California considers selling its own generic prescription drugs

California could become the first state to introduce its own brand of generic prescription drugs in an effort to drag down stratospheric healthcare costs.

The plan for state-branded drugs is part of California Gov. Gavin Newsom’s budget proposal, which he is expected to unveil Friday, January 10.

“A trip to the doctor’s office, pharmacy or hospital shouldn’t cost a month’s pay,” Newsom said in a statement. “The cost of healthcare is just too damn high, and California is fighting back.”

A plan for California to sell its own drugs would “take the power out of the hands of greedy pharmaceutical companies,” Newsom said, according to the Associated Press.

Under the plan, the state would contract with one or more generic drug companies, which would manufacture select prescription drugs under a state-owned label, according to an overview of the plan reported by the Los Angeles Times. Those state generics would presumably be offered to Californians at a lower price than current generics, which could spark more competitive pricing in the market overall.

So far, much of the plan’s details are unclear, though, including which drugs might be sold and how much money they could save residents and the state.

The conceptual plan so far has garnered both praise and skepticism from health industry experts.

Anthony Wright, executive director of the advocacy group Health Access California, told the Associated Press that “Consumers would directly benefit if California contracted on its own to manufacture much-needed generic medications like insulin—a drug that has been around for a century yet the price has gone up over tenfold in the last few decades.”

Geoffrey Joyce, who heads the USC Schaeffer Center for Health Policy and Economics, meanwhile, speculated to the Times that the state might end up focusing on drugs that currently have little competition—which may mean manufacturing drugs that are less commonly used. “In terms of savings to a typical family, it would be very modest,” he predicted.

Industry lobbying group Pharmaceutical Research and Manufacturers of America (PhRMA) told reporters that it was withholding comment until more details about the plan were available.

If the plan moves forward, California would be the first state to have its own drug label. But it’s not the first to try to thwart the current drug market. As the Times notes, over 1,000 hospitals in 46 states banded together in 2018 with philanthropies to form a nonprofit drug-making venture called Civica Rx. The company manufactures generic injectable drugs used in hospitals, offering lower prices and stable supplies.

In October, it delivered its first generic drug, the antibiotic Vancomycin Hydrochloride, which had been subject to shortages. “This first delivery demonstrates the Civica model in action and is a dream come true,” Martin VanTrieste, president and CEO of Civica Rx, said in a statement at the time. “We thank our founding philanthropies for prioritizing accessible and affordable healthcare.”

The company has since shipped several other essential medicines, including the blood thinner heparin and the opioid overdose rescue drug, naloxone.

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