Los Angeles Times - August 28, 2004
Robert Salladay, Times Staff Writer

The legislation puts California at the center of a national debate over the high cost of prescription drugs and could force Gov. Arnold Schwarzenegger to make a series of high-profile vetoes among the hundreds of bills sent to him before the end of the 2004 session.

"It's a far-reaching package to try to give some relief to seniors and the uninsured facing exorbitant prescription drug costs," said Anthony Wright, executive director of Health Access, a nonprofit advocacy group. "It would provide consumers with better information, more choices and, hopefully, cheaper drugs."

Although their actions are illegal, an estimated 1 million Americans already buy their drugs from Canadian pharmacies - costing U.S. pharmaceutical companies about $1 billion a year in lost revenue. Prices in Canada are as much as 40% cheaper, mostly because the government there caps prices.

Aides to the Republican governor already have dubbed some of the drug-importation legislation a "political ploy" and against the law because the federal government restricts drug imports from other countries. Schwarzenegger's health and welfare secretary said the bills would be "symbolic."

When Margita Thompson, a spokeswoman for the governor, was asked if Schwarzenegger would veto the importation bills, she said: "If legislation reaches his desk that would break the law, yes. Because right now, what we need to do is focus on what's right for the people and not breaking the law."

Among the bills sent to Schwarzenegger this week, two would set up a government-run Internet site that would compare prices between Canada and the United States, link consumers to Canadian pharmacies and target shady and dangerous drug-selling websites.

Another bill would allow California pharmacies to sign contracts with Canadian pharmacies to purchase drugs for Medi-Cal and the AIDS drug-assistance program - saving $9 million a year in drug costs, advocates contend. The state would split the savings with the pharmacies.

Yet another measure would allow the state government to buy Canadian drugs in bulk for the prison, mental health and youth authority systems. That legislation could be more palatable to Schwarzenegger because it requires a federal waiver for approval.

Lawmakers also passed a measure that would allow state agencies to pool their purchasing power and negotiate for lower prescription drug prices.

"I think they hold extraordinary promise for bringing drug prices down," said Assemblyman Dario Frommer (D-Los Angeles). "The bulk-purchasing bills, for taxpayers, could be extremely meaningful. They could help us bring down drug prices. The website bills could provide immediate relief for consumers looking for answers."

According to Frommer's office, the state Medi-Cal program expects to have spent about $3.8 billion on prescription drugs for the 2003-04 fiscal year. The prison system pays about $125 million a year for drugs given to inmates, and the Public Employees' Retirement System spends $700 million every year, his office said.

Drug companies have said that consumers cannot trust the safety of drugs that flow through Canada and that comparing prices is misleading because of Canada's nationalized health system. They warn that siphoning money from the U.S. market would jeopardize the country's status as the world's leader in drug research and development.

And Republicans who argued against the bills said the U.S. Food and Drug Administration is the best agency to determine which drugs are safe.

"Ignoring the rule of law and encouraging illegal importation of drugs from Canada is the wrong way," said Assemblyman George Plescia (R-San Diego). "There is a reason that the federal government has a ban on drug importation. Drugs from foreign countries have not been proven safe."

Schwarzenegger last week proposed his own drug-pricing plan - allowing for seniors and others to pool their resources and buy at lower prices in bulk. The idea was summarily rejected by the Legislature. Lawmakers said it came too late in the session for in-depth consideration. They plan to take up his ideas next year, they said.

Consumer advocates have said Canadian imports are the best stopgap measure to allow senior citizens to get cheaper drugs right away. The FDA, they said, has looked the other way at five other states with Internet sites linking consumers to cheaper Canadian drugs, and some U.S. lawmakers have signaled a willingness to open the door to importation.

Biomedical research companies and national pharmaceutical manufacturers hired an army of lobbyists to defeat nearly a dozen bills before the Legislature this year. But their efforts now are turning to Schwarzenegger.

Drug makers, including biotech firms such as South San Francisco-based Genentech, have donated $186,000 to the governor since his election. That sum includes $100,000 from Pfizer Inc. in February to Schwarzenegger's California Recovery Team campaign committee. Pharmaceutical companies donated $103,000 to him during last year's recall campaign.

Thompson said Schwarzenegger makes his decisions based on the merits of legislation and nothing else. But Frommer and other lawmakers said the governor's contributions from drug companies will force him to make a critical decision as he considers the legislation.

"Californians are about to learn whether the governor is serious about standing up to special interests," Frommer said, "or is just acting the part."

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