Prop. 78 & 79: Drug Companies Raising Money for a War at the Ballot Box
In the last month drug companies have raised $43 million to fight Prop. 79, a union sponsored (Alliance for California) measure that would cut prescription drug prices for a wide range of California residents.
Proposition 79, an Initiative Statute:
Provides for prescription drug discounts to Californians who qualify based on income-related standards, to be funded through rebates from participating drug manufacturers negotiated by California Department of Health Services. Rebates must be deposited in State Treasury fund, used only to reimburse pharmacies for discounts and to offset administration costs. At least 95% of rebates must go to fund discounts. Prohibits new Medi-Cal contracts with manufacturers not providing the Medicaid best price to this program, except for drugs without therapeutic equivalent. Establishes oversight board. Makes prescription drug profiteering, as defined, unlawful. Summary of estimate by Legislative Analyst and Director of Finance of fiscal impact on state and local governments: One-time and ongoing state costs, potentially in the millions to low tens of millions of dollars annually, for administration and outreach activities for a new drug discount program. A significant share of these costs would probably be borne by the state General Fund. A largely one-time state cost, potentially in the low tens of millions of dollars, to cover the funding gap between the time when drug rebates are collected by the state and when the state pays funds to pharmacies for drug discounts provided to consumers. Any such costs not covered through advance rebate payments from drug makers would be borne by the state General Fund. Unknown costs and savings as a result of provisions linking drug prices for the new drug discount program to Medi-Cal prices, including the potential effect on the state’s receipt of supplemental rebates; unknown savings on state and county health program costs due to the availability of drug discounts; and unknown costs and offsetting revenues from the anti-profiteering provisions.
Giant pharmaceutical companies including Pfizer, Merck and GlaxoSmithKline have pumped more than $8.5 million each into the industry’s California Initiative Fund, which also is financing Proposition 78, a rival drug cost measure on the special election ballot.
Proposition 78, An Initiative Statute:
Establishes discount prescription drug program, overseen by the Department of Health Services. Enables certain low – and moderate – income California residents to purchase prescription drugs at reduced prices. Imposes $15 application fee, renewable annually. Requires Department’s prompt determination of residents’ eligibility, based on listed qualifications. Authorizes Department to contract with pharmacies to sell prescription drugs at agreed-upon discounts negotiated in advance, and to negotiate rebate agreements with drug manufacturers. Permits outreach programs to increase public awareness. Creates state fund for deposit of rebate payments from drug manufacturers. Allows program to be terminated under specified conditions. Summary of estimate by Legislative Analyst and Director of Finance of fiscal impact on state and local governments: One-time and ongoing state costs, potentially in the millions to low tens of millions of dollars annually, for administration and outreach activities to implement the new drug discount program. A significant share of these costs would probably be borne by the state General Fund. A largely one-time state cost, potentially in the low tens of millions of dollars, to cover the funding gap between the time when drug rebates are collected by the state and when the state pays funds to pharmacies for drug discounts provided to consumers. Any such costs not covered through advance rebate payments from drug manufacturers would be borne by the state General Fund. Unknown savings on state and county health program costs due to the availability of drug discounts.
Here we have dueling initiative statutes with a costly media campaign that the public employee and private unions cannot win if they are battling the Governor over paycheck protection, teacher tenure and redistricting.
And does anyone continue to wonder why the Democrats want to cut a deal with the Governor and either narrow their election day campaigns or so thoroughly confuse (bore) the voters that all measures fail.
The drug industry has collected a total of more than $53 million thus far for the initiative battle, an indication of how important the fight over prescription drug costs is to the industry.
“Their fund raising is astronomical, and obviously they’re scared,” said Robin Swanson, a spokeswoman for the Alliance for a Better California, a union- funded group that put the Proposition 79 drug cost measure on the ballot. “They wouldn’t invest that kind of money if they didn’t have something to lose. ”
The money shows that the pharmaceutical industry will wage an all-out effort to defeat the union initiative and pass its rival measure, said Jan Faiks, a vice president of the Pharmaceutical Research and Manufacturers of America.
You bet they will and the ads by Merck are already airing on talk radio stations.
Maybe the drug companies can give the guv some fundraising pointers…
How about a media campaign too!
Cross-posted to the Bear Flag League Special Election Page