Gov. Gavin Newsom proposes selling California-brand generic drugs

The Golden State may become the first to make its own generic drug labels

California’s Democratic Gov. Gavin Newsom on Thursday announced his intentions to have the state create its own generic drug label as a means to combat the growing power of the pharmaceutical industry.

On Twitter, Newsom said he is proposing that California become the first state in the nation to establish its own label, which would allegedly serve to combat rising drug prices.

The plan, details of which were seen by several news outlets, would allow the state to negotiate contracts with drugmakers to manufacture certain prescriptions under its label. The idea is that the state could leverage its purchasing power – on behalf of its 40 million residents – to negotiate better prices.

It is not clear at this time how much the proposal would cost, nor what medicines would be covered.

A spokesperson for Newsom’s office did not immediately return FOX Business’ request for comment.

The proposal is part of the fiscal 2020-2021 state budget Newsom is expected to send to the state legislature on Friday.

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It is just one of a few measures Newsom plans to use to target drug prices. Other measures reportedly include seeking to allow the state’s Department of Health Care Services to negotiate for the lowest drug prices offered internationally.

Meanwhile, the Trump administration has also taken notice of the rising cost of prescription drugs. President Trump has said he plans to allow states to import drugs from neighbors like Canada in order to drive prices down. The premise is that other countries sell the same drugs at a fraction of the price.

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In the U.S., less expensive generic drugs comprise the majority of prescriptions filled, but spending on costly brand-name drugs with no alternatives has continued to drive prices higher. Total drug spending rose 2 percent in 2017, according to a report from Blue Cross Blue Shield, despite the fact that 83 percent of prescriptions filled were generic drugs.

Total prescription drug spending has risen 10 percent each year since 2010, as consumers and companies continue to spend big bucks for these medications.

Only 18 percent of prescriptions filled in 2018 were branded drugs, but these medications accounted for 78 percent of total spending. Expensive single-source drugs with no generic alternative saw costs increase at more than double the rate of average annual drug spending.

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