Dr. Richard Pan’s Bill Allowing California to be the First State to Manufacture Generic Pharmaceutical Drug Signed Into Law

September 28, 2020

SACRAMENTO— Senate Bill 852, authored by Dr. Richard Pan, a pediatrician and state senator representing the Sacramento area, was signed into law today by Governor Newsom. The bill requires the California Health and Human Services Agency (CHHS) to enter partnerships to increase competition, lower prices, and address shortages in the market for generic prescription drugs, to reduce the cost of prescription drugs for purchasers, taxpayers, and consumers, and to increase patient access to affordable drugs.

“Prescription drugs don’t work if people cannot afford them,” said Dr. Richard Pan. “The state can play a pivotal role in bringing prices down through this authority to negotiate a steady supply for all purchasers and an increase of competition in the drug markets.”

Specifically, SB 852 requires CHHSA to enter into partnerships to provide for the production of insulin and other generic prescription drugs. The measure requires drugs to be made available to providers, patients, and purchasers at a transparent price and requires CHHSA to prioritize generic drugs for chronic and high cost conditions. The bill also requires CHHSA to submit a report to the Legislature that assesses the feasibility and advantages of directly manufacturing generic prescription drugs and selling generic prescription drugs at a fair price. 

State manufacturing of drugs is not a new concept. California, through the Department of Public Health (DPH) Infant Botulism Treatment and Prevention Program (IBTPP), has been manufacturing the only treatment for infant botulism since 2003. Massachusetts and Michigan Departments of Health operated manufacturing facilities for production of certain vaccines and biologic treatments. The Massachusetts laboratory is still in operation, and the Michigan laboratory was sold to a private company in 1998.

According to the National Health Expenditure Data from the Centers for Medicare & Medicaid Services, prescription drug spending increased to $333.4 billion in 2017. The price of prescription medications rose 62% between 2011 and 2015, even after accounting for rebates.

One of the lessons of the 2019-20 coronavirus pandemic is the importance of a reliable supply chain for critical medicine and supplies. We have seen this with personal protective equipment (PPE), ventilators, basic medical supplies such as swabs and tubes necessary for testing, and even prescription drugs. When hydroxychloroquine was being touted as a potential treatment for COVID-19 patients, there were reports that patients with lupus and arthritis, who rely on hydroxychloroquine, were having difficulty obtaining it. In areas such as New York that were especially hard hit by COVID-19, there were some reports of hospitals running low on drugs such as muscle relaxers necessary for intubation of patients. As drugs are identified as effective treatments for COVID-19 patients, it is likely that there will be supply issues for those drugs as well.

“SB 852 will not only open up access to affordable drugs for millions of Californians, it is more important than ever, as the COVID-19 crisis brought to light glaring gaps in supplies of essential, lifesaving drugs, and medical equipment and supplies,” added Dr. Richard Pan.

 

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Dr. Richard Pan is a parent, small business owner, former UC Davis educator and pediatrician who represents Sacramento, West Sacramento, Elk Grove and unincorporated areas of Sacramento County in the state legislature and is the Chair of the Senate Health Committee. As a legislator, Dr. Pan continues to practice medicine at WellSpace Health Oak Park Community Clinic, pursuing his passion for working with families to build healthier communities.