California Law Raises Concerns From Drug Companies
Some pharmaceutical companies have begun negotiating medication discounts with California to comply with a state law that will take effect on Jan. 1, 2007, the Boston Globe reports.
The law will a create voluntary drug discount program for which five million state residents could be eligible. The law will ask drug companies to provide discounts of up to 40% for brand-name drugs and 60% on generic products (Henderson, Boston Globe, 11/11).
Discounts would be available to uninsured families earning less than 300% of the federal poverty level and other state residents in some circumstances (California Healthline, 10/2).
Although the drug discounts are voluntary, the state in 2010 can remove from its Medi-Cal formulary medications produced by companies that have not offered discounts. Medi-Cal is the state's Medicaid program (Boston Globe, 11/11).
The state currently purchases about $2 billion in prescription drugs annually for Medi-Cal beneficiaries (California Healthline, 9/5).
Pharmaceutical lobbyists and biotechnology companies have criticized the legislation, saying that price controls will limit innovation and research funding for new treatments.
Jan Faiks -- vice president of government affairs and law for Pharmaceutical Researchers and Manufacturers of America -- said that the law cannot guarantee a certain percentage in discounts because there is no requirement for pharmacists and other distributors to negotiate savings.
PhRMA said the law is "problematic" but has not filed a lawsuit against it (Boston Globe, 11/11).