California Delivers Blow to Pharma: Requires Drug Price Transparency | Pharmaguy's Insights Into Drug Industry News |

In a blow to the pharmaceutical industry, California Gov. Jerry Brown on Monday signed a bill into law that requires drug makers to explain and justify price hikes, making this the latest state to actively address the high cost of medicines.


The bill, which was vociferously fought by the pharmaceutical industry, is set to become one of the more comprehensive state efforts to address pricing transparency.


For instance, drug makers have to provide 60-day notice to insurers and government health plans before increasing list prices of any medicine that costs more than $40 by at least 16 percent in a two-year period. And health plans have to provide detailed information about prescription drug costs and the portion of premiums attributed to this expense. (Here is a fact sheet on the bill.)


“Californians have a right to know why their medical costs are out of control. This measure is a step in bringing transparency, truth, exposure to a very important part of our lives – that is, the cost of prescription drugs,” said Brown at a ceremony where he signed the bill into law, which goes into effect on Jan. 1 (you can watch the ceremony here).


“It’s a monumental achievement for the entire nation,” state Sen. Ed Hernandez said last month after the state legislature sent the bill to Brown. The legislation “will set national health care policy, having impact for consumers and providers in other states.”