Proposition 34 Notice

What is Proposition 34?

Proposition 34 was a 2024 ballot initiative passed by the voters and now codified at Welfare and Institutions Code sections 14124.39 et seq. The law requires certain health care entities to spend 98% of revenues from the federal discount prescription drug program on direct patient care, and to file accountings of those revenues and how they were spent. The California State Board of Pharmacy is one of four state regulators charged with enforcing the law. (See Welfare and Institutions Code sections 14124.45 and 14124.46.)

Who Must File?

A health care entity must file an accounting of revenues if it is a prescription drug price manipulator as defined in Welfare and Institutions Code section 14124.48, subdivision (l). A Prescription Drug Price Manipulator is a health care 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 with a “high” severity level

Required Submission of Accounting

A prescription drug price manipulator that is a California state tax-exempt organization and/or holds a license to operate a health plan, clinic, or pharmacy must file 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, by no later than December 31, 2025. Accountings must be submitted under penalty of perjury. Depending on the tax status and license(s) the prescription drug price manipulator holds, an accounting must be submitted to the Attorney General, the California State Board of Pharmacy, the Department of Managed Health Care, and/or the State Department of Public Health. (See Welfare and Institutions Code section 14124.45, subdivision (a)(1).)

Compliance

Prescription drug price manipulators that do not submit timely and accurate accountings will be deemed to be out of compliance with the requirements of Section 14124.44 for the applicable calendar year. The consequences for failure to submit timely, accurate, and compliant accountings are that the prescription drug price manipulator will lose, and lose eligibility for, tax-exempt status and any and all licenses it holds to operate a health plan, clinic, or pharmacy in the State of California, and shall further be prohibited from reapplying for, or again being granted, tax-exempt status or such license in this state for a period of 10 years.

Attestation Regarding Conduct

A prescription drug price manipulator must submit an attestation under penalty of perjury that in the prior calendar year, the prescription drug price manipulator was not engaged in any unprofessional conduct, dishonest dealing, or conduct inimical to the public health, welfare, or safety of the people of the State of California. (See Welfare and Institutions Code section 14124.44.) For prescription drug price manipulators that hold a license to operate a pharmacy, this attestation shall be submitted to Prop34@dca.ca.gov.

Public Comments

Public comments and information relating to prescription drug price manipulators, such as records of expenditures and written notices or inspection reports identifying violations affecting the health and safety of occupants at multifamily dwellings may be submitted to Prop34@dca.ca.gov.