Regulate Drug Pricing in California!

SB 966 is a crucial bill that aims to put a stop to the anticompetitive practices of pharmacy benefit managers (PBMs), which have been a major contributor to the rising costs of drugs. The California Pharmacist Association and the Los Angeles LGBT Center are sponsoring the bill, which seeks to regulate PBMs by requiring them to be licensed by the California Board of Pharmacy and subjecting them to increased scrutiny. The bill's passage will help to bring down healthcare costs for millions of Californians, making it the most comprehensive regulation of PBMs attempted by any state since a bipartisan effort in Florida last year set the standard for the nation.

PBMs operate as middlemen in the pharmaceutical industry, buying prescription drugs from manufacturers and wholesalers and selling them to pharmacies and health plans. However, they have increasingly taken advantage of their position to steer patients towards higher-cost drugs and pharmacies, charge high administrative fees, and charge pharmacies more for drugs than they paid for them. This has resulted in PBMs capturing a larger and larger share of total prescription drug spending at a time when prices are rising precipitously.

The increasing share of total spending on prescription drugs that goes to PBMs is particularly concerning, as they play no role in producing prescription drugs. This has led to a decline in the share of total spending that goes to drug manufacturers, while over half of every dollar spent on brand medicines goes to PBMs.

Families in California are finding it increasingly difficult to afford the rising cost of medications. In 2022, drug spending in California grew by 12%, much faster than the overall rate of inflation, while total health premiums rose by just 4%. Last year, more than half of Californians either skipped or postponed mental and physical healthcare due to cost, putting their safety and wellbeing at risk. Additionally, one in three reported holding medical debt, including half of low-income Californians.

SB 966 requires that all PBMs be licensed and disclose basic information regarding their business practices to the licensing entity. In addition, SB 966 enacts other pro-consumer requirements and prohibitions:

- Requires all PBMs to be licensed through the State Board of Pharmacy

- Prohibits steering patients to affiliated pharmacies and instead allows patients to choose which in-network pharmacy best meets their needs.

- Prohibits spread pricing, where PBMs charge a plan more for a drug than it pays a pharmacy.

- Requires that the PBM pass through all negotiated drug rebates to the payers or patients.

- Outlaws making any untrue, deceptive, or misleading statements.

- Prohibits PBMs from negotiating exclusive arrangements with manufacturers for drugs, devices, or other products.

- Limits how fees may be charged and requires transparency in fees.

Please contact your state leaders today to support SB 966.