State Run Generic Pharmaceutical Drug Manufacturing Bill Passes Both Houses

On Monday, both the Assembly and Senate passed a bill that would have California produce its own generic drugs within the state.

A generic prescription drug production by California, in California, for California

Senate Bill 852, authored by Senator Richard Pan (D-Sacramento), would have the California Health and Human Services Agency (CHHS) enter partnerships to produce generic drugs. The bill specifies that at least one type of insulin has to be included, and that it should be more affordable than similar insulin on the market.

The CHHS would have to send a report to the Legislature by mid-2023 of the feasibility and advantages of the state directly making and selling generic, low-cost drugs. A mid-2022 report would come a year before listing what drugs that they wish to make and what the inclusion of CHSS made drugs would mean for the drug market, such as the effect on competitors and if prices would increase.

Senator Pan wrote the bill following Gov. Gavin Newsom’s January proposal of a state-run generic prescription drug label. They both have said that prescription drug prices are too high and that they wish to make them more affordable for citizens of California. Insulin was specifically identified and included as part of the bill because of the prevalence of diabetes in California and because of the cost of insulin going up 1,200% in less than 20 years.

COVID-19 also played a small part in SB 852’s urgency, with supporters keeping the bill alive this session by stressing how COVID-19 found “gaps” in hospital supply communication concerning many vital things needed in hospitals, including prescription medicines.

“Prescription drug prices are too high,” tweeted Newsom in January while SB 852 was being developed. “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.”

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

Senator Pan offered a similar stance later in the year.

“People need these drugs, but prices are through the roof, so we’re saying there’s a role for the state to bring prices down,” noted Pan.

Despite concerns, SB 852 is expected to be signed soon

While Governor Newsom’s plan fizzled out due to the $54.3 billion budget deficit forming earlier this year due to the economic downturn, SB 852 stayed alive despite notable Republican opposition, as well many drug companies’ opposition of the bill. The Pharmaceutical Research and Manufacturers of America, which represents large drug companies, stayed neutral in Sacramento over the bill, but worry over the bill was present from many individuals in the industry.

“We understand the need for cheaper pharmaceuticals in California, but having the state itself play a hand in making them is another step towards socialized medicine,” explained former drug company representative Allison Eaton to the Globe. “I don’t want this to be read as alarmist, but this could lead to the state getting involved more and more into health affairs.”

“Notice how cautious they are being. They don’t know if the added competition will raise prices or have the state lose a lot of money over doing this, the same thing that doomed Governor Newsom’s drug plan.”

“Even the more generic medicine can be expensive, and costs to make them aren’t cheap. They have a few years to look into everything surrounding this, and they may be a bit more than discouraged at what they find.”

So far, start-up costs are estimated to be at around $2 million, although that figure may rise with more research into the process.

Despite opposition and concerns over the bill, SB 852 passed the Senate 31-8 and the Assembly 66-7 during the marathon legislative session on Monday, beating the midnight deadline.

SB 852 awaits Governor Newsom’s signature. Due to the Governor’s continued support and praise for his plan and the bill, it is widely expected that he will sign the bill by the September 30th deadline.