SACRAMENTO >> Two months after California Gov. Jerry Brown signed into law what many consider to be the nation’s most comprehensive legislation on transparency in prescription drug prices, the pharmaceutical industry filed a lawsuit challenging its constitutionality.
Calling Senate Bill 17 “an unprecedented and unconstitutional California law,” the Washington-based Pharmaceutical Research and Manufacturers of America argues that the new law will dictate national health care policy related to drug prices.
The complaint filed in U.S. District Court in Sacramento, also says SB 17 — which is scheduled to take effect next month — singles out drug manufacturers as the sole determinant of drug costs, ignores the role other entities play in what patients pay for prescription drugs, and will lead to drug stockpiling and reduced competition.
James Stansel, general counsel of PhRMA said in a statement that “the law creates bureaucracy, thwarts private market competition, and ignores the role of insurers, pharmacy benefit managers and hospitals in what patients pay for their medicines.”
PhRMA — a national trade group that represents 37 drug companies —tried to defeat the bill, partially out of fear that it could become a national model and the first major step toward price controls.
The complaint is asking for a declaration from the court that certain provisions of SB 17 violate the U.S. Constitution. It also wants the court to permanently prohibit California from implementing or enforcing those provisions of the law.
State Sen. Ed Hernandez, author of SB17, called the lawsuit “just another example of Big Pharma refusing to accept any responsibility for the skyrocketing costs of prescription drugs.
“The idea that anyone other than drug companies is responsible for price increases is absurd,” Hernandez said in a statement. “I’m confident the law will be upheld.”
Anthony Wright, executive director of Health Access California, a health care advocacy group, called it a “baseless lawsuit.”
“The question is: what are they hiding?” Wright said.
SB 17 aims to make drug prices for both public and private health plans more transparent in California. It would require pharmaceutical companies to notify health insurers and government health plans at least 60 days before scheduled prescription drug price increases that would exceed 16 percent over two years. It would also force drug companies to explain the reasons behind those increases.
“The essence of this bill is pretty simple,” Brown said Oct. 8, the day he signed the bill into law. “Californians have a right to know why their medical costs are out of control, especially when the pharmaceutical profits are soaring. That’s the take-away message.”
A similar lawsuit was filed in September in Nevada. That federal lawsuit challenges the constitutionality of Senate Bill 539, which had been signed into law by Gov. Brian Sandoval.
The new Nevada law requires drugmakers and pharmacy benefit managers to disclose pricing and rebate information for diabetes drugs.
The complaint says SB 539 removes trade secret protections for highly sensitive information and improperly infringes on federal authority over patent rules.
