January 2020

Generic drugs

California governor proposes that the state manufacture its own generic drugs

The proposal, which is still largely conceptual, was part of Newsom’s proposed budget for 2020-2021.1

California Democratic Governor Gavin Newsom has introduced a sweeping proposal to reduce drug prices, suggesting that the state contract with one or more generic drug manufacturers to manufacture specific generic drugs on behalf of the state. ‘State.1 The proposal, which is still largely conceptual, was part of Newsom’s proposed 2020-2021 budget.1

Rising drug prices are an ongoing concern, with 79% of Americans saying the cost of prescription drugs is unreasonable, according to a Kaiser Family Foundation survey.2

In the survey, about 6 in 10 respondents reported taking at least 1 prescription medication, while 1 in 4 reported taking 4 or more prescription medications.2 As the number of prescriptions increases, respondents also reported that their ability to pay for them decreases. Among those taking 1 to 3 prescription medications, 17% said it was difficult to purchase their medications. However, of those taking 4 or more prescription drugs, 35% said it was hard to afford.2

Affordability also affects medication adherence, according to the survey. Of those surveyed, 19% said they had not filled a prescription for a drug because of the cost, 18% said they had taken an over-the-counter drug instead, and 12% said they had reduced by half the pills or skipped doses. These statistics correspond to 29% of patients who did not take their prescription drugs as instructed due to cost.2

Finally, the survey also found that a majority of Americans are dissatisfied with how politicians are handling rising drug costs, regardless of their political party affiliation. According to the survey, 75% said Democrats in Congress were not doing enough and 77% said Republicans were not doing enough to solve the problem.2

This dissatisfaction may lead to more creative solutions, such as Governor Newsom’s proposal. The program, called CalRx according to a press release,3 would allow the state to contract with one or more generic drug manufacturers to provide them to Californians for purchase.1 The plan would not apply to brand name prescription drugs.1

Proponents argue that the program would increase competition from generic drugs, thereby lowering prices.1 Opponents, however, said it was unlikely to change anything.

“If California enters the market on its own, it will face the same market dynamics that have led to generic prescription drug price deflation over the past 3 years, as well as some instances of abuse. of patents that have led to longer monopolies for certain brand-name drugs,” Jeff Francer, MPP, JD, general counsel for the Association for Accessible Medicines, said in a statement from the organization.4

The proposal, however, is not an entirely new idea. Senator Elizabeth Warren (D-Mass) argued that the federal government should be allowed to manufacture its own generic drugs to reduce costs,5 and a group of more than 500 hospitals set up its own pharmaceutical company in 2018 to manufacture generic drugs at lower cost.6

“A trip to the doctor’s office, pharmacy or hospital shouldn’t cost a month’s pay,” Governor Newsom said in an interview with the Los Angeles Times. “The cost of health care is just too high and California is fighting back.”seven


  • 2020-2021 California Governor’s Budget Summary, Health and Human Services. Released on January 10, 2020. Accessed January 13, 2020.
  • Public opinion on prescription drugs and their prices [survey]. Kaiser Family Foundation. Posted November 20, 2019. Accessed January 13, 2020.
  • Governor Newsom Proposes 2020-2021 State Budget [news release]. Sacramento, California; January 10, 2020. Office of Governor Gavin Newsom. Accessed January 13, 2020.
  • Subject: Pharmacy Times: Request for Statement on CA’s Proposed Generic Drug Program [email]. By Rachel Schwartz, Association for Accessible Medicines. Received January 13, 2020.
  • Warren, E. Elizabeth Warren: It’s time to let the government make generic drugs [opinion]. The Washington PostDecember 17, 2018. html. Accessed January 13, 2020.
  • Civica presentation graphic. Accessed January 13, 2020.
  • Karlamangla S. Q&A: What you need to know about Governor Newsom’s pharmacare plan for California. Los Angeles TimesJanuary 9, 2020. Accessed January 13, 2020.

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