California Governor Passes Legislation for State-Sponsored Generic Drugs

California Governor Gavin Newsom recently signed bill SB 852, allowing the creation of a state-sponsored generic drug label, Cal-Rx, through which the state can sell generic prescription drugs to its 40 million residents.

This legislation, which was proposed earlier this year, would also create a single market for drug pricing in California, in which companies would bid to sell their drugs at a uniform price. According to Governor Newsom, SB 852 is aimed at regulating high prescription drug costs, increasing the accessibility of essential drugs such as insulin and epinephrine, and correcting medication 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,” the governor said. “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 groundbreaking leadership in breaking down market barriers to affordable prescription drugs.”

The plan has been met with some reservation. “Overall health care costs are rising from all over the place. I do feel that to pinpoint it and try to find out what is the true cost is obviously complex,” President of the California Pharmacists Association Ken Thai, PharmD, said, commenting on whether the bill would bring down health care expenses. “Drug costs, medication costs specifically, are definitely a part of that. But I think there are definitely other areas that need to be looked at, whether it’s from the standpoint of pharmacy benefit managers, corporate pressures, manufacturing processes, supply chains … I think there’s a lot of work that needs to be done in terms of navigating this whole process to see if this kind of theory is true, or valid.”

Under this plan, California will become the first state in the U.S. to manufacture its own generic drugs.

Sources: Office of Governor Gavin Newsom press release, September 28, 2020; Drug Topics, October 8, 2020.