Pharma Lobby Group Sues to Bar California's Drug Price Law

(Bloomberg) -- The U.S. drug industry’s main lobbying group said it filed a lawsuit challenging the constitutionality of a California law meant to make drug prices more transparent.

The state law “attempts to dictate national health-care policy related to drug prices in violation of the United States Constitution,” the Pharmaceutical Research and Manufacturers of America said in a statement Friday.

The California measure, signed in October by Governor Jerry Brown, is among the most aggressive efforts by states to peel back the secretive process of setting drug prices. The law requires pharmaceutical companies to notify insurers and government health plans at least 60 days before a planned price increase of more than 16 percent during a two-year period, and to explain the rationale for the increase. The information would be available on a government website.

In its statement, PhRMA said that the California law “singles out drug manufacturers as the sole determinant of drug costs.” PhRMA and its drug company members have said that at least part of the blame lies with health insurers and pharmacy benefit managers that negotiate -- often in secret -- prices and discounts for drugs.

A spokeswoman for California Attorney General Xavier Becerra declined to comment on the lawsuit.

--With assistance from Jared S. Hopkins

To contact the reporter on this story: Caroline Chen in San Francisco at cchen509@bloomberg.net.

To contact the editors responsible for this story: Drew Armstrong at darmstrong17@bloomberg.net, Peter Blumberg

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