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First up for California's new governor: Reform drug purchasing

The new governor wants to shift the state's Medicaid program to a direct purchase system and allow private businesses to join its buying pool.

By Drew Armstrong, John Tozzi and Riley Griffin | January 08, 2019 at 11:24 AM
California and US flags The governor’s executive order on drug purchasing came along with a series of health-care proposals for the state, including expanding health care coverage to many more people. (Photo: Shutterstock)

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.

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