California lawmaker calling for more pricing transparency for costly meds

Assembly Member David Chiu (D-CA)

As the U.S. government and payers counter sky-high drug prices, a California lawmaker is proposing a new measure that would require drug companies for the first time to reveal information on how they price the industry's most expensive meds.

Under a bill proposed by California Assembly Member David Chiu, pharmaceutical manufacturers would give California's Office of Statewide Health Planning and Development (OSHPD) yearly feedback on any drug or treatment that costs more than $10,000 a year. The office would then compile the data into an annual report for the state legislature and make results available to the public online.

Reports from companies would include information about production costs including R&D, clinical trials, marketing and advertising and any financial assistance provided to patients through prescription assistance programs, Chiu's office said in a statement.

"In recent years we have seen drug costs climb to new heights with little transparency for these astronomical prices," Chiu said in a statement. "With this bill, we will lift the veil on drug prices and offer the public greater insight so that we can identify meaningful strategies to ensure prices do not threaten access to life-saving treatments."

California has already taken steps to respond to the recent influx of pricey meds, with Gov. Jerry Brown in his 2015-16 proposed budget including $300 million to fund hep C treatments through state programs. But the state's Legislative Analyst's Office is questioning the amount, saying the costs for the drugs could run far higher depending on the number of patients covered by state programs and the cost per treatment for individuals who are covered.

Chiu's bill comes amid more government action on drug pricing, as earlier this month President Obama in his proposed budget said Medicare Part D should be able to negotiate prices "to ensure access to and affordability of" certain treatments for chronic or lethal diseases. The chance of the measure being approved by a Republican-controlled Congress is slim, but the proposal puts more pressure on the industry to control prices on new treatments.

Payers are also battling skyrocketing drug prices, especially in light of recent approvals for Gilead's ($GILD) $84,000-per-treatment course hep C med Sovaldi and AbbVie's ($ABBV) $83,319 hep C combo Viekira Pak. Earlier this year, Express Scripts ($ESRX) Chief Medical Officer Steve Miller laid out a four-point solution to fix the problem, suggesting companies set up contracts with all stakeholders before a product is approved. He also suggested the U.S. secure a final biosimilars pathway to save payers billions and give them room to fund next-generation meds.

- read the statement

Special Report: The top 10 most expensive drugs of 2013

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