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Public Policy Newsletter Article

2019 State Policy Review

  • 2019-12-18T14:52:00.000+0000
  • California
  • Author: Jimmy Jackson

The year began with a new Governor, and shortly after being sworn in as Governor of California on January 7, Governor Gavin Newsom announced one of his first official acts was to sign an Executive Order on health care that could have a significant impact on drugs and biologics sold in California. Biocom continues to monitor the progress of this Order, which is still in process almost a year later and whose impact is yet to be determined.

In short, the Governor directed the Department of Health Care Services to “take all necessary steps to transition all pharmacy services for Medi-Cal managed care to a fee-for-service benefit by January 2021,” and review and recommend changes to state drug purchasing practices to maximize the state’s leverage and purchasing power. The Governor’s press release can be found here.

As the year progressed, it quickly became apparent what legislation would be in play. Biocom engaged significantly on AB 1468, originally proposed as a $100 million tax on manufacturers of opioids (a similar bill failed in the Legislature last year). Although changed in various incarnations (including reducing the total cap to $50 million and addressing issues brought forward by Biocom in this letter), to this point the bill has not been brought up for a vote on the Assembly floor, possibly because the author does not yet have the support necessary to pass.

Another key bill to garner a great deal of attention is SB 468, a proposal which originally proposed to repeal a great number of the state’s business tax incentives on December 31, 2023, including the state’s research and development credit, unless performance metrics are added to the incentive. A broad coalition, of which Biocom was a member, came together to fight this bill aggressively, and as a result the bill now will be amended to create a state commission to review current tax incentives and make recommendations to the Legislature, with no immediate changes to these incentives. The coalition opposition letter to the original bill may be found here.

The highest priority bill for the industry was AB 824, legislation which sets a presumption in law that any patent challenge settlement, whether executed in California or not, is anti-competitive and subject to significant penalties, and furthermore shifts the legal responsibility to the companies to prove a settlement is not anti-competitive.

Biocom, working as part of an opposition coalition working with member companies and the Pharmaceutical Manufacturers and Research Association and other strategic partners, secured changes removing the onerous burden of proof to prove a settlement was not non-competitive originally contained in the bill (eliminating an evidentiary standard requiring “clear and convincing” evidence an accused company was not guilty). The opposition coalition was also successful in attaining other changes in the bill that, when signed into law by Governor Newsom, the bill was fairer to all parties involved and no longer contained a private right of action.

Biocom was also instrumental in mitigating potential impact to the industry from two companion bills, SB 54 and AB 1080, which mandate that producers of products which are on a list of “priority single use plastics” achieve a reduction of 75% in single use packaging and “priority single use products.” They also mandate that all single use products be compostable or recyclable by 2030. Due to the unique nature of products used in the life sciences, including impact on sterility and stability of products, however, Biocom was the principal negotiator in securing an exemption from these requirements for prescription drugs and medical devices and their packaging. Although these bills were not taken up for a floor vote before adjournment, they almost certainly will be taken up very early in 2020 when the Legislature reconvenes.

A final issue for this legislative session was clean-up on California consumer privacy laws, as a follow-up to consumer privacy legislation passed in 2018. Biocom is part of a broad health care and consumer coalition led by AdvaMed pursuing adjustments to current consumer privacy law, both to address existing issues and anticipating further possible consumer privacy efforts either via legislation or by citizens’ initiative.