California Gov. Gavin Newsom announced Wednesday the state will partner with Los Angeles County in an effort to bring down prescription drugs prices, setting up a likely showdown with the pharmaceutical industry.
Earlier this year, the Democratic governor directed state agencies to begin buying drugs in bulk and using that leverage to negotiate lower prices. He said state agencies, including the prison system and health care for the needy, known as Medi-Cal, together spend as much as $13 billion annually on drugs. State analysts have pegged the drug costs for Medi-Cal at $8 billion.
The government, like many Americans, feels gouged by relentless price increases driven by corporate greed, the governor said outside a rehabilitation center in suburban Los Angeles.
Ultimately, those costs land on taxpayers.
“There’s a reason the pharmaceutical companies are working aggressively against us,” he said.
Newsom’s strategy to cut drug costs, outlined on his first day in office, remains in planning stages, with the first bulk purchases not expected until later this year. He projected the change in purchasing could eventually save billions.
The alignment with Los Angeles County, home to 10 million people, will give the state a stronger hand in pressing for better deals, he said.
The county spends about $250 million annually for drugs for its hospitals and clinics. Janice Hahn, a former member of Congress who heads the Board of Supervisors, acknowledged that attempts to bring reform to the drug industry have stalled in Washington.
But California, she said, “is not going to wait for Congress.”
Newsom was elected after a campaign that leaned heavily on his promise to provide health coverage to everyone. His proposals, which include state-funded health coverage for 138,000 young people who are in the U.S. illegally, represent a step in that direction, though costs remain an issue.
Newsom’s actions could make California a model for other states — he’s spoken with other governors — while influencing the emerging Democratic presidential contest, where Medicare-for-all has been embraced by a string of candidates, including California Sen. Kamala Harris.