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SAN FRANCISCO -- Drugmakers have ponied up $72 million to try to defeat a California ballot initiative to extend drug discounts to more uninsured people and get their discount plan passed instead.
The vote on the measures may influence other states' efforts to reduce drug costs for uninsured residents and would open companies up to lawsuits should they charge "unconscionable" prices.
The stage is set for one of the costliest initiative battles ever. The industry's war chest may grow as the Nov. 8 special election vote nears and the opposing consumer and union groups are likely to spend millions, too. "It's only August. It's unprecedented the amount of money behind this," says Kristina Wilfore, director of the Ballot Initiative Strategy Center. She says $10 million is normal.
Pfizer, GlaxoSmithKline, Merck and Johnson & Johnson have each given almost $10 million to the cause, state records show. The industry contributed just $9.8 million to try to affect the 2004 federal elections, says the Center for Responsive Politics. The money is big because the threat of being sued is big, says Jan Faiks of the Pharmaceutical Research and Manufacturers of America.
Proposition 79 would pressure drugmakers to discount drugs for an estimated 10 million Californians who make less than $38,000 a year if single or less than $77,000 if a family of four.
Under the proposal, if drugmakers don't provide those discounts, California could discourage use of their drugs in the state's $4-billion-a-year Medicaid program for low-income residents. Maine has a similar law, initially passed in 2000.
Faiks says the drug-discount plan is a "fake promise" that will never get enacted because the income levels are too high. The Supreme Court, because of the Maine law, signaled in 2003 that states need federal approval before linking Medicaid business to drug discounts for a broader population.
She says the industry is more concerned with Proposition 79's provision allowing "any person" to sue drugmakers for allegedly charging "unconscionable" prices. The proposition doesn't define what that is, and Faiks says hundreds of frivolous lawsuits could result, tying up courts and drugmakers. "It's a huge potential legal nightmare for every company," Faiks says.
Anthony Wright, head of consumer group Health Access California, which proposed Proposition 79, says the industry is trying to scare voters: "The amount of money they've raised is an admission that our proposal is popular and workable."
To counter Proposition 79, the industry put Proposition 78 on the ballot. It would extend drug discounts of up to 40% for an estimated 5 million Californians with single incomes of less than $29,000 a year and family incomes of about $58,000. But it would be voluntary for drugmakers and the plan could be abandoned if drugmakers didn't participate, which has happened in the past. "Once political pressure eases up, discounts go away," Wright says.
If both measures pass, the one with the most votes will prevail.
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