Blog: California Governor Considers Drug Price Reporting Bill and Ban on Discounts and Rebates for Branded Pharmaceutical Products

by Cooley LLP
Contact

The California State Legislature sent two new pharmaceutical pricing measures, S.B. 17 and A.B. 265, to Governor Jerry Brown on September 13th. S.B. 17 would impose new reporting requirements on pharmaceutical manufacturers related to certain price increases of some already marketed drugs and the introduction of new drugs onto the market over a threshold price. A.B. 265 would prohibit manufacturers of branded prescription drugs from providing discounts and rebates on their products to Californians in certain circumstances.

S.B. 17

If S.B. 17 is enacted, beginning no earlier than January 1, 2019, manufacturers of prescription drugs with a wholesale acquisition cost (WAC) of more than $40 would be required to give 60 days’ notice of any increase in WAC of greater than 16 percent to certain purchasers, including purchasers for or on behalf of the state, health care service plans and health insurers, and pharmacy benefits managers. Reports made to purchasers would include the amount of the WAC increase and the amount of cumulative increases in WAC for the past two years. Purchasers would have to opt-in to receive the required notice under S.B. 17. Manufacturers would be able to obtain a list of purchasers opted-in from the California Office of Statewide Health Planning and Development (OSHPD).

Additionally, S.B. 17 would require manufacturers to notify OSHPD in a quarterly report of any increase in WAC for which notice would be required to a purchaser. The report to the OSHPD would contain seven categories of information, including: (1) a description of the financial and nonfinancial factors used to make the decision to increase WAC, the amount of the increase, and an explanation of the increase based on the influencing factors; (2) a schedule of increases in WAC for the previous five years (if the drug was manufactured by the reporting manufacturer for that period of time); (3) a description of any change or improvement in the drug that necessitates a price increase; (4) volume of sales of the manufacturers drug in the United States for the previous year; and (5) whether the drug is a multiple source drug, an innovator multiple source drug, a non-innovator multiple source drug, or a single source drug under the Medicaid program. For drugs acquired in the last five years, the manufacturer also would report certain information about the purchase, including the WAC of the drug at the time it was acquired. The manufacturer would additionally state the expiration date of the patent, if applicable.

With respect to new drugs, the S.B. 17 would require that manufactures notify the OSHPD within three days after introducing a drug to market if the drug has a WAC that exceeds the Medicare Part D threshold for a specialty drug. Additionally, within 30 days of giving the required notice, manufacturers would have to submit a report to the OSHPD providing: (1) a description of the marketing and pricing plans used in the launch of the new drug in the United States and internationally; (2) the estimated volume of patients that may be prescribed the drug; (3) if the drug was granted breakthrough therapy designation or priority review by the U.S. Food and Drug Administration (FDA) prior to final approval; and (4) the date and price of acquisition if the drug was not developed by the manufacturer.

If S.B. 17 is enacted, failure to make the required reports to the OSHPD could result in a civil penalty of up to $1000 per day that a manufacturer fails to provide required information. Though S.B. 17 is one of the most sweeping price reporting bills considered by a state to date, the law would allow manufacturers to limit the data and other details they provide to OSHPD to publicly available information.

A.B. 265

The governor also is considering a bill that would prevent manufacturers from offering “a discount, repayment, product voucher, or other reduction in an individual’s out-of-pocket expenses” for a branded prescription drug if a lower cost therapeutically equivalent generic drug is available under the individual’s health care coverage, or if the active ingredient in the drug is available at a lower cost in an over the counter product that is regulated by the FDA and the product is not contraindicated for treatment of the individual’s condition.

The rule would not apply to rebates and discounts made to state agencies, individuals for out of pocket expenses that are not associated with their health care coverage, or individuals who have completed step therapy or received pre-authorization for the branded prescription drug, as required by their health care coverage provider. In addition, the rule would not prohibit rebates and discounts for prescription drugs required under an FDA Risk Evaluation and Mitigation Strategy (REMS), or single tablet HIV and AIDS medications, under certain circumstances. The bill notes that it is not intended to limit manufacturer-funded prescription assistance programs or charitable organizations that provide patient assistance.

The governor has until October 15th to sign or veto these new measures. We will continue to monitor the progress of S.B. 17 and A.B. 265, and provide an update when the governor takes action.

[View source.]

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Cooley LLP | Attorney Advertising

Written by:

Cooley LLP
Contact
more
less

Cooley LLP on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
Privacy Policy (Updated: October 8, 2015):
hide

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.

Security

JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at info@jdsupra.com. In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at: info@jdsupra.com.

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.