The Brief

Gov. Gavin Newsom announced today that he will seek to regulate prescription drug middlemen that he blames for driving up costs for patients, less than a year after he vetoed similar oversight for the companies called pharmacy benefit managers.

The plan — part of a revised state budget proposal that Newsom will unveil in full on Wednesday — calls for licensing pharmacy benefit managers through California’s Department of Managed Health Care and requiring them to report their operational and financial details.

“Prescription drug prices are out of control and we’re shining a light on hidden costs,” Newsom said in a statement.

California has long sought to more closely monitor pharmacy benefit managers, which serve as intermediaries between insurance companies and pharmaceutical drug manufacturers, controlling the list of drugs covered by health insurance plans, negotiating their prices and processing claims. Critics say these companies needlessly raise costs by tacking on fees and withholding manufacturer discounts as profit. They can also restrict access for patients to some higher priced name-brand drugs.

But legislative efforts to rein them in have repeatedly withered in the face of the powerful industry lobby, which contends that more stringent regulations would drive up health insurance premiums by billions of dollars annually.

Bill Head, assistant vice president for the Pharmaceutical Care Management Association, the industry group that represents pharmacy benefit managers, said the organization supports Newsom’s goal to lower prescription drug prices, but blamed pharmaceutical manufacturers for rising costs.

“Drug companies alone set and raise drug prices, and the price is the problem. We look forward to working with the administration to ensure transparency across the drug supply chain and to ensure consumers benefit,” Head’s statement said.

According to the association, its members are projected to save Californians $108 billion over the next 10 years in drug costs.

Last year, a measure made it all the way to Newsom’s desk that would have required pharmacy benefit managers to get licensed through the state insurance department, disclose the prices they pay and the discounts they negotiate with drug manufacturers, and then pass on 100% of those discounts to insurance plans.

Newsom vetoed it in September, writing in a message that he was not convinced that the bill’s “expansive licensing scheme” would achieve the desired result of bringing down prescription drug prices.

“We need more granular information to fully understand the cost drivers in the prescription drug market and the role that [pharmacy benefit managers] play in pricing,” the governor said at the time.

The governor’s office would not explain why Newsom’s perspective on regulations had shifted in the eight months since, only saying that they "will continue to collaborate with legislative leaders."

His proposal, according to a summary provided by his office, would allow the state to review pharmacy benefit managers’ contracts, perform financial audits and issue penalties, and require the companies to report detailed drug pricing data to California’s Department of Health Care Access and Information.

California Gov. Gavin Newsom announces a partnership with Civica Rx to provide insulin to Californians for $30 for 10 milliliters, which he said was as little as one-tenth of the current cost.

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Ringo Chiu

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Sipa USA via Reuters

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Newsom’s proposal also would require benefit managers to act in the best interest of health plans and clients, something known as fiduciary duty.

Geoffrey Joyce, director of health policy at the USC Schaeffer Center and an expert on drug pricing, said health economists have argued for years that establishing a fiduciary duty for pharmacy benefit managers would solve many of the perceived problems caused by the business model.

“If they have to act as a fiduciary by law, that changes everything,” Joyce said. “Right now, the incentives are to make money for the [pharmacy benefit manager] ... but if they have to act in the best interest of the clients they would be legally liable for the things that they do.”

Pharmacy benefit managers have come under fire in Congress for engaging in opaque business tactics that artificially drive up the cost of some drugs. The Federal Trade Commission, which was investigating their practices last year, published a report stating that pharmacy benefit managers actively tried to avoid regulation by moving portions of their business overseas.

Consolidation has also led to practices like patient steering, Joyce said. Three pharmacy benefit managers dominate the industry: CVS Caremark, Express Scripts and OptumRx represent more than 80% of the market.

Drug spending has risen 56% since 2017

Pressure has been growing on politicians nationally in recent years to take action on drug prices, which are one of the primary drivers of increased medical costs. In just one year, between 2022 and 2023, drug spending in the U.S. increased 13.6%, according to a study on national pharmaceutical trends. Other studies indicate that Americans pay nearly three times as much as people in other countries for the same drugs.

