The Golden State could become the first to make its own generic medicine. California Governor Gavin Newsom says the drug-making would “take the power out of the hands of greedy pharmaceutical companies.” But some say the plan won’t solve the prescription drug problem.
California is big. Really big. It is the nation’s most populous state. Its huge economy means California sometimes pressures other states and large companies to do whatever it wants. (See “Gator Ban Bites Louisiana.”)
The state’s new governor wants to contract with generic drug companies to make medications on its behalf. Then California would sell them to its nearly 40 million residents. The goal is to lower drug prices by increasing competition. The state hopes to save by not spending on advertising costs like pharma companies do.
“Other countries control or negotiate the price of drugs,” says Larry Levitt. He is executive vice president of health policy for the Kaiser Family Foundation. “And if there is one state that could do it, it’s California, which is the size of a country. . . . A drug company could walk away from Rhode Island. It’s much harder to walk away from California.”
Assemblyman Joaquin Arambula is an emergency room doctor from Fresno. He chairs the House Budget Subcommittee on Health and Human Services. “If Costco can have a Kirkland brand, why can’t California have our own generic brand?” he asks. Arambula sees “quite a bit of merit” in having California produce medicine.
The governor’s office doesn’t say how much the drug plan would cost. That has prompted criticism from some lawmakers.
“When the state runs it, it costs more,” says Assemblyman Devon Mathis.
Supporters say California’s generic drug label could help lower the cost of at least one common drug that has steadily increased in price—insulin for diabetes. Just three drug companies control most of the market for that life-saving hormone.
Jon Roth, CEO of the California Pharmacists Association, says the state might be surprised by production costs. That affects how much California would need to charge for generic drugs. After all, some factors are beyond a producer’s control—including raw material shortages and problems getting supplies.
Roth warns, “There are other factors in the actual manufacturing that the state may not be able to escape.”
Jeff Joyce is chairman of the Department of Pharmaceutical and Health Economics at USC’s School of Pharmacy. He admits that Governor Newsom’s proposal “would help in specific cases.” But he also cautions that making drugs isn’t a cure-all.