California leads way on drug pricing transparency with other states poised to follow: 6 things to know

Last October, Democratic Gov. Jerry Brown signed a drug pricing transparency law, making California the first U.S. state to pass such legislation. While the law went into effect in January, it remains unclear whether it will successfully lower drug prices, according to a Politico report.

Here are six things to know.

1. The recently enacted law requires pharmaceutical companies to notify health insurers and government health plans at least 60 days prior to prescription drug price increases exceeding 16 percent over a two-year period. The law also requires the companies to publicly justify these price hikes.

2. A coalition of insurers, employers and advocates has supported the measure, according to the report. However, the Pharmaceutical Research and Manufacturers of America industry group challenged the law's constitutionality in December.

3. Under the new law, Valeant revealed its plan to increase the price of a generic glaucoma medication by 63 percent, and Teva Pharmaceuticals disclosed its plan to increase the price of an inhaled solution for asthma patients by 49 percent May 1, according to the publication.

4. However, it remains uncertain whether the law will help reduce drug prices, reports Politico. The wholesale price for medications with rising costs will be publicly available in 2019 and will provide insights into drug industry pricing activities that have been previously unavailable.

5. California's efforts have spurred other states to consider drug pricing transparency legislation. For instance, Oregon Democratic Gov. Kate Brown recently signed a law that requires drug companies to reveal certain cost information related to annual price increases above 10 percent, according to Politico. The publication reports Massachusetts and Nebraska are also considering drug pricing transparency legislation.

6. Beginning Oct. 1, California health plans will have to inform the state of the most commonly prescribed medications among participants, as well as which prescriptions among this group are the most expensive, among other information, according to the report.

Read the full Politico report here.

Editor's note: Alia Paavola contributed to this story.

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