LA County to partner with state in prescription drug purchasing plan

From a press conference at LA County’s Rancho Los Amigos National Rehabilitation Center, Governor Newsom, together with LA County Supervisors Janice Hahn and Hilda Solis, Dr. Christina Ghaly, Director of the LA County Department of Health Services and Patricia Perez, State President of AARP, announced on April 17th that LA County will partner with the state to negotiate lower prescription drug prices.

Shortly after taking office in January, Governor Newsom signed an Executive Order directing state agencies to coordinate a consolidated drug purchasing program for the purposes of leveraging volume into bargaining power to drive down drug prices.   The Order also directed the agencies to provide a framework for private purchasers to join the programs to take advantage of and further enhance bargaining power.

 

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With the announcement, LA County, the state’s most populous county, will become the largest private purchasing partners. As Dr. Christina Ghaly explained,

“As we know California is one of the largest economies in the world and LA County is one third of that so there is immense power in working together. And there is no better topic to try to work to forge a new partnership on that the rapidly rising costs of pharmaceuticals in America and in California.

Department of Health Service spends a quarter of a billion dollars a year on pharmaceuticals. It is one of the fastest rising components of our budget, rising on average 8% per year… But over two thirds of the increase is not because we are treating more patients, it is because of the rising cost of the drugs themselves.”

Despite the excitement over the partnership, there are still questions over how the program and the carve-out of the prescription drug benefit from the Medi-Cal managed care benefit will be implemented. The Order directs the Department of General Services, in consultation with the California Pharmaceutical Collaborative, to generate a list of the 25 highest-cost prescription drugs and to “develop and implement bulk purchasing arrangements for high-priority drugs” but says little else about what that plan will look like or how it will function.

Earlier this month the non-partisan Legislative Analyst’s Office released a report acknowledging the program’s potential to save hundreds of millions of dollars, but suggesting that the direct dollar savings may come at addition externalized costs to pharmacists, Medi-Cal managed care plans, and providers. Specifically, managed care plans and providers have voiced concerns that shifting the management of the prescription drug benefit out of managed care will hamper their abilities to monitor and coordinate members’ pharmaceutical usage, which can be critical to managing patient care.

However, as Supervisor Hilda Solis highlighted in comments, the partnership really comes down to increasing access and affordability of prescription drugs that people depend on.

“Our Governor understands that getting medications and prescription drugs is really driving down our economy. And the quality of life for some many people is impacted in so many ways. You see it every day, or I see it every day in my district where seniors and young people can’t afford to buy their medicine or they will cut their pills in half. They will forego buying medicine because they have to pay the rent.

Well those choices shouldn’t have to be made. Right here in California, $8 billion – with a “B” – that’s what we spend. What would happen if we could do what the VA (Veterans’ Administration) does and cut that number in half? That’s something we have been fighting for for a long time.”