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Governor Gavin Newsom Signs Legislation Banning “Pay for Delay” to Fight Runaway Prescription Drug Costs 

Governor signs AB 824 “Pay for Delay” bill blocking pharmaceutical companies from keeping cheaper generic drugs off the market

Governor also signs two bills to create healthier California communities — SB 464 to improve black maternal health care and SB 159 to allow PrEP access without a prescription

Legislation builds on first-in-the-nation investments in state budget and Governor’s executive actions to lower prescription drug costs, bring CA closer to universal coverage and make health care more affordable

SACRAMENTO – Building on the state’s first-in-the-nation investments in the California budget and the Governor’s executive actions to lower prescription drug costs, Governor Gavin Newsom today signed into law three bills to lower the cost of prescription drugs and increase access to care for California families. These bills will block pharmaceutical companies from keeping cheaper generic medicine off the market, improve black maternal health, and expand access to PrEP and PEP HIV medication. ​​

AB 824, authored by Assemblymember Jim Wood (D-Santa Rosa) and sponsored by Attorney General Xavier Becerra, makes California the first state to tackle pay-for-delay agreements which hurt consumers and increase drug company profits by blocking the development of generic drug competition. According to a Federal Trade Commission study, these anticompetitive deals cost consumers and taxpayers $3.5 billion in higher drug costs every year. The bill prohibits these agreements between brand name and generic drug manufacturers by making them presumptively anticompetitive.

“California will use our market power and our moral power to take on big drug companies and prevent them from keeping affordable generic drugs out of the hands of people who need them,” said Governor Newsom. “Competition in the pharmaceutical industry helps lower prices for Californians who rely on life-saving treatments.”

SB 464 by Senator Holly Mitchell (D-Los Angeles) will reduce preventable maternal mortality among black women by requiring all perinatal health care providers to undergo implicit bias training to curb the impact of bias on maternal health, and improving data collection at the California Department of Public Health to better understand pregnancy-related deaths. The 2019-20 state budget includes more than $65 million of ongoing total funds to expand the California Home Visiting Program and the Black Infant Health Program, which will improve the health and wellness of mothers and children and allow more families to access these important culturally appropriate services.

“California is sending a clear message that discrimination has no place in our health care system,” said Governor Newsom after signing SB 464. “We know that black women have been dying at alarming rates during and after giving birth. The disproportionate effect of the maternal mortality rate on this community is a public health crisis and a major health equity issue. We must do everything in our power to take implicit bias out of the medical system – it is literally a matter of life and death. I applaud the California Legislature for taking action to save the lives of mothers and children.”

SB 159 by Senator Scott Wiener (D-San Francisco) authorizes pharmacists to furnish pre- and post-exposure prophylaxis (PrEP and PEP) without a physician’s prescription. The bill also prohibits insurance companies from requiring prior authorizations for patients to obtain PrEP coverage. The state budget includes one-time $40 million General Fund for infectious diseases prevention and control and ongoing $2 million General Fund specifically to address sexually transmitted diseases, as well as an additional ongoing $5 million General Fund for HIV prevention and control.

“Recent breakthroughs in the prevention and treatment of HIV can save lives,” Governor Newsom said of signing SB 159. “All Californians deserve access to PrEP and PEP, two treatments that have transformed our fight against HIV and AIDS. I applaud the Legislature for taking action to expand access to these treatments and getting us closer to ending HIV and AIDS for good.”

Today’s actions build on the Governor’s efforts to confront the cost crisis affecting working Californians. Just moments after being sworn in, the Governor launched a series of first-in-the-nation actions to make health care more affordable for all Californians and to move the state closer toward the goal of health care for all. Those proposals included Executive Order N-01-19 to create the nation’s largest single-purchaser system for drugs and to, ultimately, allow all Californians and private employers to sit together at the bargaining table across from big drug companies when negotiating prescription drug prices.

Earlier this year, the Governor announced that the counties of Los Angeles, Santa Clara, Alameda and San Francisco, among the largest public purchasers of prescription drugs in California, will partner with the state to use our combined market power to take on drug companies and lower the cost of prescription drugs.

The 2019-20 state budget signed by the Governor makes historic investments in health coverage protections for Californians and includes a series of proposals that leads the nation in reducing health care costs and increasing access for families. The budget:

  • Invests $1.45 billion over three years to increase Covered California health insurance premium support for low-income Californians – and provides premium support for the first time to qualified middle-income individuals earning up to $72,000 and families of four earning up to $150,000, partially funded by restoration of an enforceable Individual Mandate
  • Expands Medi-Cal coverage to all income-eligible undocumented young adults ages 19 through 25
  • Includes an increase of $1 billion, using Prop 56 funding, to support increased rates to Medi-Cal providers, expanded family planning services, and value-based payments that encourage more effective treatment of patients with chronic conditions
  • Invests in and supports California’s seniors by expanding health and other vital state services to this fast-growing part of California’s population
  • Ends the “senior penalty” in Medi-Cal by raising the income eligibility limit for older Californians
  • Expands eligibility to 138 percent of the federal poverty level for the Medi-Cal Aged, Blind and Disabled program, estimated to help 22,000 Californians
  • Invests boldly in responding to Alzheimer’s disease including $3 million for research grants with a focus on women and communities of color, and $5 million for Alzheimer’s disease local infrastructure.