California to require advanced notice on drug cost spikes

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SACRAMENTO, Calif. (AP) — Drug companies doing business in California will now have to notify the public two months in advance of dramatic price spikes.

Legislation signed by Gov. Jerry Brown on Monday is designed to bring more transparency to drug pricing and, hopefully, tamp down on rapidly rising costs. Companies will be required to offer a reason for price spikes of more than 16 percent in a two-year period.

Pharmaceutical companies have sharply criticized the proposal and helped kill it in previous years.

They argue it could create drug shortages if distributors horde drugs in advance of the increases and could limit the money they take in for research and development.

Drug price transparency laws in Nevada and Vermont require more disclosure about prices but do not require advance notice of increases.

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