In California, prescription drug spending has increased 56% since the state first began tracking data in 2017. Spending between 2017 and 2023, the most recent year data is available, jumped by nearly $9 billion, according to a state report on drug costs.

President Donald Trump this week also signed an executive order demanding that manufacturers lower the price of prescription drugs in the next 30 days or face new limits on what the federal government will pay, though it’s unclear how it would work.

Sen. Scott Wiener, a San Francisco Democrat, authored the vetoed measure last year and has continued to push forward bills aiming to bring down drug costs. Wiener said in a statement today that Newsom’s announcement is a “solid step” toward improving prescription drug affordability but that more needs to be done.

Wiener reintroduced the bill from last year as Senate Bill 41, which outlines clear prohibitions for pharmacy benefit managers, including forbidding them from requiring patients to fill prescriptions at specific pharmacies. That bill is moving through the Legislature and passed its first committee last month.

Pharmacy benefit mangers "should not pocket rebates they negotiate on behalf of consumers, they shouldn’t steer patients toward more expensive drugs and their affiliated pharmacies in pursuit of profit, and they should compensate pharmacies and doctors fairly," Wiener said in a statement.

Newsom’s announcement also included an effort to expand the role of CalRx, a $100-million state effort to procure and manufacture certain highly used drugs like insulin and naloxone, the opioid reversal medication.

Currently, CalRx is tasked with securing lower prices for generic drugs, but the new proposal would allow the state to pursue cost savings on name-brand drugs. This would give California more flexibility to respond to supply chain issues or “politically motivated” federal restrictions placed on drugs like mifepristone, the abortion pill, according to a statement from Newsom’s office.

In 2023, Newsom ordered state agencies to stockpile 250,000 abortion pills after a federal court ruling in Texas temporarily overturned FDA approval of the drug. That stockpile was depleted in 2024, but the fate of the pill’s usage remains in question as conservative groups continue to pursue legal action to block its use.

This article was originally published on CalMatters and was republished under the Creative Commons Attribution-NonCommercial-NoDerivatives license.

LAX officials are considering a proposal Tuesday to increase the fees rideshare companies are charged to access the airport.

Currently, rideshare companies like Uber and Lyft generally pass a $4 to $5 airport fee along to their customers. You might see this listed as a line item on your receipt as an “LAX Airport Surcharge.”

But the Los Angeles World Airports Board of Commissioners could vote to increase that fee by as much as $2 to $8 depending on where the rideshare picks you up or drops you off.

The idea behind the proposal is to encourage the use of the long-awaited, much-delayed and over-budget Automated People Mover once it opens and decrease congestion in the central terminal area, the area of the airport that’s also known as the horseshoe.

David Reich, a deputy executive director for the city agency that manages the airport, told LAist that if the proposal is approved, LAX doesn’t plan on increasing the fee until after the Automated People Mover opens, which could be later this year.

The proposed increases

When the Automated People Mover opens, there will be new curb space for drop-off and pick-up. Known as the “ground transport center,” this new curb space will be a 4-minute trip from the terminal area via the Automated People Mover, according to Reich.

LAX-it will shut down as a rideshare and taxi lot once the train opens, Reich said.

If the proposal is approved, getting an Uber or Lyft to and from the ground transport center will come with a $6 airport fee.

Even once the Automated People Mover opens, you will still be able to get rides directly to and from the curbs along the horseshoe, but they will come with a $12 fee.

The proposed increases would also apply to taxi and limousine services, which currently operate under a slightly different fee structure than rideshare companies.

The increased fees are expected to generate as much as $100 million in the first year the Automated People Mover is usable, according to a report to the board.

Why the different fees for the different locations?

In a report to the board, Reich said the Automated People Mover represents a "significant investment” that aims to “fundamentally reshape how vehicles move through the airport.”

The idea behind having a higher fee for direct access to the curbs along the horseshoe is to encourage “use of new, high-capacity infrastructure” and preserve central terminal access for trips “that most require it.”

Uber is trying to fight the increases

Uber is trying to mobilize the public to fight the proposed fee increases.

