California governor Jerry Brown has just signed SB-17 – Drug Price Transparency into state law. Click here for the official summary.
This law is truly nutty. It won’t accomplish much of what it purports to do.
Below, I focus on the provision that requires manufacturers to provide 60 days’ advance notice of increases in a prescription drug’s Wholesale Acquisition Cost (WAC) list price.
As I explain, this requirement ignores crucial drug channel and supply chain economics. Consequently, mandating advance notice of price increases will benefit pharmacies and hospitals, not third-party payers. The new law also ignores what we’ve learned from the wholesale channel’s evolution more than a decade ago.
To mitigate some of the disruption, manufacturers should pay special attention to trade agreements with wholesalers and pharmacies. Everyone else should shake their head in wonder and despair for healthcare policy making in our country.
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