Health Access - Lobby group battling state

Lobby group battling state
Pharmaceutical industry using campaign money to target cheaper drug measures

Paul Elias
Associated Press
April 9, 2005 8:03 AM

SAN FRANCISCO — Even the mere whiff of government-mandated price cuts has mobilized drug companies to flash their most potent political weapon in California: cash.

The pharmaceutical industry's chief lobby outfit raised $8.2 million last month, hoping to stop the national debate over trimming soaring prescription drug costs from reaching California's ballot box.

Drug companies are taking aim at a measure that hasn't even qualified, for an election date that hasn't been determined. The measure would require companies selling drugs to the state's $34 billion Medicaid program to also provide deep discounts for as many as 10 million uninsured Californians.

The drug makers fear that as California goes, so would the nation, costing them billions in lost profits.

Led by its lobbying firm, the Pharmaceutical Research and Manufacturers of America, the companies are also pushing a competing measure that would allow companies to make voluntary discounts to fewer people.

The dueling proposals are part of a larger battle between Democrats and Arnold Schwarzenegger. Both are scrambling to get the 400,000 signatures needed to qualify each of a series of competing ballot measures dealing with a wide range of issues for the special election, which may happen in November.

The measure proposed by Health Access, a nonprofit consumer group in Oakland, would give a discount card to any uninsured Californian earning less than 400 percent of poverty level, about $77,000 for a family of four. Anyone who spends 5 percent of income on medical expenses would also qualify. Companies that decline to participate would be barred from contracting with Medi-Cal.

"If you are going to provide affordable drugs to the poor you need to give the state offrom Business 1

California a hammer instead of relying on the goodwill of the industry," said Anthony Wright, executive director of Health Access. "We want to use the purchasing power of California to leverage better discounts for Californians that don't have health insurance."

PhRMA argues that any discount program should be left to the discretion of the companies themselves, and that the measure is unfair to poor Medi-Cal patients who could be deprived of vital medicines if drug makers decide not to participate.

"It punishes patients and uses them as leverage," said PhRMA spokesman Dave Puglia. The proposal also would "kill venture capital investment" in the state's biotechnology industry, he said.

PhRMA is using part of its $8.2 million campaign war chest for its measure, which would limit discounts to those earning less than 300 percent of the poverty level and would be strictly voluntary.

The petition drive of Health Access, a nonprofit consumer group in Oakland, is bankrolled by a labor coalition, the Alliance for a Better California. The alliance has raised $1.3 million for the drug discount proposal and several other measures that could qualify for the ballot.

Stopping such a movement in the nation's most populous state is vital, Puglia said, because voters in two dozen other states can also approve ballot issues, and often mimic successful California initiatives.

But if the Health Access measure wins, it's sure to face legal challenges. Medi-Cal is funded with federal dollars and any dramatic changes to it would first have to be cleared by the U.S. government. "Their proposal is a false promise," Puglia said.

Even supporters concede that the legality of the measure is an open question.

"I don't think anyone knows if this will stand up and it's something that will certainly be fought out in the courts," said Jamie Court, president of the Foundation for Taxpayer and Consumer Rights in Santa Monica.

Short of campaign money and facing a tight qualifying deadline, the foundation had to drop its own effort to promote a discount drug program that would allow all Californians to receive the same discounts negotiated by the California Public Employees Retirement System, the state's biggest pension fund. Court said the group hopes to resurrect that campaign next year.

The PhRMA proposal is identical to a bill introduced by Sen. Deborah Ortiz, D-Sacramento, that is supported by Schwarzenegger. The governor has said he will use his influence to encourage drug companies to participate in a voluntary program if the law passes.

PhRMA has emerged in recent months as one of Schwarzenegger's biggest supporters after the governor vetoed four bills in September that would have made it easier for Californians to buy cheaper drugs from Canada. Schwarzenegger has not take a position on either of the ballot measures.