California to use market power in bid to lower drug costs

SACRAMENTO, Calif. (AP) — California will attempt to use its massive market power to increase the availability and lower the cost of prescription drugs under a bill Gov. Gavin Newsom signed into law Monday. © Provided by Associated Press FILE – In this July 23, 2019, file photo, Gov. Gavin […]

SACRAMENTO, Calif. (AP) — California will attempt to use its massive market power to increase the availability and lower the cost of prescription drugs under a bill Gov. Gavin Newsom signed into law Monday.



FILE - In this July 23, 2019, file photo, Gov. Gavin Newsom talks to reporters at his Capitol office in Sacramento, Calif. California will attempt to use its massive market power to increase the availability and lower the cost of prescription drugs. The new law that Newsom approved Monday, Sept. 28, 2020, requires the California Health and Human Services Agency to create partnerships designed to increase competition, lower prices and reduce shortages for generic prescription drugs. (AP Photo/Rich Pedroncelli, File)


© Provided by Associated Press
FILE – In this July 23, 2019, file photo, Gov. Gavin Newsom talks to reporters at his Capitol office in Sacramento, Calif. California will attempt to use its massive market power to increase the availability and lower the cost of prescription drugs. The new law that Newsom approved Monday, Sept. 28, 2020, requires the California Health and Human Services Agency to create partnerships designed to increase competition, lower prices and reduce shortages for generic prescription drugs. (AP Photo/Rich Pedroncelli, File)

The new law requires the California Health and Human Services Agency to create partnerships designed to increase competition, lower prices and reduce shortages for generic prescription drugs.

Newsom said the measure brings the state “one step closer” to his January budget proposal for California to eventually create its own generic label.

The new law “will help inject competition back into the generic drug marketplace — taking pricing power away from big pharmaceutical companies and returning it to consumers,” Newsom said.

He said the most populous state has started to identify certain medications and develop a plan to promote its manufacturing and purchasing. The agency will look for drugs that could produce the biggest cost savings.

California is switching all Medi-Cal pharmacy services next year from managed care to direct state payment, which he said will also boost the state’s ability to negotiate better drug prices.

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The bill is SB 852

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