District Attorney Gregory D. Totten wishes to alert county residents of a new Executive Order by Governor Gavin Newsom regarding price gouging. Pursuant to Executive Order N-44-20 issued April 3, 2020, retailers may not charge a price that is ten percent greater than the price that they charged on February 4, 2020, for food, consumer goods, medical supplies, emergency supplies, or any other materials previously designated by the United States Secretary of Health and Human Services as Scarce Materials or Threatened Materials pursuant to section 102 of the Defense Production Act, 50 U.S.C. § 4512. However, consistent with the language of Penal Code section 396, retailers may charge more if their costs recently increased, or if they offered a reduced price as of February 4, 2020, they may charge their ordinary price for the item.
Pursuant to the Executive Order, persons or businesses who are now selling items listed above that they did not sell as of February 4, 2020, are now subject to a price cap. If the item was purchased, the price cannot exceed the cost of the item plus a markup of fifty percent of the cost. If the item was produced, the price cannot exceed the cost to produce and sell the item plus fifty percent of that cost. A violation of either of these provisions is a misdemeanor punishable by six months in jail or a $1000 fine, or potentially by both jail and fine. Violators may also be subject to a civil enforcement action resulting in civil penalties, restitution, and injunctions. Alleged price gouging violations may be reported by calling the District Attorney’s Office at (805) 662-1737, or by sending an email to [email protected].
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That would mean that most pharmaceuticals are in violation, depending on whether it is based upon manufacturer’s cost or distributor’s price. Methods of overhead allocation and assignment of R&D approval costs also factor in.