Drug companies sued the state of California Friday for creating a law that would require them to provide advance notice before raising their prices. The law was established in October after consumers complained about the rise in drug spending and the astronomical costs of some prescription drugs, including Hepatitis C medications and EpiPens.
Many states have addressed the issue with rising drug prices. The National Conference of State Legislatures reports that at least 176 bills on pharmaceutical pricing and payment have been introduced in 36 states in 2017.
A new Maryland law tackles the price hikes on generic versions of old off-patent drugs that are supposed to be much less costly than the original branded medicines.
Drugmakers have been opposed to the new bill since the beginning. Biotechnology Innovation Organization (BIO), the leading biotech industry trade group, released a statement arguing that the law won’t serve its purpose.
“This law will neither provide meaningful information to patients nor lower prescription drug costs,” the group said, adding that the law “seriously jeopardizes the future of California’s leadership in this innovative industry.”
According to the lawsuit brought by the Pharmaceutical Research and Manufacturers of America, the new law attempts to illegally dictate national health policy. The law is tied to a national measure of drug prices, so the advance notice requirement may prevent drug companies from increasing prices in other states.
The lawsuit argues that the law is vague and fails to comply with the First Amendment by making drug companies explain price increases. The law also requires health insurance plans to give the state yearly reports about which drugs are most frequently prescribed, which drugs are the most expensive and which drugs have the largest year-to-year price increase.
“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,” James Stansel, PhRMA’s executive vice president and chief counsel, said in a statement Friday.
Sen. Ed Hernandez, who wrote the bill, dismissed the belief that the law could increase prices all around the country and that the pharmaceutical industry was “refusing to accept any responsibility for the skyrocketing costs of prescription drugs.”
Charles Bacchi, president of the California Assn. of Health Plans, supports the new bill, saying it proves that drug companies don’t care what the state’s voters and elected officials think.
“From day one they have been unable to acknowledge their outsized role in driving health care costs skyward and continue to pretend they are above the law,” Bacchi said.
The lawsuit was filed in U.S. District Court in Sacramento and names Gov. Jerry Brown and Robert David, head of the Office of Statewide Health Planning and Development.
If PhRMA wins the lawsuit, it could postpone or stop the implementation of the law, which is set to take effect Jan. 1.