The California Department of Justice has launched a new webpage to provide information on Proposition 34, a measure approved by voters in 2024. The law requires certain health care entities to allocate 98% of their revenues from the federal discount prescription drug program directly to patient care. These entities must also submit detailed accountings of their revenues and expenditures to the Department of Justice.
According to the announcement, covered health care entities—referred to as “prescription drug price manipulators” under Proposition 34—must file by December 31, 2025, an accounting for the previous calendar year. This report must include both California statewide and nationwide gross and net revenues generated through participation in the discount prescription drug program, as well as details on how those net revenues were spent. Submissions are accepted at Prop34@doj.ca.gov, which is also open for public comments.
Entities classified as “prescription drug price manipulators” are defined by several criteria: participation in the federal drug discount program; having or having had a license in California as a health plan, pharmacy, or clinic; being a tax-exempt organization in California or holding contracts with Medi-Cal or Medicare; spending over $100 million on purposes other than direct patient care within ten years; and owning or operating multifamily housing units with at least 500 high-severity health and safety violations.
These organizations are required to submit their financial reports under penalty of perjury. Failure to comply can result in suspension and revocation of tax-exempt status and licenses necessary for operation within California. Additionally, violators would be prohibited from reapplying for these privileges for ten years.
Enforcement responsibility falls jointly on four state agencies: the Attorney General’s Office, the California State Board of Pharmacy, the Department of Managed Health Care, and the State Department of Public Health. Entities that hold pharmacy licenses are directed to find filing instructions through the Board of Pharmacy’s Proposition 34 web page.
“The Attorney General is one of four state regulators charged with enforcing the law,” according to today’s statement from the department.