California Department of Justice Announces Webpage Providing Information on Proposition 34

The Attorney General is one of four state regulators charged with enforcing the law

OAKLAND - The California Department of Justice today announced a webpage providing information on Proposition 34, a ballot initiative passed by voters in 2024. The new law requires certain health care entities - as defined in Proposition 34 - to spend 98% of their revenues from the federal discount prescription drug program on direct patient care, and to file with the Department of Justice accountings of those revenues and how they were spent. Specifically, a health care entity covered by Proposition 34 must file by December 31, 2025, a detailed accounting for the prior calendar year of both its California statewide and nationwide gross and net revenues generated from participation in the discount prescription drug program, as well as how those net revenues were spent. Accountings can be submitted to [email protected]. Public comments may also be submitted to [email protected]. Proposition 34 is codified at Welfare and Institutions Code sections 14124.39 et seq.

A health care entity that is covered by Proposition 34 - referred to in Proposition 34 as a "prescription drug price manipulator" - is defined as an entity that:

• Participates in the federal drug discount program,
• Has (or ever had) a license in California to operate as a health plan, pharmacy, or clinic, is a California tax-exempt organization, or has had certain contracts with Medi-Cal or Medicare,
• Has a ten-year period in which it spent more than $100 million on purposes other than direct patient care, and
• Owns and operates (or has previously owned and operated) multifamily housing units with at least 500 violations affecting the health and safety of occupants of the multifamily dwellings that were categorized in violation severity level "high." (Welfare and Institutions Code section 14124.48, subdivision (i).)

A "prescription drug price manipulator" must submit its accounting under penalty of perjury. The law provides that the penalty for failure to submit the required information is the covered "prescription drug manipulator's" suspension and ultimate revocation of tax-exempt status and all licenses it holds to operate a health plan, clinic, or pharmacy in the State of California, and further prohibition from reapplying for, or again being granted, tax-exempt status or such license in this state for a period of 10 years.

The Attorney General, the California State Board of Pharmacy, the Department of Managed Health Care, and the State Department of Public Health are charged with enforcing Proposition 34. "Prescription drug price manipulators" that hold pharmacy licenses and therefore are required to submit information to the Board of Pharmacy can access information and instructions for filing accountings by accessing the Board of Pharmacy's Proposition 34 web page.