SB 17: Drug price transparency rules

On Oct. 9, 2017, Gov. Jerry Brown signed drug price transparency bill Senate Bill 17 into law. This law requires pharmaceutical manufacturers that have a wholesale acquisition cost of more than $40 for a course of therapy to give 60 days' notice to state and health insurers if they plan to raise the price of a medication by 16 percent or more over a two-year period. SB 17 also requires pharmaceutical companies to justify the increased prices. Under SB 17, "pharmaceutical manufacturers" include companies that produce medications, and also certain businesses that repackage or distribute medications.

As part of SB 17, California now requires prescription drug manufacturers to notify California's Office of Statewide Health Planning and Development within three days after the release of a new medication if the price exceeds the threshold set for specialty drugs under Medicare Part D. For the 2017 and 2018 calendar years, the specialty drug threshold price is $670 per month.

Finally, SB 17 requires health insurers and health care service plans to report cost information to the state Department of Managed Health Care or Department of Insurance for the 25 most frequently prescribed drugs, the 25 most costly drugs, and the 25 drugs with the highest year-over-year increase in total annual plan spending.

The health planning office will publish the prescription drug manufacturer information on their website, and the managed health care department and insurance department will compile the health insurer and health care service plan information into a public report.