Bill Text: CA SB17 | 2017-2018 | Regular Session | Introduced

California Senate Bill 17 (Prior Session Legislation)

NOTE: There are more recent revisions of this legislation. Read Latest Draft

Bill Title: Health care: prescription drug costs.

Spectrum: Partisan Bill (Democrat 3-0)

Status: (Passed) 2017-10-09 - Chaptered by Secretary of State. Chapter 603, Statutes of 2017. [SB17 Detail]

Download: California-2017-SB17-Introduced.html

CALIFORNIA LEGISLATURE— 2017–2018 REGULAR SESSION

Senate Bill

No. 17

Introduced by Senator Hernandez

December 05, 2016

An act relating to health care.

LEGISLATIVE COUNSEL'S DIGEST

SB 17, as introduced, Hernandez. Prescription drugs: pricing: notification.

Existing law establishes various programs to assist individuals with the purchase of prescription drugs at affordable prices, including, among other programs, the California Rx Prescription Drug Web Site Program and the Golden Bear State Pharmacy Assistance Program.

This bill would state the intent of the Legislature to enact legislation requiring public and private purchasers of health care and health care coverage be given advance notice of price increases for the costs of prescription drugs in order to further the ability to predict and manage these costs and the public be given information about the justification, if any, for the prices of newly emerging medications and price increases for existing prescription drugs. This bill would include the findings and declarations of the Legislature in support of its intent.

Vote: MAJORITY Appropriation: NO Fiscal Committee: NO Local Program: NO

The people of the State of California do enact as follows:

SECTION 1.

The Legislature finds and declares all of the following:

(a) Health care spending in the United States is twice the level of health care spending in other developed countries while life expectancy is often less.

(b) Health care spending in the United States has climbed from about $1,000 per person to almost $9,000 per person while the rate of growth for health care spending in other developed countries has been much more modest.

(c) High health care spending is paid for by individual consumers, employers, taxpayers, and other purchasers of health care services and coverage. While existing state and federal law limits the profit and overhead of health plans and health insurers, there are no similar limits on the profits and overhead of pharmaceutical manufacturers.

(d) The United States has experienced significant growth in spending on prescription drugs so that total prescription drug costs in the United States exceeded $450 billion, or 16.7 percent of personal health care spending in 2015, up from $367 billion or 15.4 percent of personal health care spending in 2012. For persons under 65 years of age, the cost of outpatient prescription drug spending amounts to 19 percent of the premium dollar, and that 19 percent spent on outpatient drugs does not account for drugs administered by a health professional, such as chemotherapy or drugs administered in a hospital or other health facility, which further compounds spending on prescription drugs.

(e) Specialty drug spending rose 30.9 percent between 2013 and 2014 while specialty drugs accounted for 1 percent of prescriptions in 2013. These drugs accounted for 25 percent of prescription drugs spending in 2013. Cancer drug prices doubled within the last decade, from an average of $5,000 per month to an average of $10,000 per month.

(f) Approximately 75 percent of the increase in Medicaid spending on prescription drugs between 2013 and 2104 was due to increases in price. Many prescription drugs had increases in unit prices, including Ativan, which increased 1,264 percent between 2014 and 2015, and five other drugs that had unit cost increases of more than 300 percent between 2014 and 2015. From the fourth quarter of 2013 to the second quarter of 2016, Epi-Pen prices increased 15 percent every other quarter so that the price had increased 548 percent since 2007. Of the 20 drugs with the highest per unit cost increases in Medicaid, nine were generic drugs and those products had increases in price ranging from 140 percent to nearly 500 percent between 2014 and 2015.

(g) The State of California spent more than $4 billion in taxpayer dollars on prescription drugs in the 2014–15 fiscal year and this amount did not include prescription drug spending for the almost ten million people enrolled in Medi-Cal managed care.

(h) The 2016 Kaiser Health Foundation tracking poll found that 77 percent of Americans say prescription drug costs are unreasonable, 86 percent of Americans favor requiring drug companies to release information to the public on how drug prices are set, and 78 percent of Americans support limiting the amount drug companies can charge for high cost drugs for illnesses like cancer or hepatitis.

(i) Despite intense public scrutiny and broad consumer concern about escalating prescription drug prices, prescription drug prices climbed by 7 percent in September 2016, while overall health care costs climbed only 2.1 percent with nondrug costs climbing even more modestly.

SEC. 2.

It is the intent of the Legislature to enact legislation requiring public and private purchasers of health care and health care coverage be given advance notice of price increases for the costs of prescription drugs in order to further the ability to predict and manage these costs and the public be given information about the justification, if any, for the prices of newly emerging medications and price increases for existing prescription drugs.