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California Businesses, Government Would Join in Drug Buying Pact

  • Executive order issued by new Democratic governor Gavin Newsom
  • Proposes using state buying power to drive drug prices down
Inside of a Gilead Sciences Lab
Photographer: David Paul Morris/Bloomberg

California’s newly sworn-in Democratic governor has proposed using the state’s substantial buying power to drive down pharmaceutical costs, allowing government programs, health insurers and private businesses to join forces to negotiate against drugmakers.

Under an executive order signed by Governor Gavin Newsom as one of his first acts hours after being sworn in Monday, drug benefits for the about 13 million Californians in the state’s Medicaid program would be shifted into a direct purchase system. The state would then target some drugs for bulk purchasing, and private businesses and insurers would then be able to join the buying pool.