California’s plan to establish a single market for drug pricing within the state could set Medicaid policy for the entire country, some experts say, because the federal-state program requires all states to pay the lowest price available in any U.S. market.
In a state 2020-2021 budget document released Friday, Gov. Gavin Newsom said his proposal would enable all purchasers in the state — including the state Medicaid program, called Medi-Cal, as well as the California Public Employees’ Retirement System, Covered California, private insurers, self-insured employers and others — to combine their purchasing power for pharmaceuticals. Right now, Medi-Cal negotiates prescription drug prices separately from other state agencies.
“Drug manufacturers would have to bid to sell their drugs — at a uniform price — in the California market” under the proposal, according to the budget document.
“California would invoke a most-favored-nation clause in the manufacturer price bid, which would require manufacturers to offer prices at or below the price offered to any other state, nation, or global purchaser if they wish to sell their products in California,” the document states.