Prop. 78 backers outspend Prop. 79's

Saturday, October 22, 2005

It's hard to imagine a more lopsided battle than that of the rival prescription drug measures on the Nov. 8 ballot.

In the past two weeks alone, the No on Proposition 79/Yes on Proposition 78 folks have spent $3.8 million on 3,636 television spots, according to an analysis by HealthVote.org.

The ads have appeared in all five of the state's top media markets, including the Bay Area.

All told, the group has raised at least $80 million, more than any ballot campaign in state history.

And their opponents?

Prop. 79 supporters have produced one ad, airing only on smaller cable television stations. They had collected $1.8 million as of the last reporting period.

"We know we're being outspent exponentially," said Anthony Wright, executive director of Health Access California, a coalition of 200 consumer groups.

"But at the end of the day, all of those ads still have who's paying for them."

That would be the pharmaceutical industry, which has provided the bulk of the money behind Prop. 78. The measure also has received endorsements from the California Chamber of Commerce and Gov. Arnold Schwarzenegger.

Prop. 79 has support from such consumer and senior groups as the AARP, League of Women Voters of California, Gray Panthers, Health Access California and Consumers Union, publisher of Consumer Reports magazine.

Both measures seek to provide discounts on prescription drugs to low-income Californians, but they differ dramatically in their approach.

If both propositions pass, only the one with the most yes votes will become law.

The battle over the dueling propositions developed in the midst of a marketing blitz for the complex new Medicare drug benefit. While the Medicare plan has nothing to do with the programs that the propositions would establish, the deluge of information on prescription drugs may perplex many voters.

"There are a lot of people out there I suspect who are utterly confused," said Dan Carson, health section director for the state Legislative Analyst's Office. "Folks are just going to get lost."

Prop. 78 would set up a discount program with voluntary participation by drug companies. The Prop. 79 program would include an "enforcement mechanism" designed to penalize drug companies that do not agree to lower prices.

Under both measures, eligible people would receive a card qualifying them for discounts on drug purchases at pharmacies.

The state Department of Health Services would negotiate with drug companies to obtain the discounts. It remains unclear exactly how much prices would be lowered and which drugs would be included.

Eligibility requirements differ for the two measures.

The Prop. 78 program would be open to families with annual incomes at or below 300 percent of the federal poverty level, which is about $29,000 for one person and $58,000 for a family of four.

Those who have drug coverage through private health insurance, Medi-Cal or the Healthy Families program would be excluded.

The Prop. 79 program has broader eligibility categories. It would include families with incomes at or below 400 percent of the federal poverty level, or about $38,000 for one person and $77,000 for a family of four.

Also eligible would be those whose medical expenses exceed 5 percent of their family income.

People with drug coverage through Medi-Cal or the Healthy Families programs would be excluded.

Both proposals would allow Medicare recipients to obtain discount cards for drugs not covered by Medicare.

Much of the controversy involves the "lack of teeth" in Prop. 78 and the impact of the Prop. 79 enforcement mechanism.

To give the state more bargaining clout to get reduced prices under Prop. 79, pharmaceutical companies that declined to participate could see their drugs removed from the preferred list for the state's Medi-Cal program. Doctors who wanted to prescribe these drugs for Medi-Cal patients would need to get state authorization.

An exception would be made if there are no equivalent drugs on the preferred list.

Exceptions would also be granted for Medi-Cal patients who currently receive a prescribed drug. They would be allowed to continue to get those drugs without their doctor needing to request approval.

"The point of Prop. 79 is to use the ability to steer business from one drug to another therapeutically equivalent drug as leverage," Wright said. "That ability to steer business is worth hundreds of millions of dollars to the drug companies."

Denise Davis, a spokeswoman for the pro-Prop. 78 Californians for Affordable Prescriptions, argues that this could hurt Medi-Cal patients by making it tougher for them to get needed drugs. Many doctors may not have the time to go through the additional hoops needed to get prior authorization, she said.

"Medi-Cal patients are some of the most vulnerable in our society," she said. "This would put a bureaucrat between a patient and a doctor."

Wright counters that this leverage mechanism is nothing new -- the state uses it to get reduced drug prices for the Medi-Cal program. He said that his group, Health Access, would never support anything that harms such patients.

"For 18 years, we've been working to defend and protect Medi-Cal patients."

Earl Lui, senior attorney for Consumers Union, argues that drug companies cannot be counted on to voluntarily lower prices. He notes that the Prop. 78 voluntary program could be discontinued at any time if not enough companies participate. That explains why drug companies back Prop. 78 and strongly oppose Prop. 79, he said.

"Prop. 78 has no teeth to it," Lui said. "It's all in the control of the drug companies. It's a sham to us."

Prop. 78 supporters argue that a similar voluntary program in Ohio has resulted in discounts averaging 31 percent. They reject suggestions that drug companies will opt out of the program or decline to provide meaningful discounts.

"The public will be watching," Davis said. "I think (drug companies) have a lot of incentive to participate."

Prop. 78 could be implemented quickly because it has strong support from the pharmaceutical industry, Davis argues. She said that Prop. 79 may never take effect because the Medi-Cal provision would require federal approval and the program is likely to be stalled by years of litigation.

Prop. 79 supporters disagree that federal approval is needed. Lui noted that a similar program in Maine, which includes a link with its Medicaid program, has been operating without such approval.

Also generating vigorous debate is a provision in Prop. 79 that would enable the attorney general and members of the public to sue pharmaceutical companies for illegal profiteering, defined in part as demanding "an unconscionable price" for a drug.

The industry fears this provision could lead to a flood of frivolous lawsuits.

"Profiteering is not defined," Davis said, "so any one of the 210 million prescriptions that are filled could be subject to a lawsuit."

Lui argues that it is unlikely that large numbers of people will take on the well-heeled pharmaceutical companies.

"This idea that there's going to be thousands of lawsuits -- that's just wrong," he said. "It's a red herring.

"These are not easy cases to win, so anyone that's going to file a lawsuit is going to have to fight for years and years. It's really there just as a deterrent."

The Nov. 8 ballot has two measures that would provide discounts on prescription drugs for low-income residents. If both pass, the one with the most yes votes will become law