Measure Will Help Reduce Prescription Drug Costs for Californians

For immediate release:

(SACRAMENTO, CA) – New legislation proposed by Assemblymember Tom Daly (D-Anaheim) will lower patients’ out-of-pocket costs for their prescription medications. AB 933 requires at least 90 percent of pharmaceutical rebates be passed on to the consumer.

“The current rebate system bypasses patients, while saving health insurers and the pharmacy intermediaries billions of dollars each year,” said Assemblymember Daly. “The system needs reform so patients benefit from negotiated rebates.”

Currently, rebates and discounts are negotiated when health insurers and Pharmacy Benefit Managers (PBMs) purchase medications from drug manufacturers. On average, pharmaceutical manufacturers rebate 40% of a medicine’s list price. Therefore, if the list price of a drug is $100, a PBM may negotiate a rebate of $40 so the PBM and the insurer only pay $60 for the prescription. Unfortunately, these savings are typically not passed on to consumers. In fact, the price patients pay for their prescriptions at the counter is often much higher than what insurers pay for the same medications.

“Every month, I go to the pharmacy to pick up my daughter’s prescription, which prevents excruciating flare ups that cause her skin to bubble like a third-degree burn,” said Colleen Henderson, the mother of a daughter with Hidradenitis Suppurativa. “Even with insurance coverage, my out-of-pocket cost is more than $5,000 per month for one prescription. What’s the point of insurance if I still can’t afford the medication my daughter needs?” This situation is unique to health insurance coverage of prescription medicines, and it often penalizes patients who need medicines the most. Right now, patients receive the benefit of negotiated discounts when sharing in costs for doctor or hospital visits, but they don’t always receive the same benefits for prescriptions.

“Patients with chronic illnesses often end up spending thousands per year to fill their prescriptions at the pharmacy,” said Kristin Colino, President and CEO of Depression and Bipolar Support Alliance California. “With passage of AB 933, the broken rebate system will be fixed so that patients are the ones who benefit and can finally afford their prescriptions - as it should be.”

Barry Schoer, President of the California Access Coalition Board, said that “There is something really wrong with this picture when we see patients struggling every day to pay for their medications at the pharmacy counter, while insurers and PBMs make billions on the current, unfair rebate system. This legislation will bring long-needed reform, so patients benefit and can better afford the medications they need to live a quality life.”

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Assemblymember Tom Daly represents California’s 69th Assembly District, which includes the cities of Anaheim, Garden Grove, Orange and Santa Ana.