SACRAMENTO, Calif. — California could become the first state to make its own prescription drugs under a proposal announced Thursday by Gov. Gavin Newsom, who says it would “take the power out of the hands of greedy pharmaceutical companies.”
The Democratic governor wants the nation’s most populous state to contract with generic drug companies to make medications on its behalf so it could sell them to its nearly 40 million residents. The goal is to lower prices by increasing competition in the generic drug market, Newsom said.
His proposal also would create a single market for drug pricing in California, with companies having to bid to sell their medicine at a uniform price. One expert said that piece would have the bigger impact.
“Other countries control or negotiate the price of drugs, and if there is one state that could do it, it’s California, which is the size of a country,” said Larry Levitt, executive vice president of health policy for the Kaiser Family Foundation. “A drug company could walk away from Rhode Island. It’s much harder to walk away from California.”
Lawmakers would have to approve the proposal before it could become law. A legislative leader in charge of reviewing the plan gave a tentative endorsement Thursday.
“If Costco can have a Kirkland brand, why can’t California have our own generic brand?” said Democratic Assemblyman Joaquin Arambula, an emergency room doctor from Fresno who chairs the House Budget Subcommittee on Health and Human Services. “I really do think there is quite a bit of merit in having us produce the medications.”
Officials from the two industry associations that represent name brand and generic drugmakers have not responded to requests for comment.
The drug plan is part of Newsom’s budget proposal, which he must present to lawmakers by today. The state could have as much as a $7 billion surplus this year, according to the nonpartisan Legislative Analyst’s Office.
Newsom’s office did not say how much the drug proposal would cost, prompting criticism from some Republican lawmakers who said the state should not compete with private companies.
“When the state runs it, it costs more money,” said Republican Assemblyman Devon Mathis, who’s also on the health subcommittee.
