Californians to Vote on Drug Discount Plan

July 6, 2005

Pharmaceutical Executive

Pharmaceutical Executive, Pharmaceutical Executive-07-06-2005, Volume 0, Issue 1

Two ballot initiatives offer different methods for discounting prescription drugs in California. But what are the plans really promising? Get the details of each proposal and an analysis of efforts to sway California voters.

California politics often have a much wider sphere of influence than the borders of the Golden State. Now it has become a battleground for competing theories about providing discounted drugs to low- and moderate-income people. Two ballot initiatives propose different methods for negotiating and distributing discounted drugs.  Gov. Arnold Schwarzenegger and PhRMA back one. The other is supported by the non-profit organization Health Access California, which is affiliated with the Health Access Foundation.

The Schwarzenegger Cal Rx Initiative Would:

•    Provide a drug discount card for people with family incomes of up to 300 percent of the federal poverty guidelines. The 2005 guidelines include incomes of $19,350 per year or less for a family of four. Participants could not also have drug coverage from another program. Enrolment would require a $15 annual fee from participants.

•    Negotiate discounts with pharma manufacturers on a voluntary basis.

The Health Access Cal Rx Plus Initiative Would:

•    Provide a drug discount card for people with family incomes of up to 400 percent of the poverty level who do not have outpatient drug coverage from Medi-Cal, California’s Medicaid program, or the Healthy Families Program, which provides low-cost insurance for children. Medicare enrollees who are prescribed drugs not covered under that program and people with medical expenses of 5 percent or more of their family’s income would also be eligible.

•    Make it mandatory for companies to negotiate discounts if they want to participate in Medi-Cal. If a company declines to offer Cal Rx Plus discounts it will not be eligible for Medi-Cal contracts unless the drug has no therapeutic equivalent.

•    Work with the California Chamber of Commerce, California Labor Federation AFL-CIO and other organizations to assist small businesses in purchasing discounted prescription drugs. Businesses must pay more than 50 percent of health coverage for employees and their families to be eligible for this program. 

 

Proposal Status:

•    Both ballot initiatives’ petitions were certified by the California Secretary of State’s office and will be included on the ballot of a statewide special election, which is scheduled to take place Nov. 8, 2005.

•    The state assembly’s Appropriations Committee passed a legislative version that parallels Cal Rx Plus, sponsored by Assemblyman Dario Frommer (D-Los Feliz). It is currently in the Senate Health committee.

•    The state senate’s Health Committee blocked the legislative version of Cal Rx, sponsored by Sen. Deborah Ortiz (D-Sacramento), in April.

   

Moving Forward:

The battle for winning the minds of Californians is now under way. According to a June 23 Field Poll, 60 percent of registered voters would vote “yes” on Cal Rx and 54 percent would vote “yes” on Cal Rx Plus.

    Anthony Wright, executive director of Health Access California, said the public would favor the Cal Rx Plus proposal because it “uses the purchasing power of California” and does not “rely solely on the goodwill of the drug industry.”

    He argued that the countermeasure supported by PhRMA is an admission that “drug prices are too high.” But he cautioned that pharma companies underestimate the depth of anger about the cost of prescription drugs, which will give strength to his organization’s proposal.

    PhRMA plans to spend the next few months educating the public about the “realistic expectations” offered by the Cal Rx program, said Denise Davis, spokeswoman for APCO Worldwide, which is handling PhRMA’s public relations for the California initiative. She described the Schwarzenegger initiative as a “workable solution to a serious problem in the state.”

    Davis claimed that CalRx would triumph because it is based on a similar program in Ohio, which is more successful than the Maine program Cal Rx Plus is modeled after. Although Kim Fox, senior policy analyst at the Rutgers Center for State Health Policy, said that the Maine Rx has been able to get “pretty significant discounts.”

    If either proposal wins the support of Californians, it will be part of popular trend of states seeking rebates from manufacturers, according to Fox. She said these types of initiatives are often enacted in stages, starting with a voluntary program and moving towards a mandatory discount. Fox noted that voluntary programs often fail because not enough companies chose to participate.