In a battle between two Capitol lobbying heavyweights — health insurers and pharmaceutical companies — the latter scored a major win Tuesday, beating back a measure designed to provide more transparency on prescription drug pricing.
Assemblyman David Chiu (D-San Francisco) declined to put his transparency measure up for a vote in a key committee Tuesday, effectively killing the bill.
The measure, a holdover from last year, would have required drug companies to report costs — including spending on research and marketing — and profits associated with any drug that has a wholesale price topping $10,000 a year or per treatment course.
"We couldn't begin to lift the veil on skyrocketing specialty drug costs today, but the issue is not going away," Chiu said in a statement. "Exploding specialty drug costs limit the availability of life-saving medication for people who are seriously ill and bust budgets for businesses and governments alike."
The legislation reflected the growing public debate over skyrocketing drug prices, including one Hepatitis C treatment, Sovaldi, which costs around $1,000 per pill. The state's public employee pension fund, CalPERS, reported last month that it spent $438 million on specialty drugs in 2014, up 32% from the year before.
Chiu's bill was backed by labor groups, consumer advocates and, most ardently, representatives of health insurance plans, who have called escalating prices on specialty drugs unsustainable.
"Today's outcome will not end the growing outcry against record-setting drug prices," said Nicole Kasabian Evans, spokeswoman for the California Assn. of Health Plans. "We will remain committed to tackling high-priced drugs and until pharmaceutical companies act responsibly, we'll be holding their feet to the fire."
Drug companies were staunchly opposed to Chiu's bill. Priscilla VanderVeer, a spokeswoman for the Pharmaceutical Research and Manufacturers of America, an industry trade group, said that the cost of developing individual drugs cannot be easily separated out. She added that disclosing drug development costs would do little to help consumers.
"We are glad that the legislation did not move forward today. We will continue to monitor and engage on this issue moving forward," she said.
Chiu and his backers vowed to revisit the drug pricing issue this year, and it is likely to reverberate beyond the Capitol. The Los Angeles-based AIDS Healthcare Foundation is backing a ballot measure in November that would prohibit the state from paying more for prescription drugs than the price negotiated by the U.S. Department of Veterans Affairs.
On the presidential trail, both Hillary Clinton and Bernie Sanders have called for lowering drug prices.
"Transparency was just one step — one very important first step — to get a handle on what the research and the marketing and other costs are that go into the cost of drugs," said Betsy Imholz, a lobbyist with the Consumers Union, adding that advocates could also pursue action at the federal level, changes to patents and price regulation.
"There's a lot of things for us to consider, so we just need to regroup," Imholz said.