Measure goes further than governor’s proposal to force drug prices down

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Sacramento Union

Taking the governor’s lead on trusting the voters of California, a coalition of groups submitted an ballot initiative Monday aimed at bring down the cost of prescription drugs.

Entitled the “Affordable and Safe Prescription Drugs for All Californians Act,” the initiative would leverage the state’s bulk buying power to negotiate better prices with pharmaceutical companies.

“If Canada with a population of 30 million negotiates 30 [percent] to 70 percent savings, we should be able to surpass that,” said Jerry Flanagan, consumer advocate with Santa Monica-based Election Watchdog and author of the initiative. The measure would also require that pharmaceutical companies disclose the health risk of drugs to doctors and to the public.

According to Flanagan, Gov. Schwarzenegger’s proposed drug discount program is inadequate to meet the needs of Californians. “The governor’s proposal is limited to only some of the uninsured,” he said. If Flanagan’s initiative were to pass, all Californians would be eligible to use the discount program.

Schwarzenegger introduced the Cal Rx program in his State of the State speech in early January. The plan was launched with SB 19 sponsored by Sen. Deborah Ortiz (D-Sacramento) and Sen. Charles Poochigian (R- Fresno) and would provide discounted drug coverage to uninsured families with incomes that do not exceed 300 percent of federal poverty guidelines. The participation of pharmaceutical companies would be entirely voluntary — and aspect of the bill that concerns many health advocates.

Appearing with Flanagan at a press conference to announce the initiative launch, Sonja Clarke, from Placerville, said that health insurance costs for herself and her husband had skyrocketed. “After I retired our HMO premiums increased by 400 percent,” she said. “This is not something we had planned on.” The couple found themselves paying $1,600 for three prescriptions each month. Clarke was among those who traveled on a chartered train trip to Canada to shop for prescription drugs — a journey sponsored by senior organizations to highlight the significantly lower prices of drugs across the northern border.

The announcement also served as an indictment of the practices of pharmaceutical companies. “Consumers and especially seniors continue to be gouged by drug companies who are far more concerned about profits than they are about people,” said Gary Passmore, an advocate with the Congress of California Seniors. He called the governor’s proposal a “very tentative first step” that doesn’t come close to addressing the problem. “Seniors in California are forced to choose between taking their drugs and meeting other expenses.” Often, he added, living expenses won.

Emily Clayton, representing the California Public Interest Research Group, said the state has already proven its ability to negotiate better prices for some government agencies. Senate Bill 1315 allowed a handful of state agencies to combine their buying power and negotiate drug prices. According to Clayton, the result was a savings of $7 million for just one drug. “There is absolutely no reason why California consumers can’t do the same thing,” she said. A spokesman for the Department of General Services that manages the buying program said he was unaware of any studies indicating such savings.

Clayton also talked about the great disadvantage that the uninsured have under the current system. She referred to a 2004 study done by CALPERG that showed uninsured consumers statewide pay 72 percent more than the federal government for eight common prescription medicines.

Flanagan said the specter of drug prices falling in a market as important as California is sure to incite the drug companies to action. “The one thing drug companies fear is consumers turning the tables on them,” he said, adding that his group has experience with going up against industry giants. Election Watchdog sponsored Prop 103 in 1988 — an initiative to require property and casualty insures to get approval from the state insurance commissioner before raising auto insurance rates. He said that special interests spent $80 million to defeat the measure but ultimately failed.

Sponsors are hoping the issue will appear on a November ballot, pending the governor calling a special election. Schwarzenegger has already announced his own intentions to go to the voters if his four priorities — as outline in the State of the State address — are not handled by the legislature. “The governor said he is the governor of the people,” Flanagan said. “This is a great opportunity for him to demonstrate that.”

Calls to pharmaceutical companies for comment were not returned.

Consumer Watchdog
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