“Raising the LAX rideshare fee from $5 to $12 at the curb would punish travelers, working families, and seniors who depend on affordable, reliable transportation,” Danielle Lam, the head of local California policy for Uber, said in a statement.

On Monday, Uber sent an email to passengers who recently used the rideshare service, urging them to write to city officials to “stop this massive fee hike.”

Lyft has not responded to a request for comment.

Ten state lawmakers who are members of the L.A. County delegation sent a letter on Monday to the board expressing their “strong opposition” to the proposed increases.

“Many Angelenos rely on a mix of options, including rideshare services and friends or family dropping off loved ones,” the legislators wrote in the letter. “Managing congestion cannot realistically rely on steep fee increases for certain transportation options.”

Eight of the 10 legislators who signed the letter have received campaign contributions from Uber or Lyft, according to an LAist analysis of state campaign contribution data.

Other ways to access the airport

Now is probably a good time to remind folks that there are other ways to get to the airport that don’t involve rideshares, taxis or even lifts from families and friends.

The FlyAway bus offers regularly scheduled rides from the airport to Union Station in downtown L.A. and Van Nuys. You can see the schedules here. 

Last year, the countywide transportation agency unveiled the LAX/Metro Transit center, which is accessible from the C and K rail lines and several bus routes. For now, an LAX shuttle is bringing travelers from the station to the airport. It will be one of the stops on the Automated People Mover once it opens.

The Newport Beach City Council is considering demolishing part of its quirky, beloved sculpture garden in Civic Center Park to make way for a new police station.

The city has been trying to figure out how to replace its aging police headquarters for years. It bought a property in 2022 with that intent. But an ad hoc City Council committee decided, controversially, it might be better to instead build a new station on the parkland next to city hall.

What’s so great about the sculpture garden?

The sculpture garden is a “museum without walls” treasured by art and nature lovers alike. It houses the quirky and once-controversial “Bunnyhenge,” included on the popular Atlas Obscura travel guide. Opponents of putting a new police headquarters on park grounds say it would compromise the environment, and decimate the sculpture garden.

What do supporters of the new station idea say?

Supporters say the current police station, built in 1973, is long overdue for an upgrade, and that the police force needs more space for things like servers to store digital evidence. The council ad hoc committee that studied the issue says the Civic Center parkland makes the most sense for a new building because the city already owns the land, and it would consolidate the city’s main services in one place.

Is it a done deal?

Far from it. The City Council is holding a study session Tuesday to present the plan publicly and gather input. If the council decides to go forward, the next step would be to hire a consultant to design the building and get started on an environmental impact report.

Here’s how to learn more and weigh in:

A new exhibit in L.A. — Vehicles of Expression: The Craft of the Skateboard — arrives this weekend, highlighting the cultural impact, history and artistry of handmade skateboards.

It’s the latest exhibit at Craft in America Center, a museum and library that highlights handcrafted artwork.

Todd Huber, skateboard historian and founder of the Skateboarding Hall of Fame, said before 1962, it wasn’t possible to buy a skateboard in a store.

“Skateboarding started as a craft,” Huber said on AirTalk, LAst 89.3’s daily news program. “Somewhere in the 50s until 1962, if you wanted to sidewalk surf, as they called it, you had to make your own out of roller skates.”

What to expect

Emily Zaiden, the director and lead curator of the Craft in America Center based in Los Angeles, told LAist’s AirTalk the exhibit was tricky to curate.

“What we wanted to do was focus on both the history and then expand into how this has been an object that people have interpreted in so many different ways since the very beginning,” Zaiden said.

Artists who craft skateboards not only think of design, but also of the features that give riders the ability to do tricks, such as wheelies and kickflips.

“The ways that people have constructed boards, engineered boards, design boards … people are really renegade, which I think is really the spirit of skateboarding overall,” Zaiden said. “This very independent, out-of-the-box approach and making boards that allow them to do all kinds of wacky tricks and do all kinds of things that no one imagined possible physically with their body, but through the object of the board.”

Know before you go

The exhibit at Craft in America Center opens to the public on Saturday. Admission is free. The museum is open from noon to 6 p.m., Tuesday through Saturday.