San Francisco Chronicle - August 24, 2004
Michael Weinstein

-- Gov. Arnold Schwarzenegger

(Aug. 4, 2004).

A bold and visionary statement, no doubt, and one that many on both sides of the aisle in Sacramento may clamor to support. But as the governor moves to streamline the state budget, reducing services to contain costs, eliminating commissions and slashing staff positions, will he truly cut like a surgeon? Does Schwarzenegger also have what it takes to take on big business as part of his fix for California? In particular, will he take on the powerful predator known as "Big Pharma," the drug industry?

A group of drug pricing bills soon to arrive on his desk will test the governor's resolve to include big business in such true statewide reform. The bills seek to address the skyrocketing costs of prescription drugs in California. Some of the bills would provide direct relief to individual Californians, while others target reforms that would cut the enormous costs of prescription drugs for the state.

One such bill, SB1333 (authored by Sen. Don Perata, D-Oakland) quite literally goes to the heart of Schwarzenegger's intention to "cut in order to save the patient." Senate Majority Leader Perata, with strong backing of the Legislature and AIDS organizations and their clients, has put a proposal one step away from the governor's desk. SB1333 would authorize Medi-Cal and the AIDS Drug Assistance Program to reimburse California pharmacies that purchase lower-priced drugs from Canadian pharmacies. When we see that a modest 10 percent price reduction on just three Canadian drugs alone would generate savings of more than $9 million a year (according to the AIDS Healthcare Foundation), it's clear that billions could ultimately be saved if the governor chooses to challenge "Big Pharma."

It is widely known that lifesaving drugs bought here in California can often be purchased much more cheaply in Canada. While officials at the state's Department of Health Services report that prescription drug prices in the United States have increased more than 33 percent since 1999, pharmaceutical companies frequently set prices as much as 80 percent lower in Canada and elsewhere outside the United States, according to Families USA, a Washington nonprofit that works for affordable health care.

To allay safety concerns, SB1333 wisely limits the drugs to those imported from Canada. It requires Canadian pharmacies that sell to California pharmacies to meet the state's safety requirements for a nonresident pharmacy. As to safety concerns raised by the Food and Drug Administration -- often prompted by the drug companies themselves -- Schwarzenegger's Republican colleague, Minnesota Gov. Tim Pawlenty (who is bucking the federal government on drug re-importation from Canada) said it best when he remarked: "Show me the dead Canadians!"

The state pays more than $4 billion a year for prescription drugs provided through Medi-Cal and the AIDS Drug Assistance Program -- which provides lifesaving drugs for 26,000 HIV-positive Californians. Year after year, this budget-busting expense has grown unsustainably at double-digit rates.

As a signal of things to come, in January Schwarzenegger proposed and then dropped a plan to cap enrollments in ADAP to accomplish budget savings. It would have resulted in 1,400 people with AIDS being denied access to life- saving drugs next year. As the governor and Legislature search for ways to trim the state's structural deficits, it is clear that prescription drugs available to Medi-Cal and ADAP increasingly will be put at risk.

Instead of trying to balance the budget on the backs of some of California's most vulnerable citizens, shouldn't the governor expect drug companies (the frequent beneficiaries of generous taxpayer support for drug research and development) and the Fortune 500 industry (with one of the highest profit margins -- 18 percent or more) to shoulder some of this growing burden? For an industry that in 2002, according to Families USA, spent 14 percent on R&D while spending 31 percent on marketing, this does not seem to be unreasonable.

Big Pharma continues to pass on its predatory pricing to U.S. consumers and the federal and state governments alike. The apparent attempts to corner the market is similar to the recent outrageous gouging of California consumers by electric companies such as Enron. These actions must not go unchallenged by the governor and this administration. If he chooses to do nothing on SB1333 and other drug pricing bills, what alternatives will he present? It is late in the game to just shoot down bills that could lead to meaningful reform without offering other viable options.

Schwarzenegger recently chided members of the Legislature as "girlie men" beholden to special interests. It remains to be seen if the governor himself has the mettle to challenge drug-industry special interests and address the state crisis head on by signing these drug-pricing bills into law.

Michael Weinstein is president of the nonprofit AIDS Healthcare Foundation in Los Angeles (www.aidshealth.org), the largest specialized provider of HIV medical care in the United States.

040824
SC040811

Always watch for outdated information. This article first appeared in 2004. This material is designed to support, not replace, the relationship that exists between you and your doctor.

AEGiS presents published material, reprinted with permission and neither endorses nor opposes any material. All information contained on this website, including information relating to health conditions, products, and treatments, is for informational purposes only. It is often presented in summary or aggregate form. It is not meant to be a substitute for the advice provided by your own physician or other medical professionals. Always discuss treatment options with a doctor who specializes in treating HIV.

Copyright ©1980, 2004. AEGiS. All materials appearing on AEGiS are protected by copyright as a collective work or compilation under U.S. copyright and other laws and are the property of AEGiS, or the party credited as the provider of the content. .