Curbing the rising cost of prescription drugs is something every American supports. And, Senate Bill 1010 attempts to do just this. However, what Senator Hernandez’ legislation fails to do is tackle the real culprit: skyrocketing healthcare costs.
Singling out pharmaceutical manufacturers is easy, convenient and politically expedient. It creates great sound bites in an election year, and allows every legislator supporting the bill to say that they “took on the pharmaceutical industry.”
But, nothing could be further from the truth.
As healthcare costs are eating away at the pocketbooks of every California family, drug costs are just one part. Our focus should be on the larger picture – the real culprits who are standing on the sidelines and supporting the Hernandez legislation, cheering him on while breathing a sigh of relief that their industry is not under the legislative microscope.
Legislating is about having the political courage and vision to tackle large politically and substantively tough issues and treating everyone equally.
This means declaring war on the healthcare industry, both for profits and nonprofits alike, and building a solid case for real reform and equality.
In other words, why aren’t we asking, demanding, the health insurance industry for real transparency? In other words, requiring Kaiser, Blue Cross, AETNA, and every insurer to disclose how and why their costs are increasing, access to all the data that the scholarly researchers need, what they paid for a specific prescription drug vs. what they are charging the employer? And, have an open discussion about this and more.
Where is the willingness and courage to ask the various healthcare “middlemen” to disclose and be transparent for-profit companies that manage prescription drug benefits like Express Scripts, CVS Caremark, Envision, Prime Therapeutics and others?
When is the last time the California legislature asked Cardinal Health, McKesson, AmeriSource Bergen, three of the nation’s largest healthcare wholesalers, “What price did you negotiate this specific drug for, and why is the State of California being charged more than the State of Vermont?”
Senate Bill 1010 is a ruse. It allows the legislature to go home and campaign, saying “Look what we did.” In reality, SB 1010 creates a complicated web that fails to address the real issues, the real problems and real solutions. The specter of drug pricing and healthcare costs will always be part of the larger healthcare discussion, but it belies reason why it is the sole focus.
To overcome this, I offer a number of specific recommendations to change the status quo and challenge Senator Hernandez and the California legislative leadership to do something meaningful.
First, create a California Healthcare Cost Review Commission with the sole responsibility of creating and implementing the overall strategy for the state;
Second, require every pharmacy benefit manager (PBM) operating in California to disclose what their negotiated price for the top 25 drugs are before and after rebates;
Third, require any wholesaler and Group Purchasing Organization (GPO) doing business with the State of California to disclose what they are purchasing the same top 25 drugs for in order to allow the legislature to compare prices, discounts, etc.;
Fourth, require both nonprofit and for-profit insurers to disclose their actual purchase prices for the top 25 prescription drugs (with and without any negotiated rebates);
Fifth, require all health insurers (nonprofit and for profit) to provide notice to the public 90 days before any price increase or decrease and why;
Sixth, ensure that the newly created California Healthcare Cost Review Commission has access to all of the same data from Medicaid, contracts, etc., to ensure that when comparing prices paid they are operating on an equally playing field; and
Finally, treat generic and brand drug companies the same, requiring each to provide whatever information is needed.
As the California legislature ponders all of this, they need to ask themselves if what they really want is socialized medicine, a single payer system, and complete government control. If so, simply admit it. While I do not agree with U.S. Senator Bernie Sanders, I admire his courage to tell the voters what he really wanted to do.
Perhaps someday the California legislature will have the courage of conviction to tackle the entire healthcare industry and not one part. We cannot allow only one part of the healthcare industry to be the “undressed emperor”. Let’s tackle the cost of healthcare on a bipartisan basis, fairly and openly, understanding we are also talking about growing or reducing jobs in the healthcare industry and the implications for that today and tomorrow.
The challenges are great, but the opportunities for real meaningful reform are even greater.
John Kehoe is founder of the California Board of Rehabilitation and served as the state’s first Secretary of Consumer Affairs under Governor Ronald Reagan.