New California Governor Sets Sights on Health Care Reform

LOS ANGELES (CN) – On his first day in office, newly inaugurated California Governor Gavin Newsom unveiled a plan to lower prescription drug costs and make it easier for Golden State families to get insurance coverage.  

One of Newsom’s first executive orders as the state’s 40th governor creates the nation’s biggest single-purchaser system for drugs and will allow all Californians, including private employers, to negotiate prices with drug companies.

“No state has more at stake on the issue of health care. California must lead,” Newsom said in a statement Monday after his inauguration. “We will use our market power and our moral power to demand fairer prices for prescription drugs. And we will continue to move closer to ensuring health care for every Californian.”

The new Democratic governor’s first budget will include to a proposal to expand financial help to make it easier for people and families to buy health insurance “and reinforce the Affordable Care Act after recent federal attacks,” according to a statement from his office.

He also wants to bring the state closer to health care for all by expanding Medi-Cal coverage to all eligible undocumented young adults.

In addition, Newsom signed a separate executive order establishing a California surgeon general to look into the underlying causes of the health challenges facing the state’s residents.

Newsom’s announcement comes the same day a study was released showing prescription drug costs have skyrocketed in recent years due to steady price hikes by the nation’s top pharmaceutical companies, not because of innovative drugs entering the market.  

The University of Pittsburgh study, published Monday in the journal Health Affair, found that prices for brand-name drugs rose annually by more than 9 percent between 2008 and 2016, or nearly five times the rate of general inflation over that time span.

The cost of injectable drugs spiked by more than 15 percent over the same period.

Researchers said the soaring prices were overwhelmingly attributable to existing drugs and their manufacturers.

“It makes sense to pay more for new drugs because sometimes new drugs are more effective, safer or treat a new disease you didn’t have a treatment for,” Inmaculada Hernandez, assistant professor at the Pitt School of Pharmacy and lead author of the study, said in a statement. “But the high year-over-year increases in costs of existing products do not reflect improved value.”

Brand-name drugs are considered new for the first three years they’re available from pharmacies, while generics are considered new for the first three years after the expiration of brand-name patents.

An analysis of drug prices and pharmacy claims from a national database found that new drug products accounted for most of the rising costs of specialty and generic drugs.

The price of brand-name specialty oral drugs rose by 21 percent while the cost of specialty injectables rose by 13 percent, according to the database, which examined prices and claims between 2005 and 2016. Generic oral drug prices rose by 4 percent while the cost of injectable drugs rose by 7 percent.

The Health Care Cost Institute found that the price of insulin doubled between 2012 and 2016.

Consumers paid 49 percent more in 2014 alone for Lantus, an insulin made by French pharmaceutical giant Sanofi, researchers said.

“These types of insulin have been around for a while,” Hernandez said. “Whereas the original patent for Lantus expired in 2015, dozens of secondary patents prevent competition, and it is this lack of competition that allows manufacturers to keep increasing prices much faster than inflation.”

Study co-authors include the University of Pittsburgh’s Chester Good, Natasha Parekh and Walid Gellad and Harvard University’s David Cutler.

In one of his first executive actions as California governor, Gavin Newsom announced a plan Monday that would lower prescription drug costs and provide a health-care-for-all plan for Golden State families.

One of Newsom’s executive orders creates the nation’s biggest single-purchaser system for drugs and will allow all Californians – including private employers – to negotiate prices with drug companies.

“No state has more at stake on the issue of health care. California must lead,” Newsom said in his inaugural address Monday. “We will use our market power and our moral power to demand fairer prices for prescription drugs.”

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