California might become the first state to offer its own brand of generic prescription drugs under a proposal announced Thursday by Gov. Gavin Newsom.
The Democratic governor wants the nation’s most populous state to contract with generic drug companies to make medications on its behalf so it could sell them to its nearly 40 million residents. The goal is to lower prices by increasing competition in the generic drug market, Newsom said….Newsom’s proposal would create a single market for drug pricing in California, with companies having to bid to sell their medicine at a uniform price. One expert said that piece would have the bigger impact.”Other countries control or negotiate the price of drugs, and if there is one state that could do it, it’s California, which is the size of a country,” said Larry Levitt, executive vice president of health policy for the Kaiser Family Foundation. “A drug company could walk away from Rhode Island. It’s much harder to walk away from California.”
And while escalating drug prices are a reasonable concern, the motivation behind Newsom’s proposal is troubling: He blames the costs on “greed.”
Any serious proposal that addresses drug prices must account for the enormous expenditures associated with research and development. Furthermore, due consideration must be given to the funding to address the burdensome regulations associated with pharmaceutical testing and the final blessing by the Food and Drug Administration.
Other areas trigger additional skepticism.
“Frankly, I think it’s a ludicrous proposal that demonstrates a profound misunderstanding of generic drug economics,” said Adam Fein, chief executive of the Drug Channels Institute, a market research and consulting firm. “It’s like saying you want to go to Post [Consumer Brands] for your Fruity Pebbles and open a supermarket to buy them. It doesn’t make sense.”Health experts said California’s plan has the potential to assist consumers if done correctly but cautioned that the state should not expect it to yield significant savings. Those experts said the state could identify drugs that have not generated sufficient competition among generic drug manufacturers and try to compete, but that would mean producing medicines that are in less demand.
I would also like to point out that California’s attempt to reap profits from the legalized marijuana industry has been a spectacular failure, due to over-regulation and over-taxation. If there was any cost reduction possible, I sense that the state’s bureaucrats would find a way to raise the costs and limit the access anyway.
Interestingly, President Donald Trump has implemented policies that have reduced the costs associated with prescription medicines. Back in 2018, Trump’s FDA approved 781 generic drugs. Now, prescription drug prices are decreasing at rates not seen since the 1960s.
In the eight years prior to President Trump’s inauguration, prescription drug prices increased by an average of 3.6 percent per year. Fast forward to today, and prescription drug prices have seen year-over-year declines in nine of the last ten months, with a 1.1 percent drop as of the most recent month. In June 2019, the United States saw the largest single-year drop (2.0 percent year-over-year decline) in prescription drug prices since 1967.
I would suggest that if Newsom wants to have at least one of his policies succeed, he confer with the President instead of continuing his #TrumpDerangementSyndrome-inspired #Resistance.
More details on the proposal here:
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