CSAC Bulletin Article

Los Angeles County Joins Governor’s Prescription Drug Reform Effort

April 18, 2019

Los Angeles County Board of Supervisors Chair Janice Hahn joined Governor Newsom in Downey to announce the County’s participation in the Governor’s California Pharmaceutical Collaborative, which allows the state to partner with local governments and other entities to bargain on bulk prescription drug purchases and potentially save on drug prices.

While details on the new collaborative are still under development, Supervisor Hahn announced that Los Angeles County wanted to be the first county to join in the effort to save on drug costs. She told the LA Times that the Los Angeles County Department of Health Services alone spends $242 million a year on prescription drug purchases in their health, hospital, and jail systems.

The California Pharmaceutical Collaborative (CPC) is one prong of the Governor’s plan to reduce prescription drug costs announced in his very first Executive Order upon taking office. Besides directing the California Department of General Services (DGS) to grow the CPC and identify the state’s most purchased and highest-cost drugs, the Governor tasked the Department of Health Care Services (DHCS) to draft plans for transitioning all Medi-Cal pharmacy services into a “carved out,” standardized fee-for-service benefit. This transition would allow the state to bargain directly with pharmaceutical manufacturers on behalf of all Medi-Cal enrollees and would streamline any drug rebate savings.

County public hospitals and county health systems could benefit from these proposals, but the Legislative Analyst’s Office has indicated in a new report that the potential savings for the CPC are uncertain, while savings from the Medi-Cal prescription drug carve out could potentially save the state hundreds of millions of dollars – once details are known.

But with the addition of Los Angeles County in the CPC, the collaborative can already leverage the buying power of the state and the largest county in the nation. For counties interested in joining the CPC, please contact Angela Shell, Deputy Director of the Procurement Division at DGS, at Angela.Shell@dgs.ca.gov.

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