CLSA Wire

Sacramento at a Glance — Feb. 23, 2015 — CHI Hosts Asm. Jimmy Gomez, Chair of the Appropriations Committee
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Monthly Speaker Series with Assembly Appropriations Committee Chair Jimmy Gomez

At our February Monthly Speaker Series, Assembly Appropriations Committee Chair Jimmy Gomez engaged with a room full of CHI members about the rising cost of healthcare and the Appropriations Committee’s effects on public policy. Assemblymember Gomez recognizes the importance of the life sciences industry to California and is looking forward to working with members of CHI

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CHI Members Meet with Asm. Jimmy Gomez, Chair of the Assembly Appropriations Committee

Gomez also had the opportunity to share his goals for healthcare policy and vision for the committee in this legislative year. With so many bills that come to the Appropriations Committee, he emphasized the need for bipartisan solutions on issues as well as the need to isolate and analyze each issue on its own and then understand it in broader contexts. He also emphasized the need to expand access to healthcare while controlling costs, educate people about preventative care and move the process in a bipartisan direction that benefits California.

CHI members had the opportunity to share two major points about our industry. First, pharmaceutical drugs constitute only 10 percent of the total healthcare costs, and provide a long-term plan for preventative care, which ultimately lowers the costs for emergency care and hospital visits. Second, the life sciences sector generates the most revenue, after the technology sector, when it comes to attracting business, innovation and job creation for California. Additionally, CHI members were able to educate the Assemblymember about the resources that are able to provide for legislators about their respective districts and how the life sciences community innovates to find solutions that provide dramatic improvements to public health and quality of life.

CHI’s next Speaker Series on March 18 will feature Senator Janet Nguyen. Please contact Christina Hwee, CHI’s state government affairs associate (Hwee@chi.org or 916-233-3497) for more information or to RSVP for this exciting event.

Senate Health Committee Hearing: Making Healthcare Affordable: What’s Driving Costs?

The California Senate Health Committee, chaired by Senator Ed Hernandez, held an informational hearing on Feb. 4, “Making Healthcare Affordable: What’s Driving Costs?” A variety of groups presented, including representatives from public and private sector payers, the biotechnology/life sciences sector and hospitals. These speakers outlined factors they believe to be contributing to the rise in healthcare costs, including:

  • State-mandated hospital staffing ratios, resulting in labor shortages
  • Cost of prescription drugs, both specialty and generics
  • California’s aging population
  • Perceived lack of transparency in drug pricing
  • Underfunded government programs

A panel comprising members of the payer community expressed their position that the companies developing new medicines in the life sciences sector are the “culprits” behind rising drug costs. The price of newer specialty medicines was cited as the primary reason for increasing overall drug costs, despite the fact prescription drugs account for just ten percent of health care costs. This panel was especially focused on Gilead’s curative treatments for hepatitis C, Sovaldi and Harvoni, as prime examples of “ballooning pharmaceutical costs.”

Gregg Alton, Gilead’s Executive Vice President of Corporate and Medical Affairs, countered that the prices of the company’s hepatitis C medicines reflect the value these cures bring to the healthcare system, and is far less expensive to society than the cost of not curing this deadly liver disease – which often leads to complications including liver transplantation and cancer. He addressed the misleading nature of published costs, or “list prices,” widely discussed in the media – noting that, in practice, the price of these drugs are heavily discounted when accounting for rebates, discounts and negotiations with providers.

“We price [our medicines based] on their clinical benefit — the economic and public health value,” he said. “We really emphasize the value of a cure. These are not drugs that patients take for the rest of their lives. I think that’s a very important difference when you’re comparing it to drugs that you have to take every year.”

“We compared [the cost of our medicines] to the cost of existing regimens that were out on the market at that time. Existing regimens were just about $96,000. The cost of treating hepatitis C with Sovaldi or Harvoni is substantially less than what it costs to treat hepatitis C a year and a half ago. Some of the studies have shown that we actually reduced the cost from roughly $180,000 per cure to roughly $110,000 per cure,” said Alton.

Tom Stephens, a local man recently cured of hepatitis C with Harvoni, also provided his perspective as a patient, stressing that the healthcare system has spent far more money on his related health problems over the years than on the one-time cost for the medicine that cured him.

Senator Richard Pan, M.D. added a personal testament to the value of these widely-used, curative treatments, noting he “wished a cure [like Harvoni] was around” to save the life of one of his family members who passed away from hepatitis C. Similarly, Senator Janet Nguyen posed the question: “What is one’s life worth? We cannot stop innovation because there is no price tag for the value of a life.”

The informational hearing was the second in a series dedicated to understanding the rising cost of healthcare, according to Senator Hernandez.

Meeting with New and Returning Legislators

It has been a busy start to the year as CHI meets with a number of new and returning legislators, including Assemblymembers David Hadley, Young Kim, Tom Lackey, Evan Low, Devon Mathis and Senators Tony Mendoza, Janet Nguyen, Bob Wieckowski. Members of the California State Legislature have been receptive to understanding how the life sciences industry innovates to find solutions that provide dramatic improvements in the quality of life for patients. CHI looks forward to continuing to educate and meet with legislators in order to further their knowledge of how the life sciences industry affects their particular districts and communities.

Meeting with Senator Richard Roth 

On Feb. 11, CHI members met with Senator Richard Roth to discuss his vision to increase medical residencies in underserved communities through public and private partnerships. With the implementation of the Affordable Care Act (ACA), there is a greater need for primary care physicians in California. With a rapidly changing healthcare system, Senator Roth is looking to a number of different hospitals, public health plans, the state budget, groups and organizations to create funds for medical residency retention programs.


CHI Members meet with Senator Richard Roth

For more information on health professional shortage areas, please click here

In the News

Covered California Will ‘Easily’ Hit Goal

Covered California will get close to hitting its goal of 500,000 enrollees for the second open enrollment period. Officials for Covered California noted that the extension of the deadline to Feb. 22 should push them over the goal for this period. With a number of pending applications, Covered California is working to process those who have “started an application or made a good faith effort to start an application.” Learn more and read the full article at California Healthline.

Primary Care Physician Supply Not Keeping Up With Medi-Cal Demand

With an increase of 2.7 million additional state residents enrolled in Medi-Cal under the ACA, there is a shortage of Primary Care Physicians (PCP) serving these communities. The current ratio of PCP to Medi-Cal beneficiaries is 35-49 physicians per 100,000 Medi-Cal beneficiaries—far below the federal guidelines of 60-80 physicians per 100,000 beneficiaries. Learn more and read the full article at California Healthline.

Are Sky-High Prices for New Drugs Justified?

In a joint effort with the Massachusetts Institute of Technology and the journal, Health Affairs, a new report, “Decline in Economic Returns From New Drugs Raises Questions About Sustaining Innovations,” concludes that the return on new drugs has diminished. As such, drug companies may not have enough R&D expenses to fund innovation which would help explain and justify the up-front costs of rising drug prices. Learn more and read the full article at Forbes.

123 Measles Cases Confirmed; Calif. Lawmakers Plan Vaccine Bill

The California Department of Public Health confirmed at least 107 measles cases in the state, 39 of which were linked to the Disneyland outbreak in Dec. 2014. As a result, several California lawmakers are introducing vaccine bills that require preschool children to get vaccinated unless their doctor confirms that a medical condition makes the immunization unsafe. Learn more and read the full article at California Healthline.