First Committee Hearings Indicate Tough Road Ahead on Major State Legislation in Sacramento

April 21, 2017

The third week of April marked the first policy committee hearings on the top two bills of interest for CLSA this year, Senate Bill 17 (Hernandez) and Assembly Bill 265 (Wood). These hearings, however, signify a difficult battle ahead for the life sciences sector in this legislative session.

SB 17 would require, among many other things, manufacturers of prescription drugs to submit a 90-day advance notice of a price increase to all California public agency purchasers, health insurers, and pharmacy benefit managers (PBM) where that increase would mean the wholesale acquisition cost (WAC) has exceeded 25 percent over the previous three calendar years. For specialty drugs, the price increase threshold is only 10 percent. A host of information must also be submitted on the effective date of the increase, and, after amendments in the recent hearing, similar information must also be submitted within 3 days of FDA approval of new drugs.

AB 265 was also amended in the recent hearing to explicitly remove biologics from the prohibitions on the use of copay assistance. The narrower bill now prohibits the use of copay assistance for small molecule brand drugs where a lower cost generic is covered by the insurer, as well as for drugs that combine multiple generic or over-the-counter active ingredients.

CLSA did not expect either bill of the committee chairs to fail in their own respective committees. Both bills were passed with only two “no” votes and a handful of abstaining committee members.  SB 17, in particular, also received statements in support from many of the almost 70 organizations on file as supporting the bill.

On AB 265, in response to concerns from committee members, the author and Chair of Assembly Health, Jim Wood, did commit to amending the bill to exempt drugs for which an insurer has approved a prior authorization, which address a number of the concerns voiced by CLSA.

On SB 17, while questions from committee members expressed concerns with the bill, the Chair and author, Ed Hernandez, set rigid guidelines for the hearing and witnesses in opposition to the bill, which included representatives from PhRMA and BIO, received a fraction of the opportunities to respond that were afforded to witnesses in support.

The next stop for both bills will be their respective appropriations committees in the coming weeks. CLSA will continue to fight vigorously on behalf of California’s life sciences industry and to protect our ability to discover new treatments and cures for patients.  Questions? Please contact Brett Johnson, CLSA’s Senior Director, Policy and Regulatory Affairs (