Amended in Assembly January 4, 2016

California Legislature—2015–16 Regular Session

Assembly BillNo. 463


Introduced by Assembly Member Chiu

February 23, 2015


An act to add Chapter 9 (commencing with Section 127675) to Part 2 of Division 107 of the Health and Safety Code, relating to pharmaceuticals.

LEGISLATIVE COUNSEL’S DIGEST

AB 463, as amended, Chiu. Pharmaceutical Cost Transparency Act ofbegin delete 2015.end deletebegin insert 2016.end insert

Existing law establishes the Office of Statewide Health Planning and Development, which is vested with all the duties, powers, responsibilities, and jurisdiction of the State Department of Public Health relating to health planning and research development.

This bill would require each manufacturer of a prescription drug, made available in California, that has a wholesale acquisition cost of $10,000 or more annually or per course of treatment to file a report, no later than May 1 of each year, with the Office of Statewide Health Planning and Development on the costs for each qualifying drug, as specified. The bill would require the office to issue a report annually to the Legislature outlining the information submitted pursuant tobegin delete this act, and the office would be requiredend deletebegin insert the bill andend insert to post the report on its Internet Web site. The bill would also require the office to convene an advisory workgroup, as provided, to develop the reporting form required by thisbegin delete act.end deletebegin insert bill. The bill would require the office to maintain the confidentiality of any information submitted by a prescription drug manufacturer pursuant to those provisions that the director of the office deems to be confidential and proprietary.end insert

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Existing constitutional provisions require that a statute that limits the right of access to the meetings of public bodies or the writings of public officials and agencies be adopted with findings demonstrating the interest protected by the limitation and the need for protecting that interest.

end insert
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This bill would make legislative findings to that effect.

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Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: no.

The people of the State of California do enact as follows:

P2    1

SECTION 1.  

Chapter 9 (commencing with Section 127675)
2is added to Part 2 of Division 107 of the Health and Safety Code,
3to read:

4 

5Chapter  9. Pharmaceutical Cost Transparency Act of
6begin delete 2015end deletebegin insert 2016end insert
7

 

8

127675.  

The Legislature finds and declares all of the following:

9(a) It is the intent of the Legislature to make information
10available to the public about the cost of ultra-high-priced
11pharmaceuticals, in order to make pharmaceutical pricing as
12transparent as the pricing in other sectors of the health care
13industry.

14(b) To fulfill this goal, the Legislature finds that there should
15be annual cost reporting on the most expensive drugs that would
16be of use by policymakers, government agencies, and others to
17understand costs for these important products.

18

127676.  

(a) Each manufacturer of a prescription drug, made
19available in California, that has a wholesale acquisition cost (WAC)
20of ten thousand dollars ($10,000) or more annually or per course
21of treatment, shall file a report pursuant to this section on the costs
22for each qualifying drug.

23(b) The report shall include all of the following for each drug:

24(1) The total costs for the production of the drug, including all
25of the following:

P3    1(A) The total research and development costs paid by the
2manufacturer, and separately, the total research and development
3costs paid by any predecessor in the development of the drug.

4(B) The total costs of clinical trials and other regulatory costs
5paid by the manufacturer, and separately, the total costs of clinical
6trials and other regulatory costs paid by any predecessor in the
7development of the drug.

8(C) The total costs for materials, manufacturing, and
9administration attributable to the drug.

10(D) The total costs paid by any entity other than the
11manufacturer or predecessor for research and development,
12including any amount from federal, state, or other governmental
13programs or any form of subsidies, grants, or other support.

14(E) Any other costs to acquire the drug, including costs for the
15purchase of patents,begin delete licensingend deletebegin insert licensing,end insert or acquisition of any
16corporate entity owning any rights to the drug while in
17development, or all of these.

