California Governor Gavin Newsom signed a bill on Monday allowing the state to manufacture its own generic prescription drugs in order to lower the cost of prescription drugs.

The law, California Affordable Drug Manufacturing Act of 2020, will require California’s Health and Human Services Agency (CHHSA) to partner with drug manufactures to produce and/or distribute prescription drugs under the label Cal Rx. Under the law, California will manufacture “at least one form of insulin, provided that a viable pathway for manufacturing a more affordable form of insulin exists at a price that results in savings.” Drugs produced under Cal Rx must be made available to providers and patients at a reasonable and transparent price.

In a press release, Newsom discussed the purpose of the law: “The cost of health care is way too high. Our bill will help inject competition back into the generic drug marketplace – taking pricing power away from big pharmaceutical companies and returning it to consumers.”

The law does not specify a specific date for implementation but does state that by July 1, 2023, the CHHSA will assess the feasibility of directly manufacturing generic prescription drugs and selling generic prescription drugs at a fair price.