California Lawmakers Are Fixed on You

Amid the rush of states clamping down on pharmaceutical companies, California has set the pace for a showdown with drug manufacturers. The state’s new law (SB 17) imposing unprecedented transparency requirements has triggered fierce backlash from the industry, including a federal lawsuit filed by the Pharmaceutical Research and Manufacturers of America. Pharmacy benefit managers and insurers doing business in California aren’t being spared either.

That's not the only change. On Sept. 30, the final day for the governor to sign or veto bills for the 2017-2018 session, it was eye-opening to see the sweep of new laws enacted with healthcare in the crosshairs. California’s legislative activity has often been a bellwether for other states, and suggests a national wave is building.

Here is the activity that stands out.

Cancer Drug Copays AB 1860

Prohibits a health plan from requiring more than $250 per month in out-of-pocket costs for each filled prescription of a covered oral anticancer drug

Who supported? Association of Northern California Oncologists, Medical Oncology Association of Southern California, Health Access California

Who opposed? California Association of Health Plans


Short-term Health Plans SB 910

Beginning on Jan. 1, 2019, short-term health plans are banned in California

Who supported? Blue Shield of California, Kaiser Permanente, Health Access California, and America’s Physician Groups

Who opposed? No opposition filed


Health Plan Merger Oversight AB 595

Grants state regulators greater oversight over health plan mergers and the authority to approve or deny the deals; also requires public hearings for consumers to weigh in

Who supported? Health Access California, Consumer Union, California Physicians Alliance

Who opposed? California Association of Health Plans, Department of Insurance, California Medical Association


Drug Pricing Transparency SB 17

Requires drug companies to announce large price hikes and give detailed justifications to explain increases

Who supported? Kaiser Permanente, Consumers Union, California Medical Association

Who opposed? Eli Lilly & Co., Pharmaceutical Research and Manufacturers of America, Biotechnology Innovation Organization


Drug Coupons AB 265

Prohibits drug companies from offering coupons in California that would reduce out-of-pocket expenses for any prescription drug when less expensive equivalent drugs are available

Who supported? AFL-CIO, California Labor Federation, Health Access California

Who opposed? Biocom, California Life Sciences Association, Alliance for Patient Access


PBM Clawbacks AB 2863

Curtails PBM clawbacks, in which a patient’s copay cost is higher than a drug’s retail price and the difference is remitted to the PBM; health plans may not require pharmacies to collect cost-sharing amounts in excess of the total retail price paid for the prescription drug

Who supported? Anthem Blue Cross, California Association of Health Plans, California Chronic Care Coalition, Express Scripts (stating that requiring in-network pharmacies to dispense at the lowest cost is already a standard provision in their contracts)

Who opposed? No opposition filed


E-prescribing AB 2789

Requires all providers authorized to write prescriptions to have the ability to electronically prescribe them by Jan. 1, 2022

Who supported? California Association of Health Underwriters, America’s Physician Groups, McKesson, California Pharmacists Association

Who opposed? California Academy of Family Physicians, California Medical Association


PBM State Registration AB 315

Requires PBMs to register with the Department of Managed Health Care and exercise a duty of good faith and fair dealing with purchasers; PBMs must notify network providers of certain contract changes

Who supported? Consumers Union, Health Access California, Association of Northern California Oncologists

Who opposed? America’s Health Insurance Plans, California Association of Health Plans


Cap the Copay SB 1021

Extends a cap-the-copay law applicable to commercial insurance plans, which California enacted in 2015 and expires on Jan. 1, 2020

Existing law provides that cost-sharing for a covered outpatient prescription drug for an individual prescription not exceed $250 for a supply of up to 30 days. SB 1021 extends those provisions indefinitely and also prohibits insurers from having more than four tiers on their drug formularies.

Who supported? Health Access California, Arthritis Foundation

Who opposed? No opposition filed


Stephanie Hoops is a senior analyst at DRG and a regulatory expert whose work appears in Health Plan Analysis and Market Overviews. Follow Stephanie Hoops on Twitter @StephHoopsDRG

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