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CLSA Wire

Bill Mandating State Reporting by Drug Makers Heads to Governor
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Sept. 18, 2017

Despite the best efforts of CLSA and its partner trade associations, Senate Bill 17 (Hernandez) has reached the Governor’s desk. Gov. Brown has until Oct. 13 to sign the bill for it to become law. If it’s signed, the advance notice requirements, as discussed below, would become effective on Jan. 1, 2018.

SB 17 would require, among many other things, industry to provide a 60-day advance notice of any price increase on a drug to all California public agency purchasers, health insurers, and pharmacy benefit managers (PBM) if that drug’s price has increased 16 percent or more cumulatively over the previous two calendar years, including the current year’s increase. In other words, if a company has increased the price of a 6 percent in 2016 and 7 percent in 2017, then it would have to provide a 60-day advance notice on any 2018 price increase that would account for the additional 3 percent needed to reach the 16 percent reporting threshold.

Beginning on Jan. 1, 2019, on the effective date of any price increase triggering the advance notice, the drug’s manufacturer would have to submit a host of information to the state, though the bill would allow the manufacture to withhold any information not “otherwise in the public domain or publicly available.” The information reported would then be posted publicly by the state in a manner that allows for identification of the individual drugs.

Though the bill appeared to stall after initially being put up for a vote in the Assembly, the bill quickly reached the 41 votes needed when being put back up for a vote, passing off the Assembly floor by a vote of 66-9. In a breach of Assembly decorum, its passage was accompanied by applause and several cheers from the Assembly floor. On Senate concurrence for the most recent amendments, the bill was sent to the Governor by a vote of 32-8.

CLSA continues to oppose the bill and has submitted a request to the Governor that the bill be vetoed, but we are anticipating that he will sign the bill into law. We also plan to organize a letter-writing effort for small company members. Visit www.ProtectAccessAndInnovation.org to see how patients, small businesses and life science innovators are speaking out against SB 17.

Finally, we are continuing to analyze the potential impacts of implementation of the bill on our industry, and any members who would like further information on this or anything else related to SB 17 are encourage to reach out to Brett Johnson, CLSA’s Senior Director, Policy & Regulatory Affairs (BJohnson@califesciences.org) or Oliver Rocroi, CLSA’s Senior Director, State Government Affairs (orocroi@califesciences.org).