California: Governor Newsom’s budget to help lower drug costs, expand authority to access medication abortion through CalRx
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May 13, 2025

Governor Newsom's budget to help lower drug costs, expand authority to access medication abortion through CalRx

What you need to know: Governor Newsom will take action tomorrow to lower drug prices, increase transparency for PBMs, and expand authority for the state to acquire medication abortion.

Sacramento, California – As part of the 2025-26 May Revision, Governor Gavin Newsom will propose two major actions to reduce prescription drug costs and safeguard reproductive freedom by expanding access to medication abortion.

"Prescription drug prices are out of control and we're shining a light on hidden costs — while also giving CalRX more tools to respond to supply chain disruptions, market manipulation, or politically motivated abortion restrictions."

Governor Gavin Newsom

Pharmacy Benefit Managers: Pharmacy Benefit Managers (PBMs) act as middlemen between drug manufacturers, pharmacies, and insurers — often driving up costs in the process. The Governor's May Revision proposes new state oversight to increase transparency and cut costs. Under this proposal:

• PBMs must be licensed and regulated by the Department of Managed Health Care (DMHC).
• They must report operational and financial details, including audited statements and will have a fiduciary duty to clients, holding PBMs to a higher ethical standard.
• DMHC will review PBM contracts and perform regular financial audits.
• As part of licensure, PBMs must report detailed drug pricing data to the Department of Health Care Access and Information (HCAI), the state's health data agency.
• DMHC will have clear authority to enforce rules and penalize violations.

Expanding CalRx for brand-name drugs: The May Revision proposes expanding the authority of CalRx to purchase brand-name drugs. This change gives the state more tools to respond to supply chain disruptions, market manipulation, or politically motivated restrictions that could threaten access to essential medications — including medication abortion.

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By expanding CalRx's scope, California will be better positioned to:

• Secure affordable supply of both generic and brand-name drugs.
• Maintain uninterrupted access to medications at risk of shortage or political interference.
• Strengthen the state's ability to protect reproductive health care options, including mifepristone and other medications under attack in other states.

Members of the press who wish to attend tomorrow's release of the revised budget plan can learn more HERE.

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