State Begins Process of Implementing Drug Price Reporting Legislation

March 18, 2018
By Brett Johnson

Last year, Governor Brown signed Senate Bill 17 (Hernandez) into law. The law requires manufacturers 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. It also requires reporting on new drugs with an initial list price of over $670 per month, which is the Medicare Part D specialty drug threshold.

The law’s advance notice provisions officially took effect on Jan. 1, 2018. Additional quarterly reporting and reporting on new drugs by manufacturers is required beginning Jan. 1, 2019.

The agency charged with implementing and administering the law, California’s Office of Statewide Health Planning and Development (OSHPD), recently began its stakeholder engagement process with a workshop for users of the data submitted by drug makers. The nearly fifty attendees included CLSA staff and several member companies.

The goal of the workshop for OSHPD was to better understand how recipients of the data intended to use it. OSHPD states that users’ input will be used to inform its initial drafting of regulations and the ultimate data submission formats for drug makers.  The workshop also included a panel of eight “subject matter experts” representing purchasers, OSHPD staff and consultants, and consumer groups.  Specific organizations represented included Kaiser Permanente, Blue Shield of California, an electrical workers’ trust, Molina Healthcare, the California Labor Federation, and Health Access.

The next OSHPD workshop will take place on April 11 and focus on “data submitters,” such as drug makers. CLSA staff will again be in attendance and intends to provide written and verbal comments to OSHPD. Any members with comments they would like reflected in those of CLSA or who would like further information on the OSHPD process are asked to reach out to Oliver Rocroi ( or Brett Johnson (

OSHPD has stated it intends to submit a draft regulatory package to the Office of Administrative Law (OAL) in July, which would commence the official “notice and comment” rulemaking process.