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Drug Companies Beat Schwarzenegger To The Punch
By
Shannon Snow
January 14, 2005
In a fight to provide California's poor with access to pharmaceuticals
in a time of rising drug costs, two players entered the fray
this week. Governor Arnold Schwarzenegger announced plans to
negotiate drug discounts for a new statewide health program,
and a consortium of ten drug companies introduced their own program.
The corporate plan – called "Together Rx Access" – is
a nationwide plan to allow customers with low incomes to sign
up for a free card enabling them to purchase prescriptions at
reduced prices. Pfizer, Johnson & Johnson and GlaxoSmithKline
are among the participating pharmaceutical companies, which propose
to offer more than 170 medicines at 25 to 40 percent below cost.
Portions of the plan sound very similar to the "Cal Rx" program
that Schwarzenegger is pushing in the state Senate. The governor
announced that he would earmark $4 million in the California
budget for the plan, which would offer prescription discounts
of up to 40 percent to low income families in the Golden State.
Like the corporate plan, Schwarzenegger's program distributes
drug discount cards to those with limited income, defined as
those who earn less than 300% of the federal poverty level. For
individuals, this is $28,000 a year – the same as the corporate
plan cut off – and $56,000 for a family of four. Cardholders
could use the card, which will cost participants $15, to purchase
medicines at reduced prices negotiated by the state. More than
6 million California residents would be eligible for the benefits,
according to statistics from Rand California.
Despite its similarities to the program sponsored by the drug
companies, California Rx is yet to bring any drug makers on board.
The governor told reporters last week that he had spoken with
executives from the pharmaceutical industry, but that no companies
have committed to participate in the program. Cal Rx merely requires
that state officials negotiate the discounts.
The drug makers spearheading Together Rx Access may be reluctant
to participate in Cal Rx now that they have their own national
program. In the past, drug companies have shown resistance to
similar state prescription plans around the nation. In Maine,
pharmaceutical companies resisted an attempt by state officials
to require that drug makers provide discounts to uninsured customers.
A long legal battle followed, with the U.S. Supreme court eventually
deciding in Maine's favor in 2003.
The governor’s Cal Rx plan also has legislative hurtles
to overcome. The State senate Committee on Rules is currently
reviewing the bill, SB 19. It will likely be months before the
bill comes up for vote, and will require two-thirds approval
of the state legislature to pass.
Contact Shannon Snow at ssnow@stanford.edu
