California certainly marches to the beat of a different drummer. They treat the federal government as a rival fiefdom, setting their own environmental laws, their own immigration laws, their own fuel standards — as if the seat of power in the United States was in Sacramento.
On Friday, Governor Gavin Newsom will present the state’s budget for the next fiscal year. In it, he will propose that the state of California sell its own brand of prescription drugs in order to “increase competition in the generic drug marketplace and lower the cost of medications by having Sacramento contract drugmakers to manufacture certain prescriptions under a state label.”
Prescription drug prices are too high.
I’m proposing that California become the first state in the nation to establish its own generic drug label.
It’s time to take the power out of the hands of greedy pharmaceutical companies. https://t.co/XphJz4iukQ
— Gavin Newsom (@GavinNewsom) January 9, 2020
“Greedy pharmaceutical companies”? According to a study by Tufts University released last year, it costs a drug company $2.6 billion to bring a drug to market. There is no “greed” when pharmaceutical companies — whose innovations and research save countless lives every year — need to get a return on that massive investment.
Be that as it may, California is carving out an independent role in health care that does not bode well for the rest of us.
While the proposal is still in the conceptual phase, the plan is in line with a number of executive orders Newsom signed last year with the aim of driving down the costs of prescription drugs.
According to a recent report by the Kaiser Family Foundation, six in 10 Americans take a prescription drug and 79 percent of those surveyed say the cost of the medications is unreasonable. The report also found that three out of 10 Americans do not take their medications as prescribed because they are worried about the cost.
Newsom last year put his signature on an executive order to merge the state’s prescription drug purchases into one government-run program. Currently, Medi-Cal and other state agencies separately work out drug prices, but Newsom’s order – which is still in its nascent stages – hopes to consolidate the purchasing to give the state more power when it comes to negotiating prices.
Because California is so large, with such a huge economy and so many people, the state’s dominance generally steers industry and other governments in the direction it wants. No company that does business with state governments can afford to ignore what California is doing.
“No state has more at stake on the issue of health care. California must lead,” Newsom said in a statement last January. “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.”
Newsom’s idea of “fairer prices” for drugs is no doubt arbitrary. I would love it if my Eliquis blood thinner wasn’t $400 per prescription. But without it, I would be at a much higher risk of having another heart attack. Eventually, generic labels for the drug will be widely available and that price will come down considerably.
But if Newsom is planning on setting up the state to sell generic drugs, chances are pretty good that competition has already lowered the price considerably. No company is going to sell the drug at a loss, so Newsom is going to have to lean on the companies to see any savings at all.
If California doesn’t think that Washington should be setting national policy, why be a member of the union of states in the first place? Its $3 trillion economy would be ranked 5th in the world if the Golden State was a sovereign nation. Maybe it’s time that California thought about being a separate country.
They act like it anyway.