EDITORIAL: A dose of transparency on drug prices

Sept. 27--With the defection of Arizona's John McCain and others, Senate Republicans decided on Tuesday not to hold a vote on the latest Obamacare repeal bill. That would be the good news.

But anyone looking for something more than the status quo on health care, especially the spiraling cost of pharmaceuticals, might keep an eye on Sacramento rather than Washington.

Two bills on Gov. Jerry Brown's desk offer some hope for people struggling to pay for prescription medication. One of the measures is AB 265 by Assemblyman Jim Wood, D-Healdsburg, which would limit the use of discount coupons by pharmaceutical companies. At first glance, that may seem like a bad deal for consumers. Who doesn't like a discount?

Look a little deeper, however, and you'll see why this bill, inspired by recent examples of price gouging, is a promising cost-control measure.

Remember the EpiPen? With a quick stab in the thigh, an EpiPen injects a life-saving dose of epinephrine, a drug that quickly opens airways swollen shut by an allergic reaction.

The EpiPen was invented in the 1970s, and any research costs were recouped years ago. Moreover, the dose of epinephrine it contains costs about $1.

The drugmaker Mylan bought the patent in 2007, when a pack of two EpiPens, which must be replaced annually, cost about $100. Since then, the company has raised the price to about $600.

In response to a public outcry about the enormous cost, Mylan began offering discount coupons to help consumers with copayments. The net effect was to keep the price high and discourage people from switching from the name-brand to a less expensive alternative.

That's where the coupon restriction in Wood's bill comes in -- it takes effect only if a less expensive generic alternative is available. In the case of the EpiPen, there is an alternative that costs as little as $10 for a two-pack.

The EpiPen is just one example. A recent study by researchers from UCLA, Harvard and Northwestern found that copayment coupons helped boost the sale of name-brand drugs by more than 60 percent and pushed spending on about two-dozen such drugs up by as much as $2.7 billion over five years. A separate Harvard study found that brand-name medications with coupons more than doubled as a share of retail drug spending between 2007 and 2010.

Coupons already are prohibited by Medicare, Medicaid, military health insurance and the Veterans Administration. Californians would benefit from the same rules. Brown should sign AB 265.

The governor also should sign SB 17 by state Sen. Ed Hernandez, D-West Covina. SB 17 introduces accountability and transparency to prescription drugs. Drug makers would be required to notify health plans, health insurers and state purchasers, such as the Medi-Cal program, at least 60 days before raising prices of many prescription drugs.

The bill also requires insurers to submit data that will help the state determine the impact of drug costs on health insurance premiums. Pharmaceutical companies stopped a version of this bill in 2016, and they waged a battle against SB 17, too. It's a modest measure that won't cut costs on its own. But it may shame drug makers into limiting unjustified price increases.

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