Legislation To Create California Rx Program Introduced
Sens. Deborah Ortiz (D-Sacramento) and Chuck Poochigian (R-Fresno) on Thursday introduced a bill (SB 19) that would implement Gov. Arnold Schwarzenegger's (R) California Rx plan, which "relies on voluntary cooperation from drug companies" to provide low-income state residents with prescription drug discounts of about 40%, the Sacramento Bee reports.
The announcement, which included several administration officials, laid "the groundwork for a showdown" between the governor and some Democratic lawmakers, who last year introduced legislation that would have addressed the issue of prescription drug costs by making it easier to import medications from Canada, the Bee reports. The governor vetoed the bills, which Democrats recently reintroduced (Benson, Sacramento Bee, 1/7).
The program, which the governor announced in his State of the State address on Wednesday, would be available to an estimated five million uninsured state residents. Pharmacies and drug makers would provide approximately equal shares of the discounts.
Health and Human Services Agency Secretary Kim Belshe said drug makers would participate voluntarily because of California's large purchasing power.
State health officials said that all major drug makers -- represented by the Pharmaceutical Research and Manufacturers of America -- have agreed to participate in the program.
Provisions of the plan, which would be available for those with annual incomes less than 300% of the federal poverty level, include:
- A discount card that would require an annual $15 fee from participants;
- A requirement for participating manufacturers to offer drugs at the lowest price paid by any commercial buyer in the state;
- A requirement for pharmacies to grant participants discounts similar to those given to large buyers, such as the Blue Cross health plan or Costco (Vogel/Rau, Los Angeles Times, 1/7);
- A discount available for all uninsured residents, as well as those who have some coverage but must pay full price for some medications;
- A Web site, funded by $10 million from PhRMA, that would help state residents enroll in existing drug maker discount programs (Sacramento Bee, 1/7). The state general fund also would contribute $4 million to create the Web site (Sheppard, Los Angeles Daily News, 1/7).
Participants would enroll in the program through the Internet, local pharmacies, doctors' offices or a toll free number. If approved, HHSA expects the program to begin enrolling members Jan. 1, 2006, and the Web site to be operational in spring 2005 (Skidmore, San Diego Union-Tribune, 1/7).
Belshe said, "California Rx offers not just the rhetorical promise of lower-priced drugs; California Rx offers the practical reality of significant savings to nearly five million low-income and uninsured Californians" (Los Angeles Times, 1/7). She added, "Unlike drugs that are purchased through Canadian Web sites, these are legal and FDA-approved and affordable at prices competitive to the Canadian Web sites" (Silber, Contra Costa Times, 1/7).
Sandra Shewry, director of the Department of Health Services, said, "We wanted to put something on the table that would be legal, that would be safe, would be local and that we could implement in a reasonable amount of time. This will be unique."
Ortiz, who previously had introduced a bill addressing reimportation that Schwarzenegger vetoed, said, "Our job as elected officials ... is to in fact try to find that common ground. We've got a huge challenge ahead of us this year" (Los Angeles Times, 1/7).
Ortiz, chair of the Senate Health Committee, is a "significant ally" for Schwarzenegger, but she has said she also would support legislation addressing prescription drug costs that was re-introduced in the Assembly, the Bee reports. She said, "I intend to support any and all proposals that come through my committee. We ought to allow all proposals that are sound policy to be supported" (Sacramento Bee, 1/7).
Former Rep. Billy Tauzin (R-La.), who recently became PhRMA's president and CEO, said the plan "balances the immediate needs of patients without compromising on the promise of future research and development." Tauzin said that PhRMA "look[s] forward to continue working with the governor to ensure this program's success."
The program also has the support of the California Medical Association, AARP and the California Pharmacists Association (Los Angeles Times, 1/7).
HHSA Assistant Secretary David Topp dismissed criticisms about the plan's reliance on drug makers' voluntary participation and said the state had several initial agreements already in place that could exceed the expected savings levels. "We believe we will get widespread support," Topp said, adding that mandating the discounts would require federal approval, which would be unlikely to happen (San Diego Union-Tribune, 1/7). Topp noted that Schwarzenegger personally called several pharmaceutical industry leaders and that companies have since "come to us individually and said, 'We're comfortable and we can give better discounts than the baseline (of 17%)'" (Contra Costa Times, 1/7).
Some critics said that the program is "a sellout to the pharmaceutical industry, which has donated heavily to Schwarzenegger," and that the state would have difficulty stopping "drug companies from raising prices before setting a discount," the Los Angeles Times reports (Los Angeles Times, 1/7). Some Democrats and consumer advocates called the plan "unrealistic" and noted that it "relies on drug companies" to disclose "closely held information, while imposing no penalty if they do not negotiate in good faith," the Bee reports. Critics also said that the eligibility limit was set too low and that another plan introduced in the Assembly would provide discounts for state residents with annual incomes less than 400% of the federal poverty level (Sacramento Bee, 1/7). In addition, critics noted that the Medicare discount cards have "so far had limited success in lowering costs" and have confusing enrollment processes, the Contra Costa Times reports (Contra Costa Times, 1/7).
Assembly member Dario Frommer (D-Glendale) said that after the governor last fall vetoed several reimportation-related bills and other measures to reduce drug costs, "He promised that within six weeks he was going to have a deal with drug companies to negotiate discounts." Frommer added, "We're obviously three, four months past that now, and what he announced today is that basically nothing happened. He couldn't name a single drug company that is prepared to offer discounts."
Frommer said that the program lacks a "hammer" to require drug makers to provide discounts and that the only such mechanism would be to bar companies from including their drugs on the Medi-Cal formulary. "That is the only leverage we have," Frommer said (Los Angeles Times, 1/7). He added that unless the governor alters his plan, "I don't think it's going to fly in the Assembly."
Sen. Jackie Speier (D-Hillsborough) called the plan an effort by the governor "to make it seem like he's doing something for prescription drugs," adding that a similar plan failed several years ago because of a lack of interest among residents and drug companies (Sacramento Bee, 1/7).
Anthony Wright, executive director of advocacy group Health Access, compared the governor's comments on the proposal in his State of the State speech to a prescription drug commercial, adding, "There's that first 30 seconds which has people running through fields, and it looks very good. But there's that second 30 seconds with the fine print that tells who's excluded, what are the side effects, what are the real implications. ... We really want to see the fine print. We don't have that at this time" (Los Angeles Times, 1/7).
Jerry Flanagan, spokesperson for the Foundation for Taxpayer and Consumer Rights, said, "(These companies are) the makers of Vioxx and Celebrex. We can't trust drug companies to give discounts" (San Diego Union-Tribune, 1/7).
The governor's plan deserves only "one star on a four-star scale" for being a "good start, but only that," a San Jose Mercury News editorial states. According to the editorial, Schwarzenegger should have "used some of his muscle to move pharmaceutical companies further in the right direction" by not relying on their voluntary participation and by taking "a leadership role in pushing for reimportation."
According to the editorial, "Californians will most likely watch Democrats kill the governor's proposal this spring" and then watch Schwarzenegger "counter by vetoing the Democrats' vastly superior prescription drug package this summer." The editorial concludes that state residents are in for "a prescription drug battle royal on the ballot" (San Jose Mercury News, 1/6).