Prop 78 is modeled after a successful drug discount program in Ohio, where consumers are receiving discounts that average more than 30 percent. Although the Ohio program took effect only this year, every major drug company and more 2,000 pharmacies participate.
According to California’s Health and Human Services Agency, Prop 78 will deliver discounts in excess of 40 percent. A Los Angeles Times news report said Prop 78 “would offer one of the most extensive discounts in the country.”
An estimated 8 million seniors and uninsured Californians with low and moderate incomes will qualify for the program, and because it doesn’t require federal approval, it can begin helping people immediately.
Here’s how it works. Seniors and other Californians with annual family incomes up to $58,000 can sign up for Cal Rx, the program created by Prop 78, at their local pharmacy, in their doctor’s office, on the Internet or by calling a toll-free number. There’s an annual $15 charge to offset the state’s costs to manage the program, and if people qualify for a program that offers deeper discounts or free drugs, they will be referred to those programs.
The state will enter into binding contracts with pharmaceutical manufacturers to provide discounts equal to what they give their largest commercial customers health plans and large employers, for example. The state will enforce the contracts to make sure the promised discounts are delivered to consumers. Pharmacists will give additional discounts.
Prop 78 does not require a big government bureaucracy to implement, and all drugs are eligible for discounts under Prop 78, not just those on a government list.
The legislature had an opportunity to enact a program identical to Prop 78 this year, but it was caught in the crossfire of special election politics. It was supported by Republican and Democrats, patient groups, AARP, doctors and a long list of others. Our legislature should resolve important issues dealing with prescription drug costs. But it didn’t, and that’s why these initiatives are on the ballot.
Meanwhile, Prop 79 the rival initiative to Prop 78 is the latest on a long list of California ballot measures that promise voters something they can’t possibly deliver. It promises lower prescription drug prices but it uses the state Medi-Cal program as leverage to force drug companies to lower their prices.
Who gets hurt if drug companies can’t provide medicine to the low-income and disabled people who rely on Medi-Cal? Sure, drug companies lose sales, but, more important, sick people lose access to the drugs they need. And taxpayers are left to foot the bill when those people have to go to the emergency room for treatment.
The federal government’s Medicaid program provides about half the funding for Medi-Cal, so it must approve any state drug discount program that potentially affects Medi-Cal patients. Under both Republican and Democratic administrations, the federal government has never approved a program such as Prop 79.
Prop 79 also risks the health of low-income patients to give drug discounts to people with a family income of as much as $77,000 a year, including some people who already have health insurance. Prop 79 says that if a drug manufacturer does not provide steep discounts to these higher-income Californians, its drugs will be subject to prior authorization, which means that bureaucrats, not doctors, decide which drugs Med-Cal patients can take.
It is presumed that public employee unions strategically put Prop 79 on the ballot to divert money and resources away from other measures and to set up a huge new government program that would boost their membership. With budget deficits that already affect funding for critical programs, how can we take on a massive new government program?
On top of that, Prop 79 jeopardizes more than $480 million in rebates that taxpayers currently receive from pharmaceutical companies.
A hidden section in Prop 79 will let trial lawyers file thousands of frivolous lawsuits simply by claiming the price charged for the product is too much or that the manufacturer’s profits are too high. The initiative doesn’t define what is a fair price or a reasonable profit.
Worse, trial lawyers don’t need a client to bring these lawsuits and can keep all the money they receive in a settlement. Sound familiar? Just last November, California voters overwhelmingly repealed a law that permitted the same type of frivolous lawsuits.
Prop 78 helps those who need it most seniors and uninsured Californians who need help affording medicine. And it enjoys bipartisan support it is supported by groups representing seniors, patients, taxpayers and small businesses.
Prop 78 will bring real help, right now across the state. As responsible L.A. business leaders who care about the quality of life of our region, we should vote yes on Prop 78.
About the author
Rusty Hammer is president and CEO of the Los Angeles Area Chamber of Commerce.
About the L.A. Area Chamber
The L.A. Area Chamber, which has nearly 1,400 members, represents the interests of business in L.A. County. Founded in 1888, the chamber promotes a prosperous economy and quality of life in the Los Angeles region.