California would get into the business of selling prescription drugs under a sweeping plan to reduce health costs that Gov. Gavin Newsom unveiled Thursday.
Newsom’s office provided a memo summarizing the proposal but declined to answer questions about how it would work and how it would be funded. Even some supporters say it will be hard to accomplish.
The Sacramento Bee reports that the plan, which will be part of Newsom’s 2020-21 budget proposal, would make California the first state to create its own generic drug label. Newsom also wants state agencies and private insurers to negotiate drug prices together to leverage lower prices.
Under the plan, California would contract with existing drug manufacturers to produce pharmaceuticals for the state. Newsom’s office argues that would increase competition and lower prices in the market for generic versions of brand name drugs.
Generics companies were surprised by Newsom’s announcement Thursday, said Jeff Francer, general counsel for the Association for Accessible Medicines, which represents generics manufacturers.
State government partnering with generics companies could help California leaders address problems the manufacturers face related to patents and anti-competitive practices by brand-name pharmaceutical companies, Francer said. But he added he’s waiting to see more details from Newsom’s office before taking a position on the plan.
Newsom also wants state agencies that purchase drugs, including Medi-Cal, CalPERS and Covered California, to team up with private insurers and other entities to negotiate as a group with pharmaceutical manufacturers.
His plan would create a single market for drug purchasing in California, forcing drug manufacturers to sell their drugs at the same price to everyone in the state. To sell drugs in the California market, Newsom’s office says the state would require manufacturers to sell drugs at or below the prices they charge other states, nations or global purchasers.
Priscilla VanderVeer, a spokeswoman for the pharmaceutical trade group PhRMA, declined to comment on Newsom’s proposals until his office releases more information.
Mary Ellen Grant, spokeswoman for the California Association of Health Plans, which represents insurers, said the association is waiting to see more detail.