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Emily Rusch,
CALPIRG

Bill to Set Limits on Rx Gifts to Doctors Has its First Vote

For Immediate Release

Today the Senate Health Committee will vote on CALPIRG-backed legislation by Senator Mike McGuire, SB 790, to rein in pharmaceutical company gifts to doctors.

In recent years CALPIRG’s Health Insurance Rate Watch Project reviewed dozens of health insurance companies’ rate filings at the California Department of Insurance, and found prescription drug price increases to be a significant driver of premium price hikes overall. That’s why CALPIRG supports of package of bills introduced this year in the California Legislature to rein in the high cost of prescription drugs.

“Reining in the high cost of prescription drugs has to be part of the larger conversation about the future of health care in this state,” said Emily Rusch, Executive Director of CALPIRG. “Pharmaceutical companies charge whatever prices they think the market can bear, and actively market those high-cost drugs to prescribers. We urge the legislature to pass SB 790 to limit pharmaceutical company gifts to doctors.”

Other key CALPIRG-supported bills in the California state Legislature include:  

-       SB 17 by Senator Ed Hernandez would require drug manufacturers to notify purchasers of significant price increases at least 90 days in advance, so that they can react and respond.
-       AB 265 by Assemblymember Jim Wood would increase transparency in the pharmacy benefits marketplace.
-       AB 587 by Assemblymember David Chiu would help the state negotiate better discounts on prescription drugs paid for through state tax dollars.

Here is our prepared testimony for SB 790:

My name is Emily Rusch and I am the Executive Director of CALPIRG, the California Public Interest Research Group. We’re here today in support of SB 790.  

In recent years CALPIRG’s Health Insurance Rate Watch Project reviewed dozens of health insurance companies’ rate filings at the California Department of Insurance, and found prescription drug price increases to be a significant driver of premium price hikes overall.

We applaud members of this committee and the Assembly Health Committee for embarking on a number of strategies to pressure prescription drug costs down, and we believe this bill is an important complement to other efforts to increase transparency and accountability in the industry.  

Each year in the U.S. $73 billion is spent on brand name drugs for which an equivalent generic available at a significant lower cost.[1] 

We understand that doctors prescribe the medicine that they believe is best for their patients. But numerous studies demonstrate a link between pharmaceutical gifts and the prescribing habits of doctors.

A ProPublica investigation found that doctors who receive industry payments such as meals, travel, speaking fees and royalties were two to three times more likely to prescribe brand-name drugs at exceptionally high rates than others in their specialty.[2]

A recent Harvard study concluded that physicians’ rate of prescribing brand-name statins — the category of drugs that treat high cholesterol — increased by 0.1 percent for every $1,000 in industry money received. Under $2,000 in payments, there was no significant increase in brand-name prescribing.[3]

Back in 2008 CALPIRG wrote a report, “Playing by their Own Rules,” that analyzed the drug companies’ voluntary gift limits, and concluded that the manufacturers have created limits that in many cases fail to constrain their actions at all.”[4] 

When brand drugs are prescribed over generics that are equally effective, we all pay for those decisions in the form of higher premiums and higher costs for taxpayer-funded programs.

We support SB 790 because it would significantly limit the circumstances in which drug companies can make payments or provide gifts to health care providers.

There are a number of exceptions in this bill to allow pharmaceutical companies to pay for activities such as clinical trials, educational seminars and conferences, and honoraria for faculty fellowships at academic institutions. So we believe that this bill is a very reasonable approach to this issue that still puts California at the forefront of preventing conflicts of issues in this sector. We ask for an aye vote.

 

[1] Doyle, K. (2016). “Drug company-sponsored meals tied to more prescriptions.” Retrieved from http://reuters.com/

[2] Ornstein, C., Grochowski, J. R. & Tigas, M. (2016). “Now There’s Proof: Docs Who Get Company Cash Tend to Prescribe More Brand-Name Meds.” Retrieved from https://propublica.org/

[3] http://jamanetwork.com/journals/jamainternalmedicine/article-abstract/25...

[4] The report can be found online here: http://www.calpirg.org/reports/caf/playing-their-own-rules

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