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CLSA Wire

State Releases Implementation Plan for Drug Price Reporting Law (SB 17)
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Nov. 26, 2017

Shortly before Thanksgiving, California’s Office of Statewide Health Planning and Development (OSHPD) released its implementation plan for Senate Bill 17 (Hernandez). The bill was signed into law in October, and its advance notice provisions take effect on Jan. 1, 2018.

Under the law, manufacturers will be required 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.

OSHPD projects to have completed its registry of authorized recipients of the advance notice before Jan. 1, 2018, aiming to have a registration portal online by Dec.1.

CLSA and other industry partners, however, remain concerned regarding OSHPD’s standards for vetting whether the entities registering are valid recipients of the notice, as the pricing information is still considered incredibly sensitive across the industry. Any restrictions on recipients’ use of the information also remain unclear.

OSHPD has, furthermore, not yet provided any guidance as to how manufacturers should handle any price increases occurring less than 60 days after Jan. 1, 2018, which is the day on which the law is legally effective. The law states an intent not to hinder a manufacturer’s ability to price its product, suggesting manufacturers should not be expected to postpone any price increases to avoid being penalized under the law.

The quarterly reporting of manufacturers to OSHPD begins on Jan. 1, 2019. This reporting requires the drug’s manufacturer to submit a host of information on the drug and triggering price increase, though the law allows any information not “otherwise in the public domain or publicly available” to be withheld. The information is then posted publicly by the state in a manner that allows for identification of the individual drugs. Information collection on triggering new prescription drugs will also begin in January of 2019.

OSHPD intends to commence a stakeholder process in January of 2018, which will inform its drafting of regulations to be effective Jan. 1, 2019. OSHPD, however, states that the “information reporting requirements and information collection format” will be released in the fourth quarter of 2018.

CLSA and our industry partners will continue to engage the state regarding SB 17 implementation. As we continue to analyze the potential impacts of implementation on our industry, any members who would like further information on SB 17 or any other new California laws are encouraged to reach out to Oliver Rocroi, CLSA’s Senior Director, State Government Relations (orocroi@califesciences.org) or Brett Johnson, CLSA’s Senior Director, Policy & Regulatory Affairs (bjohnson@califesciences.org).