Earlier today, California Governor Gavin Newsom signed SB 852. Under the bill the state will partner with drug manufacturers to distribute generic drugs at lower prices. Cal Rx would be the state generic drug label.
According the Governor, the state will use its buying power to purchase generic drugs at lower prices. Drugs such as insulin could become more affordable under the bill
Press release from the Governor’s office
SACRAMENTO – Governor Gavin Newsom today announced that he has signed legislation to bring down the cost of prescription drugs for taxpayers, employers and consumers. Earlier this year, Governor Newsom announced a first-in-the-nation plan to lower the cost of prescription drugs by creating Cal Rx – a state-sponsored generic drug label. SB 852 by Senator Richard Pan (D-Sacramento), brings that proposal one step closer to reality. Under the bill, the California Health and Human Services Agency (CHHS) will develop manufacturing partnerships to produce or distribute generic prescription drugs, making essential medications affordable and accessible to more patients. It would also inject much needed competition into markets that have driven up prices for consumers and help address critical drug shortages.
“The cost of health care is way too high. Our bill will help inject competition back into the generic drug marketplace – taking pricing power away from big pharmaceutical companies and returning it to consumers,” said Governor Newsom. “California is using our market power and our moral power to demand fairer prices for prescription drugs. I am proud to sign this legislation affirming our ground-breaking leadership in breaking down market barriers to affordable prescription drugs.”
“Prescription drugs don’t work if people cannot afford to take them. I thank the Governor for his leadership to assure Californians will be able to have access to a reliable supply of affordable generic medications. With the signing of SB 852, California leads the country again in pursuing innovative ideas to increase health care access and affordability, this time for prescription drugs,” said Senator Pan.
SB 852 advances the Governor’s proposal in January to leverage California’s purchasing power to increase generic drug manufacturing as one solution to the prescription drug affordability crisis. The state has already begun to identify potential target medications and develop a strategic plan to promote state-led generic drug purchasing and manufacturing. California is also transitioning all Medi-Cal pharmacy services from managed care to direct state payment in 2021, strengthening California’s ability to negotiate better prices with drug manufacturers.
From his first day in office, the Governor has made addressing prescription drug pricing – one of the largest drivers of rising health care costs – a top priority for the Administration. Moments after being sworn in, the Governor signed an executive order to foster the creation of the nation’s biggest single-purchaser system for prescription drugs, which will ultimately allow all Californians and private employers to sit together at the bargaining table across from big drug companies when negotiating prescription drug prices. Last year, the Governor signed legislation prohibiting pay-for-delay agreements between brand name and generic drug manufacturers by making them presumptively anticompetitive. These anticompetitive deals hurt consumers and increase drug company profits by blocking the development of generic drug competition.
Under SB 852, CHHS will target drugs for manufacture that could produce the biggest cost savings, and will submit a report to the Legislature by July 1, 2022 analyzing how its efforts have impacted competition, access and costs for those drugs.