California Gov. Proposes That the State Manufacture Its Own Generic Drugs


The proposal, which is still largely conceptual, was a part of Newsom’s proposed 2020-2021 budget.1

California Democratic Gov. Gavin Newsom has presented a radical proposal to lower drug prices, by suggesting that the state contract with 1 or more generic drug manufacturers in order to manufacture specific generic medications on behalf of the state.1 The proposal, which is still largely conceptual, was a part of Newsom’s proposed 2020-2021 budget.1

Rising drug prices have been an ongoing concern, with 79% of Americans saying the cost of prescription drugs is unreasonable, according to a survey by the Kaiser Family Foundation.2

In the survey, approximately 6 in 10 respondents said they take at least 1 prescription medicine, whereas 1 in 4 said they take 4 or more prescription drugs.2 As the amount of prescriptions rises, the respondents also reported that their ability to afford them decreases. Among those taking 1 to 3 prescription drugs, 17% said it was difficult to afford their medications. Among those taking 4 or more prescription drugs, however, 35% said it was difficult to afford.2

Unaffordability also effects medication adherence, according to the survey. Among those surveyed, 19% said they had not filled a prescription for a medication due to cost, 18% said they had taken an OTC drug instead, and 12% said they had cut pills in half or skipped doses. These statistics equate to 29% of patients who did not take their prescription medicines as directed because of the cost.2

Finally, the survey also found that a majority of Americans are dissatisfied with how politicians are handling rising drug costs, regardless of political party affiliation. According to the survey, 75% said Democrats in Congress are not doing enough and 77% said Republicans are not doing enough about the problem.2

This dissatisfaction may lead to more creative solutions, such as Gov. Newsom’s proposal. The program, called CalRx according to a press release,3 would allow the state to contract with 1 or more makers of generic drugs in order to provide them to Californians for purchase.1 The plan would not apply to brand-name prescription drugs.1

Supporters argue that the program would increase generic drug competition, thus lowering prices.1 Opponents, however, said that it would be unlikely to change anything.

“If California enters the market itself, it will face the same market dynamics that have led to generic prescription drug price deflation in the past 3 years, as well as certain cases of patent abuse that have led to longer monopolies by select brand-name drugs,” said Jeff Francer, MPP, JD, general counsel for the Association for Accessible Medicines, in a statement from the organization.4

The proposal is not an entirely new idea, however. Sen. Elizabeth Warren (D-Mass) has argued that the federal government should be allowed to manufacture its own generic drugs in order to reduce costs,5 and a group of more than 500 hospitals created their own drug company in 2018 in order to manufacturer generic drugs at a lower cost.6

“A trip to the doctor’s office, pharmacy, or hospital shouldn’t cost a month’s pay,” Gov. Newsom said in an interview with the Los Angeles Times. “The cost of health care is just too damn high, and California is fighting back.”7


  • California Governor’s Budget Summary 2020-2021, Health and Human Services. Released Jan 10, 2020. Accessed Jan 13, 2020.
  • Public Opinion on Prescription Drugs and Their Prices [survey]. Kaiser Family Foundation. Published Nov 20, 2019. Accessed Jan 13, 2020.
  • Governor Newsom Proposes 2020-2021 State Budget [news release]. Sacramento, CA; Jan 10, 2020. Office of Governor Gavin Newsom. Accessed Jan 13, 2020.
  • RE: Pharmacy Times: Seeking Statement on CA Proposed Generic Drug Program [email]. From Rachel Schwartz, Association for Accessible Medicines. Received Jan 13, 2020.
  • Warren, E. Elizabeth Warren: It’s time to let the government manufacture generic drugs [opinion]. The Washington Post, Dec 17, 2018. Accessed Jan 13, 2020.
  • Civica Overview Graphic. Accessed Jan 13, 2020.
  • Karlamangla S. Q&A: What you need to know about Gov. Newsom’s drug plan for California. Los Angeles Times, Jan 9, 2020. Accessed Jan 13, 2020.

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