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State Affairs

Member of Biocom Board Testifies Against SB 17, Bill Banning Co-pay Coupons Advances 
This month two state bills with potentially drastic adverse effects on the life science industry were heard in their first policy committees.   

As previously reported, SB 17, by Senator Ed Hernandez, would require prescription drug manufacturers to provide 90 day advance notice, including proprietary pricing information (which would be published on a state website), regarding planned increases to the wholesale acquisition cost of the drug exceeding certain minimal thresholds.  The legislation, opposed by Biocom, was heard in the Senate Health Committee (which is chaired by the author of the bill), on Wednesday April 19.  Dr. Steve Mento, a board member of both Biocom and BIO, testified in opposition to the bill, discussing the myriad of problems the bill would create for small companies, and then responded to several questions from committee members.  Although the bill passed by a 7 to 2 margin, several of the members of the committee, including some voting for the bill (including Senators Toni Atkins of San Diego and Holly Mitchell of Los Angeles) expressed reservations about the current language and encouraged the author to further address issues and concerns raised in the hearing. The full hearing can be viewed here. SB 17 now goes to the Senate Appropriations Committee, where a hearing date has not yet been set.
Dr. Steve Mento testified in opposition of SB 17. (Screen capture courtesy of CalChannel)
AB 265 would ban co-pay coupons or other forms of manufacturer-sponsored patient medication assistance programs in most instances.  The author, Assemblymember Jim Wood, has stated he is trying to target what he feels are misuses of co-pay assistance by some companies.  The bill as currently written, however, appears to be very wide in scope and would affect a great number of patient assistance programs.  Biocom’s letter of opposition can be foundhere

On Tuesday, April 18, the bill passed out of the Assembly Health Committee on a 9-2 vote, with 4 members not voting.  Biocom would like to thank Assemblymembers Marie Waldron of Escondido and Jim Patterson of Fresno for voting to protect these critical access programs. The industry, including Biocom, continues to be in discussion with Dr. Wood and his staff about our concerns on the bill. This bill will move next to the Assembly Appropriations Committee.

These and all bills Biocom has taken a formal position on can be found here.  Please contact Jimmy Jackson for further information.

Proposed California Tax on Opioids Passes First Committee
AB 1512, legislation by Assemblyman Kevin McCarty which would create a tax of 1 cent per milligram of active ingredient of opioid in a product to pay for opioid addiction prevention and rehabilitation programs, cleared the Assembly Health Committee on 4/18/17 on an 11-2 vote, with San Diego Assemblymembers Brian Maienschein and Marie Waldron not voting.

As Biocom’s letter of opposition points out, the bill is flawed in numerous ways.  Equating milligram strength with addictive properties is overly simplistic and flawed, and this type of tax on a narrow band of manufacturers would be a dangerous precedent. Further, the federal government is already aggressively acting in this space.  The Comprehensive Addiction and Recovery Act (CARA) was signed into law by President Obama on July 22, 2016. CARA authorizes over $181 million dollars towards both opioid abuse prevention and treatment programs. The 21st Century Cures Act, signed into law by President Obama on December 13, 2016, designated $1 billion in grants specifically to states over 2 years to fight the opioid epidemic.

On Wednesday of last week (April 19), the Department of Health and Human Services announced the awarding of the first $485 million under that provision. It was announced California will be receiving $44,749,771 of that sum for this first round of funding.  Given the announcement of this money, Biocom hopes that reason will prevail and this bill will be shelved.  The bill will be next heard in the Assembly Revenue and Taxation Committee.

Legislation to Create Single Payer Health in California Passes First Committee
SB 562, the bill that seeks to establish a single payer healthcare system in California, was heard Weds April 26th in the State Senate Health Committee and passed with the minimum votes necessary.  The vote was 5-2, with both Republicans voting no and Senators Roth and Newman abstaining.  The full hearing can be viewed here.

The bill is sponsored by the CA Nurses Association and the committee hearing room was filled with hundreds of nurses, local activists and interested citizens in support of the bill. The Democrats were under greater pressure to support it because many of the Bernie Sanders supporters who also support single payer have been getting elected to local democratic committees, and there is a groundswell of local Democratic support for the bill. 

The bill lays out the governance structure for single payer but does not contain a financing mechanism. The sponsors are conducting their own study of financing options, which the author says will be made available before the bill is heard in Appropriations and on the Senate floor.  When asked whether this bill is a two-year effort, Senator Lara responded that they intend to get the study done and move forward as quickly as possible.

The hearing lasted nearly three hours and covered a great number of substantive issues and concerns from members of the committee. In substantive testimony, testifying in support were CNA and their expert conducting the financial study, and hundreds of supporters added their “me too” support, including labor groups, local democratic groups, elected officials (and some candidates), health and consumer groups (see committee analysis).

Substantive opposition came from Kaiser, the CA Chamber and the CA Association of Health Plans, with health plans, business groups and agents doing “me too” opposition. CMA took and oppose unless amended position. The CA Chamber argued that the monetary burden of single payer that employers would have to bear cannot be sustained, that the structure of the bill lacks competition, which leads to lower quality, and that the bill would cost substantially more than the amount that is currently spent (state and federal) on Medi-Cal, resulting in the need for an additional $155 billion beyond current expenditures to fund the system. This increased tax burden will hurt the economy.  CA Chamber cited the LAO study from 2008, which found a shortfall of $42 billion at that time even after a 16% payroll tax increase, and argued the amount would be even greater now. She also cited provider shortage and access problems. CAHP argued enacting this bill is sending the wrong message to the federal government at a time when the ACA is in jeopardy, and that health plans have been good partners in working to make the ACA work and the state should concentrate its efforts on supporting the ACA.

Legislators had numerous concerns and questions on a range of subjects including the following:
  • Funding. How will the bill be funded? Where will the upfront funding come from? Senator Newman noted that the initial funding required to get the program off the ground is larger than the entire budget of the state of California. The sponsors argued that they will funnel existing funding streams (Medi-Cal, etc.) into a single payer system that will be seamless to consumers, and they will present a funding proposal before Appropriations.
  • Waivers. Will the state need a federal waiver to implement the program?  Yes.  Senator Lara conceded that could be difficult and/or take a long time, and if they did not get it, he believes the state can use current eligibility for federal dollars and consolidate the funds into single payer.
  • Access. Several members noted that there are already provider access problems with the ACA expansion and wondered how much worse they would get under single payer.  Some wondered whether the system would pay sufficient reimbursement to keep providers active; others wondered if people could keep their doctors; still others wondered how rural and poor areas would be served.  
  • Managed Care. Several members asked whether this would be a fee-for-service payment model, and if so, would we be losing the benefits of managed care which the state has worked so hard to implement.  The concerns were both monetary—costs savings achieved from managed care would be lost—and quality/better health outcomes—coordination of care for managed care would be lost.
  • Consumer protections and electronic medical records. There was quite a bit of discussion regarding the mandates that have been enacted over the years to phase in electronic medical records and enact consumer protections.  Senator Lara said the intent is to incorporate the consumer protections, but the sponsors acknowledged the bill does not require providers to use electronic medical records.  
In the end, Chair Hernandez said he still had lots of questions but intended to support the bill at this time while the author works out some of the answers. Senator Newman said he supports affordable health care but had strong financial concerns with the bill. He abstained, as did Senator Roth who expressed strong concerns about access.                  

Upcoming Public Policy Events
First Bay Area Facilities/EH&S Committee Meeting
May 23, 2017
12:00 PM