SB 17 Data Shows How Out-of-Control Pharma Companies Are Gouging California Families

A recent local news story headline read “Rising Prescription Drug Prices Are Costing Some Patients Their Lives.” It detailed, as we’ve heard before, that Americans pay more for prescription drugs than consumers in any other country. This article also detailed the toll that drug prices take on patients, workers and families. The man in the story was a retired public employee with leukemia who was facing a drug co-pay he couldn’t afford. The choice was to stop treatment and have three months to three years to live, or to leave his wife in debt.

No one should have to make these choices in a country as rich as ours. Yet, drug companies have fought off any effort at the state or federal level to lower drug prices, or to even shine light on the shadowy world of drug pricing. As a result, drug prices have skyrocketed—between 2012 and 2017 the median cost of frequently taken drugs increased 75%. But some drugs have skyrocketed hundreds of percent, which is unsustainable for people who depend on that particular drug.

Even if a worker is perfectly healthy and doesn’t take prescription drugs, we all pay. Drug companies continue to raise prices, driving up premiums and deductibles and taking money out of the pockets of workers as they give up wages to cover health benefits. Rising health care costs, driven by prescription drugs, make it harder to negotiate good contracts and win wage increases, taking money off the bargaining table and sending it directly to Big Pharma.

In 2017, the Labor Movement decided to take action. UNITE HERE and the Labor Federation partnered with Health Access to sponsor SB 17 (Hernandez) to expose excessive prescription drug increases. The bill required advance notice to purchasers of excessive drug price increases so we could negotiate better prices and look for alternatives. It also required drug companies report a justification for the price increase, along with other information to state regulators.

Big Pharma fought SB 17 tooth and nail, buying ads attacking the author, hiring armies of lobbyists and flying in VPs to try to undermine the legislation. But in the end, a coalition of over 100 organizations representing workers, unions, patients, consumer advocates, cities, local Chambers of Commerce, employers and many more got SB 17 signed into law. Particularly effective were worker and union member lobby days to put a human face on the cost of prescription drugs to all of us.

This week, the first SB 17 report was released to the public. It’s a massive database the public can explore to see what drugs have large price increases and what justifies those increases, if anything.

Some highlights (or lowlights, really) are:

  • Generics had the widest range of 3-year median percent price increases ranging from 156.4% to 31.0% increases.
  • The 3-year median percent increase in price for all drugs was 25.8%, approximately 8% if compounded annually from 2017 to  2019, more than the inflation rate.
  • More than two-thirds of the drug companies (697 of 1020) did not include any reasons for the cost increases or a description of any changes/ improvements to the drugs that justified a price increase.

SB 17 points to the need for more policy to rein in the skyrocketing cost of drugs, and deserves scrutiny by researchers, advocates, unions and policy makers to figure out how this data can help develop next steps in California, other states and federally.

Governor Newsom’s Executive Order on prescription drugs acknowledges the need to do more on drug prices and this data can help drive that conversation so savings flow to workers, consumers and all Californians.

The California labor movement is committed to leading the way to lower prescription drug prices. SB 17 was an important first step. Now we must go further to protect California families.