PhRMA sues to block Calif. drug transparency law

PhRMA sues to block Calif. drug transparency law
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Drug companies are suing the state of California over a recently enacted law that would require manufacturers to give advance notice before significantly raising prices.

The Pharmaceutical Research and Manufacturers of America (PhRMA), the industry's leading lobby group, filed a complaint late Friday seeking to block the law, which supporters say is one of the most comprehensive drug transparency measures in the country.

PhRMA argued the state law imposed nationwide restrictions on the price of drugs, because it is tied to a nationwide measure of drug costs.

In its suit, PhRMA said the law “penalizes manufacturers for conduct that occurs exclusively outside California. And it intentionally exports California's policy choices regarding prescription drug pricing on the entire nation.”

The lawsuit was filed in U.S. District Court for the Eastern District of California.

California Gov. Jerry Brown (D) signed the law into effect in October amid increasing consumer outrage over extremely high drug prices, such as $600 for EpiPens and $1,000 a pill for hepatitis C treatment.

The law requires manufacturers to notify insurers and state officials anytime they plan to raise the price of a medication by 16 percent or more over two years. Companies also have to provide justification for the increase.

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The drug lobby vigorously opposed the law, and hired 45 different firms in an attempt to defeat it.

“The law creates bureaucracy, thwarts private market competition, and ignores the role of insurers, pharmacy benefit managers and hospitals in what patients pay for their medicines,” James Stansel, PhRMA's executive vice president and chief counsel, said in a statement.

The group noted the law does not accurately reflect the actual prices paid by purchasers like insurers and the government, which negotiate prices and receive rebates.

The law is supported by a variety of stakeholders, including labor and consumer groups, the hospital industry and health insurers.

In a statement, the California Association of Health Plans (CAHP) said PhRMA’s lawsuit is “part of its usual obstructionist playbook.”

“We aren’t surprised that they would try and overturn this bipartisan law,” said Charles Bacchi, CAHP president and CEO. “From day one they have been unable to acknowledge their outsized role in driving health care costs skyward and continue to pretend they are above the law. This action proves pharma doesn’t care what California’s voters and elected representatives think.”