Cal. Health & Safety Code § 130509

(a) The department may require prior authorization in the Medi-Cal program for any drug of a manufacturer if the manufacturer fails to agree to a volume weighted average discount for single-source prescription drugs that is equal to or below any one of the benchmark prices described in subdivision (a) of Section 130506 and only to the extent that this requirement does not increase costs to the Medi-Cal program, as determined pursuant to subdivision (c).
(b) If prior authorization is required for a drug pursuant to this section, a Medi-Cal beneficiary shall not be denied the continued use of a drug that is part of a prescribed therapy until that drug is no longer prescribed for that beneficiary’s therapy. The department shall approve or deny requests for prior authorization necessitated by this section as required by state or federal law.
(c) The department, in consultation with the Department of Finance, shall determine the fiscal impact of placing a drug on prior authorization pursuant to this section. In making this determination, the department shall consider all of the following:
1. (1) The net cost of the drug, including any rebates that would be lost if the drug is placed on prior authorization.
2. (2) The projected volume of purchases of the drug, before and after the drug is placed on prior authorization, considering the continuity of care provisions set forth in subdivision (b).
3. (3) The net cost of comparable drugs to which volume would be shifted if a drug is placed on prior authorization, including any additional rebates that would be received.
4. (4) The projected volume of purchases of comparable drugs, before and after the drug is placed on prior authorization.
5. (5) Any other factors determined by the department to be relevant to a determination of the fiscal impact of placing a drug on prior authorization.
(d) This section shall be implemented only to the extent permitted under federal law, and in a manner consistent with state and federal laws.
(e) This section may apply to any manufacturer that has not negotiated with the department.
(f) The department shall notify the Speaker of the Assembly and the President pro Tempore of the Senate that the department is requiring prior authorization no later than five days after making this requirement.
(g)
1. (1) Subject to paragraph (2), this section shall be implemented on and after August 1, 2017.
2. (2) This section shall be implemented only if the department determines that participation by manufacturers has been insufficient to meet both of the benchmarks identified in Section 130507.