org
Tue Apr 28 18:59:29 PDT 2015

Today the California Assembly Health Committee was unable to take action on
AB 463, following intense lobbying against the bill by drug companies.

On April 26, the LA Times published this editorial supporting the bill.


Editorial: Bill on drug pricing would help state in figuring healthcare

To figure out how to cope with long-term healthcare costs, policymakers
need drug-manufacturing transparency

April 26, 2015

A new crop of specialty drugs holds great promise for treating or even
curing some devastating diseases, but their high cost challenges health
insurers and taxpayer-funded health programs. In California, Gov. Jerry
Brown has asked for $300 million in the coming fiscal year's budget just
for specialty hepatitis C medications such as Sovaldi, which can cost
Medi-Cal or the state prison system more than $80,000 for a course of
treatment. Before policymakers can figure out how to cope with the costs
over the long term, they need to know more about why these drugs are priced
as high as they are. That's where a new proposal by Assemblyman David Chiu
(D-San Francisco) comes in.

Chiu's bill would require the manufacturer of any drug with a wholesale
cost of $10,000 or more per course of treatment to file an annual report
with the state on how much it cost the company to produce it. Included
would be information on the cost of materials, research, testing,
compliance and marketing, the drug's average price in previous years, and
the profits attributable to it.

Predictably, pharmaceutical companies do not like the proposal. The
Biotechnology Industry Assn., for example, complained in a letter to the
Assembly Health Committee that the measure would mandate the disclosure of
internal company information “without regard to the relevance and context
for the data nor the ability for a company to actually generate the
detailed data required.” Research and testing costs are particularly hard
to quantify, and drug makers typically include some of the development cost
of failed drugs in the price of successful ones.

Just because it's hard to shine a light on every aspect of drug pricing,
however, doesn't mean pharmaceutical companies should keep the state
completely in the dark. The lack of transparency about pricing is a problem
throughout the healthcare industry, and Congress is doing little about it.
That leaves it to state lawmakers to pry open the healthcare black box,
which they're trying to do in various ways across the country. These
include proposals that the California Senate Health Committee advanced last
week to create a comprehensive state database recording what insurers,
employers and residents pay for healthcare and to collect considerably more
information from large-group insurance plans about their costs and benefits.

Pharmaceutical companies have some legitimate concerns about Chiu's bill
and what the state might do with the information. Nevertheless, lawmakers
can't hope to get a handle on rising healthcare costs without significantly
more information about what's driving them. That's why they need to
negotiate a workable version of AB 463. Chiu's bill wouldn't dictate where
the state ultimately goes on prescription drug spending, but it would help
policymakers make better choices.

James Love.  Knowledge Ecology International
KEI DC tel: +1.202.332.2670, US Mobile: +1.202.361.3040, Geneva Mobile:
+41.76.413.6584, twitter.com/jamie_love

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