Two months after Gov. Jerry Brown signed into law what many consider to be the nation’s most comprehensive legislation on transparency in prescription drug prices, the phamaceutical industry on Friday fired back with a lawsuit challenging its constitutionality.
Calling Senate Bill 17 “an uprecedented and unconstitutional California law,” the Washington D.C.-based Pharmaceutical Research and Manufacturers of America argues that the new law will dictate national health care policy related to drug prices.
The 36-page complaint filed in California U.S. District Court in Sacramento, also says SB 17 — which is scheduled to take effect next month — singles out drug manufacturers as the sole determinant of drug costs, ignores the role other entities play in the costs patients pay for prescription drugs, and will lead to drug stockpiling and reduced competition.
“We understand how important it is for patients to have affordable access to the medicines they need,” James Stansel, general counsel of PhRMA said in a statement.
But, he said, “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.”
PhRMA — a national trade group that represents 37 drug companies — had furiously tried to defeat the bill, partially out of fear that it could become a national model and the first major step toward price controls.
The complaint is asking for a declaration from the court that certain provisions of SB 17 violate the U.S. Constitution. It also wants the court to permanently prohibit California from implementing or enforcing those provisions of the law.
SB 17 author Sen. Ed Hernandez, D-West Covina, called the lawsuit “just another example of Big Pharma refusing to accept any responsibility for the skyrocketing costs of prescription drugs.
“The idea that anyone other than drug companies is responsible for price increases is absurd,” Hernandez said in a statement Friday. “I’m confident the law will be upheld.”
Assemblyman David Chiu, D-San Francisco, and a co-author of SB 17 along with Assemblyman Jim Wood, D-Healdsburg, on Friday said the lawsuit was “disappointing but not surprising….Patients deserve better.”
Anthony Wright, executive director of Health Access California, a health care advocacy group, called it a “baseless lawsuit.”
“The question is: what are they hiding?” Wright asked.
SB 17 aims to make drug prices for both public and private health plans more transparent in California. It would require pharmaceutical companies to notify health insurers and government health plans like Medi-Cal at least 60 days before scheduled prescription drug price hikes that would exceed 16 percent over a two-year period. It would also force drug companies to explain the reasons behind those increases.
“The essence of this bill is pretty simple,” Brown told a room filled with SB 17 supporters on Oct. 8, the day he signed the bill into law. “Californians have a right to know why their medical costs are out of control, especially when the pharmaceutical profits are soaring. That’s the take-away message.”
The lawsuit names Brown and Robert David, director of the California Office of Statewide Health Planning and Development, as defendants.
It comes on the heels of a similar complaint filed in in Nevada federal court in September by the pharmaceutical industry. That lawsuit challenges the constitutionality of Senate Bill 539, which had been signed into law by Nevada Gov. Brian Sandoval.
The new Nevada law requires drugmakers and pharmacy benefit managers (PBMs) to disclose pricing and rebate information for diabetes drugs.
The complaint says SB 539 removes trade secret protections for highly sensitive information and improperly infringes on federal authority over patent rules.
