California Gov. Jerry Brown signed a drug price transparency bill into law Monday, which forces drugmakers to publicly justify price hikes in the state, according to NPR.
The bill requires pharmaceutical companies to notify health insurers and government health plans — at least 60 days in advance — of prescription drug price increases that would exceed 16 percent over a two-year period and to publicly justify these price hikes.
"Californians have a right to know why their medical costs are out of control, especially when pharmaceutical profits are soaring," Mr. Brown told NPR. "This measure is a step at bringing transparency, truth, exposure to a very important part of our lives…that is the cost of prescription drugs."
The pharmaceutical industry strictly opposed Senate Bill 17, arguing the law will not help consumers afford their medications because it doesn't reveal the role other entities, such as insurers and pharmacy benefit managers, play in the skyrocketing drug prices.
In total, the drug lobby spent $16.8 million and hired 45 firms to attempt to dissolve the bill, which was authored by state Sen. Ed Hernandez, D- Calif., according to the report.
The law will take effect Jan. 1.