California Department of Justice Announces Extension of Proposition 34 Reporting Deadline

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

OAKLAND - The California Department of Justice (CA DOJ) today announced that the Proposition 34 reporting deadline has been extended from December 31, 2025 to April 30, 2026. A ballot initiative passed by voters in 2024, Proposition 34 requires certain health care entities to spend 98% of their revenues from the federal discount prescription drug program on direct patient care, and to file with CA DOJ accountings of those revenues and how they were spent. Specifically, the law requires those entities to submit a detailed accounting for the prior calendar year of both its California statewide and nationwide gross and net revenues generated from participation in the federal discount prescription drug program, as well as how those net revenues were spent. Accountings can be submitted to [email protected] or via this secure file drop link. 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 10-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.