In recent months, Governor Gavin Newsom and the state legislature have responded to California’s growing affordability crisis with initiatives to cut red tape, strengthen the economy, and lower costs for working families. From reforming rules that obstruct potentially harmful housing developments to streamlining regulations to help Los Angeles rebuild from wildfires, their actions have shown how the government can be a catalyst for change that improves the everyday Californian’s quality of life.
However, voters who are feeling encouraged by Sacramento’s urgency to cut costs for consumers may be surprised to hear that the state legislature is considering a bill that would cause prescription drug costs to soar and eliminate savings for taxpayers, patients, businesses, and unions. Senate Bill 41 would create new, unnecessary government red tape in healthcare at a time when voters are counting on their leaders to deliver much-needed relief.
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, Gov. Newsom vetoed a bill nearly identical to SB 41, labeling it as too costly to residents and noting that it failed to “ensure that prescription drugs remain accessible throughout pharmacies across California and available at the lowest price possible.” Nonetheless, lawmakers are pushing forward with this shortsighted legislation, wasting time and resources on policies that were already rightfully shot down by the Governor.
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 to those on their plans.
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. These costs are passed down to consumers in the form of higher co-pays and premiums. This legislation is not a win for Californians, but it would provide a massive windfall for big drug companies.
These added costs will end up hurting working people worst of all. An independent analysis by the National Bureau of Economic Research estimates that if these restrictions were replicated nationwide, premiums would increase by up to $12.8 billion for seniors in Medicare Part D and up to $26.6 billion in commercial health plans.
SB 41 would also remove safety standards for pharmacies dispensing expensive specialty medications and undercut home delivery for prescriptions – an essential and affordable service for patients in rural and urban parts of California alike.
Just a few weeks ago, Governor Newsom signed Assembly Bill 116 into law. This is a drug pricing transparency bill that seeks to hold all members of the drug supply chain accountable, which is an important milestone for our state. SB 41 would undermine this achievement by introducing new regulations that would increase drug costs.
By prioritizing results over red tape this legislative session, state lawmakers have revived hope that our government can address the financial burdens that Californians are bearing. Now is the time to keep pressing forward, not to take a step backwards. That’s why our representatives should soundly reject SB 41.
Terry Hall taught high school and coached cross country, track, and football in California’s Central Valley for over 36 years. A Tulare County native, he now lives in Fresno with his wife, close to their children and grandchildren.
Written in partnership with Tom White
