US pharma industry challenges California's transparency legislation

Two months after governor Jerry Brown signed what many consider to be the nation's most comprehensive legislation on transparency in prescription drug prices, the pharmaceutical industry yesterday hit back with a lawsuit challenging its constitutionality.

Calling Senate Bill 17 ''an uprecedented and unconstitutional California law,'' the Washington DC-based Pharmaceutical Research and Manufacturers of America argued that the new law will dictate national health care policy related to drug prices.

According to the 36-page complaint filed in California US District Court in Sacramento, which is set to take effect next month, considering drug manufacturers as the sole determinant of drug costs, ignores the role played by other entities in the costs patients pay for prescription drugs, and would 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.

He added however, that the, ''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.''

The national trade group, PhRMA which represents 37 drug companies had earlier tried to defeat the bill, partially out of fear that it could become a national model and the first major step toward price controls.

''SB 17 is not only poorly conceived, it also misses the mark with its myopic focus on manufacturers and provisions that are in clear violation of the Constitution,'' said Stansel, in a statement. ''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.''

Under the law, which was signed by governor Jerry Brown in October, drug manufacturers would be required to announce wholesale drug prices that increase beyond a certain threshold 60 days in advance.