State Leaders Near Agreement on Drug Discounts
Gov. Arnold Schwarzenegger (R), Assembly Speaker Fabian Nuñez (D-Los Angeles) and Senate President Pro Tempore Don Perata (D-Oakland) are close to an agreement on a prescription drug discount program, the Los Angeles Times reports. As many as five million California residents could be eligible for discounts under the program, according to negotiators.
The proposed compromise would require pharmaceutical firms to reduce prices to a level set by the state for California residents who are ineligible for Medi-Cal, California's Medicaid program. The plan calls for discounts of 60% for generic drugs and 40% for brand-name treatments, according to legislators and Schwarzenegger administration officials.
The compromise agreement would consider drug companies' discounts adequate if the discounts complied with one of three benchmarks:
- Lowest price offered to any state Medicaid program;
- 85% of the average manufacturer price; or
- Lowest price paid by any nonpublic entity in California.
State residents would be eligible for the program if they do not have state-sponsored prescription drug coverage and their household incomes do not exceed 300% of the federal poverty level, the governor's preferred eligibility limit (Rau , Los Angeles Times, 8/23). Democratic legislators sought to set the eligibility limit for the program at 350% of the federal poverty level (Folmar, Contra Costa Times, 8/23).
The program also would be open to Medicare beneficiaries whose medications are not fully covered under the Medicare drug benefit and to California residents whose out-of-pocket drug costs exceed 10% of their annual incomes, provided that their household incomes do not exceed the state median (Rau , Los Angeles Times, 8/23).
Pharmaceutical companies would have to offer the discounts within three years, the timeframe Democratic legislators sought. The governor preferred giving drug makers five years to comply with the measure (Contra Costa Times, 8/23).
If drug makers do not meet the benchmarks within three years, the state could seek to remove the medications from the Medi-Cal formulary. Such a move would require physicians to obtain prior approval before the removed medications could be prescribed to Medi-Cal beneficiaries (Rau , Los Angeles Times, 8/23).
Provisions of the compromise would bar Medi-Cal from restricting access to treatments that do not have substitutes and to drugs whose removal from the Medi-Cal formulary would increase state drug costs. The compromise agreement also would bar changing the medication regimen for Medi-Cal beneficiaries who are already receiving a specific treatment (Rau , Los Angeles Times, 8/23).
At a news conference on Tuesday, Schwarzenegger said, "We haven't come to a conclusion, but I think it's looking good."
Legislative leaders said they had reached agreement on the provisions of the plan and needed to get approval on the final language of the measure, the Los Angeles Times reports (Rau , Los Angeles Times, 8/23).
The agreed upon changes by the end of the week will be amended into legislation (AB 2911 and SB 1702) by Nuñez and Perata, respectively. Passage of the bills is expected before the end of the legislative session on Aug. 31, according to the Contra Costa Times (Contra Costa Times, 8/23).
If approved, CMS would then have to approve the plan because it involves the state's Medicaid program, which receives federal funds.
According to the Los Angeles Times, drug companies might challenge the program in court (Rau , Los Angeles Times, 8/23).