That is the title of an article by Angela Maas in Radar on Specialty pharmacy (reprinted here). A few excerpts:

“Although state governments frequently pay for health care through programs such as Medicaid, in the past, state governments have not manufactured drugs,” says Jason Shafrin, vice president of health economics at PRECISIONheor. “Thus, this is a significant departure from the status quo. The California state government, however, does not have a robust set of government-owned drug manufacturing facilities to start making its own drug either.”

Why would manufacturers contract with California to produce drugs?

Shafrin tells AIS Health that there are two key reasons for manufacturers to contract with California. First, the drugs will be available without rebates. For this reason, “manufacturers could lower their list price but not lose much funds by simply cutting out the middleman — the pharmacy benefit managers — and avoiding having to pay rebates.”
Second, he notes that “California is a large market, and it could be the case that these ‘Made in California’ drugs would have preferred status among California payers. The bill notes that the state needs to consult with key state purchasers including Public Employees’ Retirement System, the State Department of Health Care Services, the California Health Benefit Exchange (Covered California), the State Department of Public Health, the Department of General Services, and the Department of Corrections and Rehabilitation. Getting access to all these large California payers could be lucrative if the reimbursement price is reasonable.”

Do read the whole article here.



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