Pharmaceutical Industry Reacts to State Efforts To Reduce Prescription Drug Costs

The Los Angeles Times on Monday examined the pharmaceutical industry's efforts to defeat proposed ballot initiatives in California that would require drug makers to provide discount prescription medications to consumers, as well as pharmaceutical industry efforts against similar measures in other states. The "most aggressive counterattack" has been launched in California, where drug makers have raised $8.6 million to defeat a ballot measure proposed by not-for-profit Health Access California, according to the Times.

The proposed ballot measure would require drug makers to provide discounts to California residents with annual incomes that do not exceed 400% of the federal poverty level, a group estimated at about six million to 10 million state residents. Under the measure, drug companies that do not comply with the program would be shut out of Medi-Cal.

Gov. Arnold Schwarzenegger (R) negotiated a voluntary discount plan called California Rx that would provide a 40% drug discount to state residents whose annual incomes do not exceed 300% of the federal poverty level. According to the Times, the Schwarzenegger administration has not negotiated agreements with individual drug makers. The administration says that, if approved, the plan could take effect as early as next year in part because drug makers would not challenge it in court.

However, state Assembly Majority Leader Dario Frommer (D), who has proposed legislation that Health Access used as the basis for its ballot initiative, said the plan would not ensure state residents the lowest prices on drugs. In addition to its support for Schwarzenegger's proposal, the pharmaceutical industry has pledged support for proposed ballot initiatives that would reduce trial lawyers' contingency fees and require unions to obtain members' permission before using their dues for political activities.

According to the Times, such measures are intended as "retaliatory" actions against trial lawyers and unions, groups that comprise "the heart of Democrats' donor base." Jan Faiks, a vice president of the Pharmaceutical Researchers and Manufacturers of America, said, "We take it as such a serious threat to the health and welfare of the pharmaceutical industry that we have to make a stand here. It's a very bad precedent. You're the leader in the country, and there are 26 states that allow ballot initiatives."

According to the Times, manufacturers also are "on the defensive" in Washington state and Rhode Island as legislators become increasingly interested in controlling drug prices. Ohio and Maine have launched voluntary discount plans for low-income residents but have been unable to punish individual manufacturers that refuse to offer discount prices. The Ohio plan, which was launched this year and used as the model for Schwarzenegger's proposal, offers discounts of about 26% off retail prices.

The Maine discount program claims savings of up to 15% off retail prices on brand-name drugs and 60% on generics. The program is operating after a long delay in court, but the state has not yet taken action against drug manufacturers that do not offer discounts to comply with the program.

PhRMA officials are in negotiations with labor leaders and legislators in Washington state, Rhode Island and Illinois about creating voluntary programs, while other states, such as West Virginia, are pursuing other efforts to address prescription drug prices (Rau, Los Angeles Times, 3/28).

KPBS' "KPBS News" on Monday reported on proposed ballot measures to address prescription drug costs. The segment includes comments from Jamie Court, director of the Foundation for Taxpayer and Consumer Rights (Goldberg, "KPBS News," KPBS, 3/28). The complete transcript is available online. The complete segment is available online in RealPlayer.