Don’t let bad policy fuel healthcare inflation

OPINION – California’s healthcare system is on the brink. Skyrocketing premiums, a strained Medi-Cal program facing a multi-billion-dollar deficit, and patients struggling to find providers are pushing workers, unions, and small businesses to their limits.

Given these challenges, now is the worst time for California’s leaders to inflict unforced errors and bad laws that will make the healthcare system even more unstable—especially when they will do nothing to lower costs. Senate Bill 41 (SB 41)—a bill currently under consideration in the State Capitol—is exactly such a mistake.

While SB 41 claims to help consumers afford prescription drugs, it dismantles the very tools that keep giant multi-billion-dollar pharmaceutical companies in check and prevent them from raising prices as high as they want. That’s why stopping SB 41 is critical for workers, unions, employers, and the millions of people who pay for insurance premiums or out-of-pocket health care expenses in California.

As the Executive Director of the Western Steel Council, I represent an association of steel fabricators, erectors, and placers who employ thousands of union workers across California. For over 60 years, we have negotiated labor agreements that ensure our workers receive fair wages and benefits, including affordable prescription drugs. A critical part of keeping those drug costs manageable is the work of pharmacy benefit managers (PBMs), which pool negotiating power to secure better deals on medications.

PBMs are one of the few tools we possess to fairly negotiate with the big pharmaceutical companies. And we know they are effective at cutting costs. According to industry estimates, PBMs are projected to save Californians more than $108 billion on prescription drugs over the next decade —savings that directly benefit workers, families, union healthcare trusts, and employers by keeping premiums and out-of-pocket costs in check.

SB 41 has several flaws that will tilt the scale in the drug makers’ favor. First, it would ban pay-for-performance incentives, which are critical for helping secure significant savings on prescription drugs. These incentives reward PBMs for negotiating lower drug prices, ensuring that savings are passed on to patients, union trusts, and empowers. Eliminating them would directly lead to higher premiums for workers and their families.

The bill would also weaken preferred pharmacy networks—another essential tool we use to negotiate lower drug prices. Without these networks, small businesses and employers would lose their ability to get the best price possible from pharmacies, resulting in higher prescription drug costs.

I am proud to represent iron workers who build California’s bridges, skyscrapers, and factories, often in grueling conditions. But I’m deeply worried that SB 41 will burden these workers with higher healthcare costs at a time when our already strained system can’t take more pressure. Our workers and all Californians cannot afford legislation that increases healthcare costs while doing nothing to lower prescription drug prices.

We must protect the few tools we have that keep prescription drugs affordable and ensure our healthcare system works for everyone—not just the big pharmaceutical companies. By disrupting the PBM system, SB 41 would make it harder to negotiate lower drug prices.

SB 41 must be stopped, and legislators should instead focus on real solutions that will make health care more affordable. Contact your state legislator today to tell them you oppose SB 41.

Greg McClelland is the Executive Director of the Western Steel Council, representing steel industry employers and advocating for the rights of union workers across California and Nevada.