The California Plan Shows that the State is Really the Land of Nuts

While I do happen to reside in California, I won’t take any blame for the Governor’s idea for California to become a private-label distributor of generic drugs.  This idea leaves me scratching my head and may have something to do with someone smoking some really potent wacky weed.

Sorry that I don’t know the specific details of the plan, but if Cali becomes a private-label distributor, it must first buy the drugs from a manufacturer that has an approved application, because buying them from a wholesaler will cost it a margin that it would not likely be able to make up in the sale of the product to fund the program’s staffing and distribution, not to mention the required recordkeeping and adverse drug reporting.  What about rebates to the CMS?  Has he thought this through at all?

An article in the Sacramento Bee by Sophia Bollag states, “His [Newsom’s) plan would create a single market for drug purchasing in California, forcing drug manufacturers to sell their drugs at the same price to everyone in the state.  To sell drugs in the California market, Newsom’s office says the state would require manufacturers to sell drugs at or below the prices they charge other states, nations or global purchasers.” (Read the entire article here).  If California requires such a price cap, then will it sell its private label drugs below that cap (isn’t that illegal, especially if it sells the products at a loss)?  If California forces firms to sell at a reduced level than they do in other markets, will that result in higher prices in other states?  Will manufacturers then refuse to sell in California, creating a drug shortage there, if the cost of doing business in Cali squeezes their margins to a point where it is no longer profitable to sell their product?  Where will the money come from to fund the program?  I can tell you that as a resident of this state, I am not anxious to have another tax placed upon me and my family in this tax-happy state!

I am sure there are many more questions than there are answers.  With CivicaRx and now Cali looking at a broader foray into the prescription drug market, this could place even more pressure on a drug industry that has saved the consumer trillions of dollars over the years.  The one thing you can always count on is for Cali to catch you by surprise.  Good luck, AAM, in trying to stem the tide – may the “farce” be with you.