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Illustration: Sarah Grillo/Axios

California Gov. Gavin Newsom wants the state to become the first to create its own generic drug label, an attempt to create more competition and bring down prices.

The big picture: California already has enacted insurance reforms that could be a model for the federal government, and is now doing the same on drug prices.

Between the lines: Having the government contract directly with manufacturers isn't a new idea; Sen. Elizabeth Warren has proposed doing so at a federal level.

  • The private market has also created a similar arrangement through Civica Rx, a nonprofit funded by hundreds of hospitals that contracts with private manufacturers to produce generic drugs.
  • “To the extent that Civica Rx has been able to do this for its hospital systems, the state of California could engage in similar kinds of arrangements, at least at some level," said Rachel Sachs, a law professor at Washington University.

How it would work: The state would contract with private manufacturers to make certain generic drugs.

  • It would also create a single market for drug pricing within the state, meaning that all participating payers — private or public — would receive the same price for the same drug.

What they're saying: Northwestern University professor Craig Garthwaite said California's approach probably wouldn't drive down prices in large, competitive markets, but it likely could in smaller markets without much competition — where prices tend to be higher.

The other side:. "This is not a new ‘entrant,’ it is just a labelling change," said Rena Conti, a professor at Boston University.

  • Conti added that establishing a single drug market could backfire by raising prices for some purchasers, or creating a situation where access to drugs is restricted because some companies refuse to bid.

The bottom line: We've told you this before, but the most interesting action on health policy is in the states.

Go deeper

Capitol review panel recommends more police, mobile fencing

Photo: Olivier Douliery/AFP via Getty Images

A panel appointed by Congress to review security measures at the Capitol is recommending several changes, including mobile fencing and a bigger Capitol police force, to safeguard the area after a riotous mob breached the building on Jan. 6.

Why it matters: Law enforcement officials have warned there could be new plots to attack the area and target lawmakers, including during a speech President Biden is expected to give to a joint session of Congress.

Financial fallout from the Texas deep freeze

Illustration: Annelise Capossela/Axios

Texas has thawed out after an Arctic freeze last month threw the state into a power crisis. But the financial turmoil from power grid shock is just starting to take shape.

Why it matters: In total, electricity companies are billions of dollars short on the post-storm payments they now owe to the state's grid operator. There's no clear path for how they will pay — something being watched closely across the country as extreme weather events become more common.

U.S. Chamber decides against political ban for Capitol insurrection

A pedestrian passes the U.S. Chamber of Commerce headquarters as it undergoes renovation. Photo: Andrew Harrer/Bloomberg via Getty Images

The U.S. Chamber of Commerce revealed Friday it won't withhold political donations from lawmakers who simply voted against certifying the presidential election results and instead decide on a case-by-case basis.

Why it matters: The Chamber is the marquee entity representing businesses and their interests in Washington. Its memo, obtained exclusively by Axios, could set the tone for businesses debating how to handle their candidate and PAC spending following the Jan. 6 Capitol attack.

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