In California, efforts to address affordability challenges have included measures to reduce regulatory barriers and lower costs for families. Governor Gavin Newsom and the state legislature have recently taken steps such as reforming housing development rules and streamlining regulations to help Los Angeles recover from wildfires.
Despite these initiatives, Senate Bill 41 (SB 41) is under consideration in the state legislature. Critics argue that this bill could increase prescription drug costs and remove savings for taxpayers, patients, businesses, and unions by adding new government requirements in healthcare.
A long-time resident of California’s Central Valley expressed concern about SB 41’s potential effects on patients and employers. “As a resident of the California Central Valley for over 36 years who bears the costs of taking daily prescription medications, I am wary of bills that may have adverse impacts on patients, employers, and any working Californian.”
Last year, Governor Newsom vetoed a similar bill to SB 41. In his veto message, he said it was too costly for residents and failed to “ensure that prescription drugs remain accessible throughout pharmacies across California and available at the lowest price possible.” Despite this veto, lawmakers are moving forward with SB 41.
The bill would affect pharmacy benefit managers (PBMs), which health plan sponsors such as small businesses and unions use to negotiate lower drug prices with pharmaceutical companies. According to critics, SB 41 would limit how health plan sponsors work with PBMs. “SB 41 would undermine one of the only safeguards for Californians against Big Pharma’s price gouging: pharmacy benefit managers (PBMs). Health plan sponsors, like small businesses and unions, hire PBMs to negotiate against big drug companies to secure lower prescription drug costs for businesses, unions, consumers, and taxpayers. No one has to hire a PBM, but health plan sponsors voluntarily choose to do so because of the savings and flexibility they provide. SB 41 would undermine the ability for health plan sponsors to provide pharmacy benefits that balance access and affordability.”
Critics also warn that limiting partnerships with PBMs could give pharmaceutical companies more control over pricing. “Specifically, this bill would eliminate the leverage health plan sponsors have in these negotiations by limiting how they partner with PBMs – effectively giving pharmaceutical companies a green light to push prices higher and higher. This legislation is not a win for Californians but a massive windfall for big drug companies.”
There are concerns about increased costs for working people if similar restrictions were implemented nationwide. An analysis by the National Bureau of Economic Research found premiums could rise by up to $12.8 billion for seniors in Medicare Part D plans and up to $26.6 billion in commercial health plans.
Additional issues raised include removing safety standards for pharmacies dispensing specialty medications and reducing access to home delivery services for prescriptions.
Recently signed Assembly Bill 116 introduced transparency requirements intended to hold all members of the drug supply chain accountable regarding pricing practices. Some believe SB 41 could counteract these goals by introducing new regulations likely to raise costs.
“By prioritizing results over red tape this legislative session, state lawmakers have revived hope that our government can address the financial challenges burdening Californians. Now is the time to keep pressing forward, not to take a step backwards. That’s why our representatives should soundly reject SB 41.”
