Governor Newsom Signs Legislation Advancing California’s Fight to Lower Prescription Drug Prices

Sacramento, CA–Governor Gavin Newsom of California today announced that he has signed legislation to bring down the cost of prescription drugs for taxpayers, employers and consumers.

Earlier this year, 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 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.”

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.

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.