(CN) – With a goal of lowering prescription drug costs, Los Angeles County officials said Wednesday they will join a new state program that allows the county to bargain directly with drug companies.
Los Angeles County Supervisor Janice Hahn said the move will permit the county to leverage its purchasing power and push back on annual, often exorbitant price hikes on prescription drugs. Last year the county spent over $240 million on prescription drugs alone for its public health care system.
Hahn, a former congresswoman, said the new program implemented by Gov. Gavin Newsom serves as a model for the rest of the country. She said California is taking the lead in fighting soaring drug prices, not Congress.
“California under Gavin Newsom’s leadership is not going to wait for Congress,” Hahn said at a press conference at a rehabilitation center in Los Angeles. “Today, California under his leadership is leading the country once again; California is a model for the rest of the country.”
Moments after his inauguration this past January, Newsom signed an executive order creating a single-purchaser system for drugs. He said the nation’s largest state will use its “market power and moral power to demand fairer prices for prescription drugs.”
Once the plan goes live, Newsom’s administration believes leveraging the state’s Medi-Cal buying power could save the state hundreds of millions of dollars annually. Medi-Cal, which serves over 13 million Californians, budgeted $8 billion during the current fiscal year for pharmacy services.
Los Angeles County is one of the state’s largest public buyers of prescription drugs and the first local government to sign up for the fledgling program.
Newsom hopes the partnership between the state and county will force the pharmaceutical industry to the bargaining table and increase pricing transparency. He said politicians have neglected to rein in drug prices because they’ve been “bought off” by Big Pharma.
“They’ve been threatened; they don’t want to touch this,” Newsom said Wednesday.
A recent study by the state’s nonpartisan legislative analyst says Newsom’s program “is likely” to cut costs but “of an unknown magnitude.” It also said that the program is unlikely to have a major impact on drug manufacturers’ bottom lines.
The analyst concluded “important details” are missing from the bulk drug-buying plan, which is still being developed by the Newsom administration.
Newsom’s plan follows a consumer protection bill signed by former Gov. Jerry Brown in 2017.
The law backed by California unions and health care providers requires drug companies to give the state and insurers at least 60 days’ notice before planned price increases of more than 16 percent over a two-year period. It also forces insurance companies to file yearly reports with state regulators outlining the impact of medicine costs on health care premiums.
The pharmaceutical lobby sued the state over the pricing transparency law, with the case pending in federal court in Sacramento.
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