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CCCC applauds legislators for passing AB 2863 and AB 315, which will help ensure that Californians do not unknowingly overpay for their prescription drugs

August 30, 2018

Sacramento, CA (August 30, 2018) – The California Chronic Care Coalition (CCCC), a unique alliance of healthcare organizations collaborating to improve the health of Californians with chronic conditions, today applauded state legislators for passing Assembly Bill 2863 (AB 2863) and Assembly Bill 315 (AB 315) and urged Governor Jerry Brown to sign both bills to ensure that Californians are not overpaying for their prescription drugs because of harmful pharmacy benefit manager (PBM) practices.

“Californians living with chronic conditions such as cancer, heart disease, arthritis or hepatitis are disproportionately impacted when health care costs go up. Health insurance is supposed to make medications for chronic conditions more affordable, but this is not always the case due to common practices by the largely unregulated pharmacy benefit manager industry,” said California Chronic Care Coalition CEO Liz Helms. “On behalf of Californians living with chronic conditions and their families, we urge Governor Brown to sign AB 2863 and AB 315, common-sense regulations that would protect consumers and make health care more affordable.”

PBMs are third-party negotiators contracted by insurers to manage prescription drug benefits, set prices with manufacturers and decide rebates with pharmacies. They were initially intended to lower drug costs for consumers, but the lack of transparency and government oversight has increased consumer costs, while driving industry profits higher. Some PBMS have inserted ‘gag clauses’ into their contracts to prevent pharmacists from telling customers when their medications could be purchased cheaper by paying out-of-pocket rather than through their insurance. This could mean that a customer with a $20 co-pay that is purchasing a prescription that costs $5 at retail price could save $15 each time they visit the pharmacy. Instead, PBMs are profiting from the overpayment difference, known as a “clawback.”

According to a recent University of Southern California study, customers overpay for their prescriptions 23 percent of the time – an average of $7.69 on each transaction. During the six-month period examined by the study, the total overpayment reached $135 million nationwide.

AB 2863, authored by Assemblymember Adrin Nazarian (D-Van Nuys), would target PBM “clawbacks,” and help ensure that the price Californians pay for their copayment is not more than the retail price of the medication. In addition, any cash payments made for medically necessary prescriptions would be applied to a patient’s insurance deductible and out-of-pocket maximum limit.

AB 315, authored by Assemblymember Jim Wood (D-Healdsburg), would prohibit PBM “gag clauses,” allow pharmacists to inform patients when their medicine could be purchased more cheaply out-of-pocket and would require disclosure from pharmacy benefit managers about drug acquisition costs, rebates received, and any administrative fees that have been collected from drug manufacturers and pharmacies. AB 315 would also establish a regulatory framework and registration of PBMs with the California Department of Managed Healthcare.

To interview Liz Helms, CEO of the California Chronic Care Coalition and/or Jon Roth, CEO, California Pharmacists Association, please contact Lucila Garcia.

Media Contact:
Lucila Garcia
(323) 646-2150