California lawmakers pass drug pricing bill opposed by PhRMA, sending it to the governor

Lawmakers in California passed a bill aimed at bringing more transparency to drug pricing.

Even after a contentious drug pricing ballot initiative in California fell short last year, the issue hasn’t gone away. Now, lawmakers in the state have approved a pricing transparency bill strongly opposed by PhRMA, sending it to Gov. Jerry Brown for a decision.

California’s Senate Bill 17 would require health insurers to disclose costs of certain drugs and force pharmaceutical manufacturers to detail price hikes to an agency for posting on a government website. The proposal would also make drugmakers liable to pay a civil penalty if they don’t follow its provisions.

The state’s Assembly passed the bill on Monday, followed by a Senate vote in favor on Wednesday. Now, Gov. Brown can either veto or approve the legislation that PhRMA says could cause “harm,” according to a spokesperson. The industry group will reach out to the governor to express its concerns with the legislation and to "convey our sincere interest in real reform that helps patients," she added.

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The bill’s passing comes after California voters rejected an initiative in November that would have stipulated the state buy its prescription drugs at a price no higher than that charged to the U.S. Department of Veterans Affairs.

SB 17 is important not only because California is such a big market, but because the bill could create a model for other states to follow on an issue that has broad public support. In a statement following the vote, State Sen. Ed Hernandez, the bill’s author, said California will “soon be able to bring some much needed information regarding drug pricing by pharmaceutical companies.

“Although this state legislation was passed in California, it’s a monumental achievement for the entire nation,” he continued. “If signed into law, SB 17 will set national health care policy, having impact for consumers and providers in other states.”

In Washington, D.C., lawmakers have been talking for years about lowering drug costs, with no proposals gaining much steam. Sen. Bernie Sanders and Rep. Elijah Cummings are two legislators who’ve been active on the topic.

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With Congress largely stuck on the issue, many states have taken pricing into their own hands. Maryland recently passed a bill that limits generic drug price hikes while Nevada took aim at the diabetes industry and pharmacy benefit managers with a transparency bill. The industry is suing in both cases.

According to the National Academy for State Health Policy, lawmakers in 30 states have drafted some 60 drug price transparency bills as of August.