California Leads the Nation in Rx Reform

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Five prescription drug reform laws passed by the California Assembly today “lead the nation in reform and could provide access to dramatically cheaper prescription drugs,” according to Jerry Flanagan of the Foundation for Taxpayer and Consumer Rights (FTCR). “In comparison, the federal government has consistently yielded to political pressure brought by the pharmaceutical industry. In fact, the recent Medicare prescription drug law guarantees a financial windfall for pharmaceutical companies by barring Medicare from negotiating bulk discounts on behalf of seniors.”

The five measures passed today by the Assembly allow reimportation of drugs from Canada, authorize a state drug bulk-purchasing program and provide greater transparency in drug company pricing practices. The legislation is expected to be approved by the State Senate and sent to Governor Schwarzenegger for final consideration.

According to analysis released on Monday by FTCR, Governor Schwarzenegger has received well over $325,000 in campaign contributions form pharmaceutical companies and the legislature has received $550,000 since the beginning of 2003. Pharmaceutical companies spent $1 million lobbying the legislature in the first three months of 2004, a 25% increase over the same period in 2003.

“Whether or not Governor Schwarzenegger supports prescription drug reform will be a litmus test of his commitment to stand-up to special interest groups,” said Flanagan.

The measures approved today by the California Assembly include:

AB 1957 (Frommer, D-Los Angeles)

Requires the Department of Health Services (DHS) to establish a web site that will facilitate the safe purchase by California residents of prescription drugs from Canadian pharmacies. Additionally, this bill requires the Department of General Services (DGS) to coordinate a review of departments and agencies that purchase prescription drugs to determine which state programs may save significant state funds by purchasing from Canadian sources.

AB 1958 (Frommer, D-Los Angeles)

Allows small business owners and uninsured patients to receive the same prescription drug discounts that the Governor, legislators and state employees currently receive by authorizing the California Public Employees’ Retirement System (CalPERS) to form a purchasing pool for prescription drugs for public and private purchasers. Currently, the U.S. Department of Veterans Affairs and the Canadian government save 30-60% off the cost of U.S. made drugs as a result of negotiating lower rates for bulk quantities.

AB 1959 (Chu, D-Monterey Park)

Requires the State Auditor to conduct an audit of the state’s procurement and reimbursement practices as they relate to the purchase of drugs for or by state agencies.

AB 1960 (Pavley, D-Agoura Hills)

Requires pharmacy benefits managers (PBMs) to register with the Board of Pharmacy (Board), requires the Board to set specified standards for registration, and requires PBMs to make specified disclosures to purchasers and prospective purchasers with regard to drug rebates, revenues and its drug formularies, and to make specified disclosures to the public upon request. Additionally, this bill would establish requirements regarding PBM contracts and the provision of certain drugs.

AB 2326 (Corbett, D-San Leandro)

Requires the Department of Managed Health Care (DMHC) to publish and update a report card on the safety, effectiveness, and cost of prescription drugs, to be posted on the DMHC’s web site.


The Foundation for Taxpayer and Consumer Rights is a non-profit and non-partisan consumer advocacy organizations. For more information please visit us on the web at: or

Consumer Watchdog
Consumer Watchdog
Providing an effective voice for American consumers in an era when special interests dominate public discourse, government and politics. Non-partisan.

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