California tries to address high drug costs

KFF Health News reported on some efforts underway in California to rein in drug prices. For context, "state data shows California health plan drug costs have grown by more than 50% since 2017. California insurers spent 11% more on pharmaceuticals in 2023 than in 2022, with specialty and brand-name drugs driving the increase."

The legislature proposed a bill to subject pharmacy benefit managers (PBMs) to licensing requirements and to "require them to pass along 100% of the rebates they get from drug companies to the health plans and insurers that hire them to oversee prescription drug benefits." The governor appears to oppose that bill, in favor of the state manufacturing its own generic drugs, along with requiring more transparency. Regardless of which approach (or perhaps another) ultimately changes the landscape, the proposals signal an ongoing concern with high prescription drug costs.

The article also raised some potential anti-competitive practices, where PBMs "appeared to steer the most profitable prescriptions away from competitors and to their affiliated pharmacies, which they reimbursed at markups exceeding 1,000% for some drugs." This practice apparently causes reimbursement from some insurers to some pharmacies to be less than what it costs the pharmacy to buy certain medications.