Drug-cost disclosure hits obstacle

An attempt to force drug makers to disclose their costs and profits for drugs that sell wholesale for more than $10,000 annually has derailed in the  Assembly, facing strong opposition from an industry targeting similar measures in other states. The forces battling over the bill include some of the most powerful in California.

Assemblyman David Chiu, D-San Francisco, said his legislation was put on hold until next year.

Oregon, Massachusetts, Pennsylvania, North Carolina and New York all had similar bills this year, mostly authored by Democrats.

“It’s a two-year bill in the Health Committee,” Chiu said, saying he hoped to round up support for AB 463 next year. “It’s got broad support – from consumer groups, labor, business organization, health plans. On this issue, they are completely united in desiring more transparency,” Chiu added.

But the measure drew heavy opposition from the drug industry, which said the bill targets approved medicines but largely ignores the costs of developing drugs that never make it to market.

Chiu’s bill, which requires the companies to file regular disclosure reports with the state, includes the costs of research, clinical trials, production costs and government funding and subsidies.

Supporters included powerful labor interests, such as the California Teachers Association and the California Labor Federation, and a number of health organizations, including the California Nurses Association, the California Association of Health Plans, which represents HMOs; Consumer Union, Kaiser Permanente and some business groups, including the L.A. Chamber of Commerce.

The issue is not limited to California.

Oregon, Massachusetts, Pennsylvania, North Carolina and New York all had similar bills this year, mostly authored by Democrats. Oregon’s bill was defeated; the measures remain pending in the other states.

Industry trade associations, such as the San Diego-based Biocom and the California Life Sciences Association, are opposed, as is Biogen, a biotech company. The Pharmaceutical Research and Manufacturers of America, or PhRMA, a national group that is a lead opponent of the bill, cited the difficulty of documenting drug costs.

“The legislation is only focused on the costs for approved medicines, which ignores the fact that for every one medicine that makes to it market, there are nine other compounds that do not,” said spokeswoman Priscilla VanderVeer. “Failure to account for these failures would not give an accurate or correct portrayal of the cost.”

Since 1960, the costs of medicine account for 10 percent of healthcare dollars, which is projected to hold true for the next 10 years. “There are lots of other parts of the health care that are not mentioned” in Chiu’s bill, she said.

Chiu remains optimistic in AB 463, but it will require amendments to pass, and changing the bill may prove difficult.

“Health plans, hospitals and doctors all report detailed pricing information to the government, which is then made public, yet pharmaceutical manufacturers have offered little to no transparency to help justify a $1,000 per pill price tag,” said Nicole Evans, a spokeswoman for the California Association of Health Plans, which currently supports the bill. She said her group remains “focused on the bill as currently drafted.”
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Ed’s Note: Recasts 9th graf to delete reference to BayBio and include description of California Life Sciences Association and Biocom as trade associations.