California's legislature approved a measure Aug. 31 that directs the state's top health agency to partner with drug companies to make or distribute generic drugs, Kaiser Health News reported.
Gov. Gavin Newsom has until Sept. 30 to sign or veto the measure, which also allows the state of California to manufacture its own generic drugs.
In January, Mr. Newsom was expected to announce a plan that would create a state-run generic drugmaker and set uniform drug prices in the state, but the plans were put on hold when the COVID-19 pandemic took priority, Kaiser Health News reported.
While it could take years for California to bring a generic drug to the market, the bill would put the state in competition with major drugmakers, possibly allowing the state to use its purchasing power to lower drug costs.
"People need these drugs, but prices are through the roof, so we’re saying there’s a role for the state to bring prices down," the bill’s author, state Sen. Richard Pan, D-Sacramento, told Kaiser Health News. "This also creates a model to address drug shortages and other supply chain issues during COVID-19 and future pandemics."
It's unclear which drugs the state would make or procure, but the bill urges officials to prioritize developing generics for chronic and high-cost health conditions and urges production of drugs that can be delivered by mail. The bill also specifically calls for at least one form of insulin, "provided that a viable pathway for manufacturing a more affordable form of insulin exists at a price that results in savings."
If Newsom signs the bill into law, the state's HHS agency would have 18 months to create a list of drugs for the state to make and have a report due to the legislature by July 2022.
Under the measure, the generic drugs developed by California would be available for both public and private purchasers with taxpayers picking up the costs for startup funding and staff costs, according to Kaiser Health News.
Civica Rx, a nonprofit generic drug company formed by several major health systems, is considering partnering with California to help it produce generics, Kaiser Health News reported.
The Pharmaceutical Research and Manufacturers of America, the drug industry's top lobbying group, declined to comment to Kaiser Health News.
Brett Michelin, the lead lobbyist for the Association for Accessible Medicines, a generic drug trade group, told Kaiser Health News that generic drugmakers aren't threatened by California potentially entering the market.
"Generic manufacturers are more than open to doing this kind of partnership. I think having a fair and open process to sell drugs and compete for customers is what the generic industry is very used to and comfortable with," he said.
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