Governor Newsom Signs State Budget with Key CLSA-Requested Line Item Veto

By Brett Johnson
July 24, 2019

On June 27th, Governor Gavin Newsom signed California’s $215 billion 2019-2020 budget, and, as of Tuesday, July 9, he had signed all budget and health trailer bills related to CLSA’s key issues of interest.

Governor Newsom cited “confronting the cost crisis” as one of his core goals for this budget – with healthcare chief among the areas in which the “cost crisis” is most concerning for his administration. Specifically, the Governor noted that the budget “establishes a pathway to transition Medi-Cal’s drug benefit to a model where the state is directly bargaining for the lowest drug prices,” referring to his planned transition of Medi-Cal’s pharmacy benefit to 100 percent fee-for-service, as opposed to allowing managed care plans to administer the benefit for their enrolled beneficiaries.

The Administration has stated it projects the Medi-Cal pharmacy benefit transition to fee-for-service to save $393 million, resulting from a significant increase (12 percent) in the supplemental rebates negotiated with drug makers by 2023.

Another key item of note for CLSA was related to the California Initiative to Advance Precision Medicine (CIAPM). Of the Governor’s three line item vetoes, one was CLSA’s requested veto of restrictions on CIAPM’s expenditure authority. The extension of CIAPM expenditure authority until June 30, 2025, which CLSA strongly supported throughout the budget process was included in the signed budget.

Other key items CLSA supported in the Budget Act of 2019 are summarized below:

  • Medi-Cal Asthma Disease Management: $15 million to the Department of Health Care Services (DHCS) to establish a project to fund local health departments, providers, and organizations to offer mitigation, education, and disease-management services to individuals with moderate to severe asthma.
  • HIV and Hepatitis C: $5 million for HIV and Hepatitis C to the Department of Public Health (DPH) to enable the Center for Inherited Blood Disorders to establish a network of sickle cell disease centers in Alameda, Fresno, Kern, Los Angeles, Sacramento, San Bernardino, and San Diego.
  • Alzheimer’s Disease: $4.5 million to DPH to allocate grants to up to 6 local health jurisdictions to support activities consistent with the federal Centers for Disease Control and Prevention’s (CDC) Healthy Brain Initiative to Address Dementia for encumbrance until June 30, 2022.
  • UC Riverside and Merced Medical Schools: Authorizes the University of California (UC) to facilitate medical school projects in Riverside and Merced with intent language to augment in subsequent budget years to support debt service associated with projects.

Any CLSA members who would like to provide input or would like further information on any of the budget items discussed above are asked to reach out to Oliver Rocroi, CLSA’s Senior Director, State Government Affairs ( or Brett Johnson, CLSA’s Senior Director, Policy & Regulatory Affairs (