(Reuters) - California Governor Jerry Brown on Monday signed state legislation requiring drug companies to report certain price hikes for prescription medicines in a move that could set a model for other states could follow.

The law, which aims to provide more transparency around pharmaceutical and biotech company pricing methods for their medicines, requires drug manufacturers to give a 60-day notice if prices are raised more than 16 percent over a two-year period. The law also requires health plans and insurers to file annual reports outlining how drug costs affect healthcare premiums in California.

"Californians have a right to know why their medication costs are out of control, especially when pharmaceutical profits are soaring," Brown said in a statement on his website announcing the new legislation.

The bill has been vehemently opposed by drugmakers, who argue that wholesale price increases to not reflect the actual prices paid for medicines after discounts and rebates.

Biotechnology Innovation Organization, the leading industry trade group, issued a statement condemning the bill and arguing that it would not serve its intended purpose.

"This law will neither provide meaningful information to patients nor lower prescription drug costs," the group said, adding that the law "seriously jeopardizes the future of California's leadership in this innovative industry."

California is home to hundreds of biotechnology companies of all sizes.