Why “No” to SB 17

SB 17 is the Wrong Prescription for Rising Health Costs in California

Healthcare costs are understandably on the minds of many Californians who are seeing their health insurance premiums and out-of-pocket costs go up.

Unfortunately, Senate Bill 17, currently under consideration by the legislature, will not do anything to address the price that California consumers actually pay for medicine, and could jeopardize patient access to critical innovative medications.

SB 17 would create an incomplete and misleading picture of drug costs in California, because it focuses on list prices and not the actual costs resulting from discounts, rebates and other payments that drug manufacturers make to health insurers and pharmacy benefit managers (PBMs) – and SB 17 does not tell us whether these payments are going to the benefit of patients. It is insurance companies and PBMs – not biopharmaceutical companies – that determine what price patients pay for medicines, and too often these entities simply keep payments from drug manufacturers instead of passing them onto patients in the form of lower prices or premiums.

In addition, the SB 17 requirement for advance notice of price increases could give rise to drug stockpiling by wholesalers and distributors. With advance notice of impending price increases, shady wholesalers and distributors would be able to stockpile large quantities of available drugs and charge consumers exorbitant prices for drugs to treat cancer and other life-threatening conditions.

Although rising health costs are a concern for all Californians, SB 17 will do nothing to address the price that consumers actually pay for healthcare, despite adding millions in new administrative costs to the system. Instead, the legislation ignores the real drivers of health care costs and jeopardizes patient access to medication through drug stockpiling that will put many of the most vulnerable Californians at risk.

We urge the legislature to reject SB 17 so that we may focus on the real cost drivers and tell the whole story of the cost of medicine.