Schwarzenegger Vetoes Four Reimportation Bills, Advocates for Administration’s Plan To Negotiate Drug Discounts

Gov. Arnold Schwarzenegger (R) on Thursday -- the last day of the legislative session -- vetoed four bills addressing the importation of lower-cost prescription drugs from Canada, the New York Times reports (Broder, New York Times, 10/1). The bills included:

AB 1957, by state Assembly member Dario Frommer (D-Glendale), which would have directed the Department of Health Services to develop a Web site that would list prices in California and Canada pharmacies for the 50 most commonly prescribed brand-name medications;
SB 1333, by state Sen. Don Perata (D-Oakland), which would have required the state to consider the purchase of prescription drugs from Canadian pharmacies and would have related to medications for beneficiaries of the state AIDS Drug Assistance Program and Medi-Cal, the state Medicaid program;
SB 1144, by state Senate President Pro Tempore John Burton (D-San Francisco), which would have required the Department of General Services to consider Canadian suppliers in the purchase of prescription drugs for state prisons, hospitals and agencies and would allow Medi-Cal to purchase medications from Canada; and
SB 1149, by state Sen. Deborah Ortiz (D-Sacramento), which would have required the California Board of Pharmacy to establish a Web site that would list Canadian pharmacies licensed by their provinces (California Healthline, 8/20).

In a veto message, Schwarzenegger wrote, "A top priority of my administration is to provide access to affordable prescription drugs" (Rapaport/Benson, Sacramento Bee, 10/1). Schwarzenegger said that the bills "would violate federal law and could expose the state to civil, criminal and tort liability" (Hinch, Orange County Register, 10/1). Schwarzenegger added that the bills "oversimplify the complex safety, trade, supply and pricing issues involved in the marketplace" (New York Times, 10/1).

CaliforniaRX

Schwarzenegger said he would address the high cost of medication in California with a prescription drug discount program for low-income, uninsured state residents (New York Times, 10/1).

Health and Human Services Agency Secretary Kim Belshe in August indicated that Schwarzenegger planned to veto the four reimportation bills in favor of the program, which would provide discounts for residents with annual incomes less than 300% of the federal poverty level.

CaliforniaRX would provide cards that participants could present to pharmacists, who would seek the lowest prices for their medications through state or pharmaceutical company programs. The program would require $3 million in annual funding and would be open to state residents covered by Medicare or residents enrolled in private health plans who need help paying for prescription drugs not covered by their health insurance.

Legislation to create the plan could be introduced early next year, and state officials have said the discount card could be available for about 4.8 million low-income state residents as early as Jan. 1, 2006 (California Healthline, 9/28). Each discount card would cost about $10 per year.

Schwarzenegger has sought to negotiate lower prescription drug prices from pharmaceutical companies for the program through bulk purchases and rebates (Rau/Vogel, Los Angeles Times, 10/1).

A report released last week by Democratic legislators and patient advocates showed that the bills would have provided residents with 30% to 50% more savings than CaliforniaRX (California Healthline, 9/28).

Negotiations With Drug Companies

Belshe said that Schwarzenegger administration officials have begun negotiations with "a number of companies" to implement the program (Martin, San Francisco Chronicle, 10/1).

However, Schwarzenegger said, "While I am encouraged by the concrete commitments made by some members of the industry, I am disappointed that many companies have not yet stepped up and offered meaningful discounts for this population." Schwarzenegger "warned the industry that he would work out a compulsory plan" with the Legislature next year if he cannot reach agreements with pharmaceutical companies by mid-November, the Los Angeles Times reports (Los Angeles Times, 10/1).

Belshe said that "if the industry falls short, there is no doubt we will be considering other means" (New York Times, 10/1). However, she added, "Absent a change in federal law, [the recently vetoed] bills will be vetoed next year" (LaMar/Folmar, Contra Costa Times, 10/1).

Criticism

According to Frommer, Schwarzenegger's vetoes indicate that he is influenced by the pharmaceutical industry, which has contributed more than $300,000 to his campaigns since he announced his candidacy for governor, the New York Times reports (New York Times, 10/1). Frommer said that the governor's action on the bills after contributions from drug companies "looks like a quid pro quo" (Orange County Register, 10/1).

Frommer also said that CaliforniaRX would benefit only a small number of state residents and that prescription drug prices under the program would exceed those available through Canadian pharmacies (New York Times, 10/1). "This will continue to be an issue here and around the country. States will continue to take matters into their own hands," Frommer said.

Ortiz said CaliforniaRX would be "heavily reliant on the goodness of prescription drug companies." She added, "It's clear that [Schwarzenegger's] program is nowhere near the 40% to 50% average discount that would be realized by importing drugs from Canada" (Ainsworth, San Diego Union-Tribune, 10/1).

Assembly Speaker Fabian Nunez (D-Los Angeles) said, "The governor of the Golden State had a golden opportunity to stand with California consumers and seniors and implement these critical reforms. Instead, he chose to side with pharmaceutical companies. That is a shame" (Lawrence, AP/Fresno Bee, 10/1).

Health Access Executive Director Anthony Wright said, "The governor is clearly siding with his campaign contributors in the prescription drug industry over senior citizens and the poor who are finding it hard to afford prescription drugs" (San Diego Union-Tribune, 10/1). He added, "The savings from this discount card depend on drug company rebates and patient assistance programs that are entirely voluntary, unenforceable and subject to change at any minute" (Sacramento Bee, 10/1).

Support

The governor's move "cheered pharmacists, drugmakers and many Republicans, who were concerned about the safety of drugs from abroad, violating a federal ban on drug importation and the possibility that lowered profits could reduce pharmaceutical research," the Contra Costa Times reports (Contra Costa Times, 10/1).

Peter Pitts, a senior fellow with the Pacific Research Institute, said, "The governor did the right thing. In this case, the right thing is to behave like a true leader and not to endanger the public health with a risky scheme that will not do anything over the long term to address all the problems in the market that are causing health costs to go up" (Sacramento Bee, 10/1).

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