Legislative Analyst’s Office Report Says Greater Prescription Savings Possible If California Rx Proposal Is Amended
Gov. Arnold Schwarzenegger's (R) California Rx plan, which relies on voluntary discounts from drug makers, likely would provide less savings on prescription drug costs than a plan proposed by some Democratic legislators, according to a report released Thursday by the nonpartisan Legislative Analyst Office, the Los Angeles Times reports (Vogel, Los Angeles Times, 2/11).
California Rx would be available to an estimated five million uninsured state residents. Pharmacies and drug makers would provide approximately equal shares of the discounts, which would amount to about 40% off retail drug prices.
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;
- A discount available for all uninsured residents, as well as those who have some coverage but must pay full price for some medications; and
- A Web site, funded by $10 million from PhRMA, that would help state residents enroll in existing drug maker discount programs. The state general fund also would contribute $4 million to create the Web site.
Sens. Deborah Ortiz (D-Sacramento) and Chuck Poochigian (R-Fresno) in January introduced a bill (SB 19) that would implement the program (California Healthline, 1/7).
The legislative analyst's office on Thursday said the administration's program could be implemented quickly and without legal challenges, but "bigger discounts on more types of drugs could be obtained," the Times reports. LAO recommends that the California Rx proposal be amended to make drug makers offering discounts a condition of participation in Medi-Cal. Democrats last month proposed such a plan.
A similar program in Maine resulted in drug discounts of as much as 60% for 200 medications. According to LAO, "It does not appear likely that California Rx will be able to obtain rebates comparable to Maine through a voluntary approach."
HHSA spokesperson Nicole Kasabian-Evans said such an amendment could lead to years of delay and jeopardize benefits for Medi-Cal beneficiaries. "The governor has already gotten commitments from major drug companies to participate in California Rx," Kasabian-Evans said.
According to the Times, Ortiz "appeared more amenable to amendments," and referred to the governor's proposal as "a good first step."
Assembly Majority Leader Dario Frommer (D-Glendale) said, "We're in a very good position to get large discounts, but only if the governor is willing to go with our approach" (Los Angeles Times, 2/11). The Legislative Analyst Office's report is available online.