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4 18(F)

end delete

19begin insert(2)end insert The total marketing and advertising costs for the promotion
20of the drug directly to consumers, including, but not limited to,
21costs associated withbegin delete direct to consumerend deletebegin insert direct-to-consumerend insert
22 coupons and amount redeemed, total marketing and advertising
23costs for promotion of the drug directly or indirectly to prescribers,
24and any other advertising for the drug.

begin delete

10 25(2)

end delete

26begin insert(3)end insert A cumulative annual history of average wholesale price
27(AWP) and WAC increases for the drug (expressed as percentages),
28including the months each increase in each category, AWP and
29WAC, took effect.

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14 30(3)

end delete

31begin insert(4)end insert The total profit attributable to the drug as represented in
32total dollars and represented as a percentage of the total company
33profits that were derived from the sale of the drug.

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17 34(4)

end delete

35begin insert(5)end insert The total amount of financial assistance the manufacturer
36has provided through patient prescription assistance programs, if
37available.

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38(6) The total costs of drugs or research projects that failed to
39succeed through the process to market approval.

end insert

P4    1(c) begin insert(1)end insertbegin insertend insert All of the information in subdivision (b) shall be
2itemized and documented by the manufacturer, and audited by a
3fully independent third-party auditor prior to filing.

begin insert

4(2) The information reported by a manufacturer pursuant to
5paragraph (1) of subdivision (b) shall be limited to the time period
6from five years prior to the filing date of an Investigational New
7Drug application with the United States Food and Drug
8Administration to the approval date of the New Drug Application
9by the United States Food and Drug Administration. This
10paragraph shall not prohibit a manufacturer from separately
11providing that information outside of that time period.

end insert

12(d) The information required by this section shall be filed
13annually with thebegin delete Office of Statewide Health Planning and
14Developmentend delete
begin insert officeend insert on a form prescribed by the office and shall
15be submitted no later than May 1 of each year.

16(e) (1) Notwithstanding Section 10231.5 of the Government
17Code, thebegin delete Office of Statewide Health Planning and Developmentend delete
18begin insert officeend insert shall issue a report annually to the Legislature outlining the
19information submitted pursuant to this section, and the office shall
20post the report publicly on its Internet Web site.

21(2) A report submitted to the Legislature pursuant to this
22subdivision shall be submitted in compliance with Section 9795
23of the Government Code.

24(f) Thebegin delete Office of Statewide Health Planning and Developmentend delete
25begin insert officeend insert shall convene an advisory workgroup to develop the form
26required by this section. The workgroup shall include, but is not
27limited to, representatives from the pharmaceutical industry, health
28care service plans and insurers, pharmacy benefit managers,
29governmental agencies, consumer advocates, and physicians.

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30(g) The office shall maintain the confidentiality of any
31information submitted pursuant to this section that the director
32 deems to be confidential, proprietary information of the
33prescription drug manufacturer, the disclosure of which would
34cause the manufacturer competitive harm. This confidential
35proprietary information shall not be made public by the office and
36is exempt from disclosure under the California Public Records
37Act (Chapter 3.5 (commencing with Section 6250) of Division 7
38of Title 1 of the Government Code). This paragraph shall not limit
39the disclosure of information that is not attributed to a specific
40manufacturer or that is released in aggregate.

end insert
P5    1begin insert

begin insertSEC. 2.end insert  

end insert
begin insert

The Legislature finds and declares that Section 1 of
2this act, which adds Section 127676 to the Health and Safety Code,
3imposes a limitation on the public’s right of access to the meetings
4of public bodies or the writings of public officials and agencies
5within the meaning of Section 3 of Article I of the California
6Constitution. Pursuant to that constitutional provision, the
7Legislature makes the following findings to demonstrate the interest
8protected by this limitation and the need for protecting that
9interest:

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begin insert

10In order to protect proprietary, confidential information from
11prescription drug manufacturers and to protect the integrity of the
12competitive market, it is necessary that this act limit the public’s
13right of access to that information.

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