Assemblymember Jim Wood’s Bills to Fight Escalating Prescription Drug Prices Receives Bipartisan Approval by Assembly

Thursday, June 1, 2017

SACRAMENTO—Yesterday and today, two bills authored by Assemblymember Jim Wood (D-Healdsburg) to fight escalating prescription drug costs received bipartisan approval by the full Assembly, and both are on their way to the Senate.

AB 265 is a bill to prohibit the use of drug manufacturer coupons for brand name drugs for which there is a less expensive and therapeutically equivalent generic version. AB 315 would regulate pharmacy benefit managers (PBMs), which are currently unregulated.

“Runaway drug prices are one of the leading causes of increasing health care costs and ultimately premium costs, and there is no one solution,” said Wood. “These bills are the result of spending the past several years peeling back the onion on this complex issue and listening to all parties,” added Wood, “and these bills can help patients receive the medications they need but not pay more than they should, both in prescriptions and premiums.”  

In recent years, there has been a proliferation of prescription coupons and discounts offered by the manufacturers of prescription drugs to encourage the use of their products which are often expensive. In the short term, these coupons and discounts can reduce a patient’s out-of-pocket costs for a prescription drug, but in the long term, this practice can raise the cost of providing coverage for health and prescription benefits, which in turn results in higher health care premium costs for all consumers. 

PBMs were initially formed over 40 years ago and are contracted by health plans, self- insured employers, and government payers to assist insurers and employers in managing prescription drug benefit programs acting as third party administrators. They achieved success and were effective in negotiating prices with pharmaceutical manufacturers and reducing prescription drug prices.

Today, it is estimated that the three largest PBMs manage prescription drug coverage to more than 180 million Americans or roughly 78 percent of Americans. In 2014, the combined revenues of the three largest PBM’s exceeded $270 billion. “With that kind of revenue and no oversight, that’s a big concern for me,” said Wood. “If the PBMs are, in fact, negotiating the best pricing and doing right by consumers, they should have no concern with us ‘looking under the hood’.”

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