Gov. Schwarzenegger Supporters Control Rx Group Fighting to Block Drug Reform;

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FTCR Calls on Gov. to Return Campaign Contributions

Eleven board members of the California Healthcare Institute (CHI) — which provided seed money to the pharmaceutical industry front group “CURES” — have contributed a total of $559,636 to Governor Schwarzenegger, according to filings with the California Secretary of State. CHI and the industry front group, purporting to represent patients, are lobbying legislators to oppose five drug reform bills to be voted on in the state Assembly today.

The Foundation for Taxpayer and Consumer Rights called on Schwarzenegger to pledge his support for five the bills or return the contributions.

CHI Chairman Elect, Myrtle S. Potter, is President of Commercial Operations at Genentech which contributed $41,200 to Governor Schwarzenegger. A complete list of CHI board members that have contributed to Governor Schwarzenegger is available at:

“Schwarzenegger’s covert prescription drug army is charged with killing drug reform proposals so that the Governor does not have to face the public scrutiny of opposing the same kind of populist support that swept him into office,” said Jerry Flanagan of the Foundation for Taxpayer and Consumer Rights (FTCR). “To keep his promises to be the Governor for the people, Schwarzenegger should either promise to sign the bills or return the campaign contributions.”

CURES received seed money from the California Healthcare Institute, and biotech and pharmaceutical trade groups. The coalition’s central argument against one of the most hotly contested issues, reimportation, is that research and development of new drugs will be significantly impacted by lower cost drugs from Canada. The position ignores the fact that drug companies spend two to three times more on marketing new drugs than they do on research and development, according to FTCR.

The five measures to be voted on today allow reimportation of drugs from Canada, authorize a state drug bulk-purchasing program and provide greater transparency in drug company pricing practices and drug quality:

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.

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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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