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Los Angeles Times
May 23, 2004 - 01:00 AM

by Robert Salladay & Jordan Rau

Drug Firms Say, 'No, Canada';

Industry-linked groups lobby with a vengeance against bills to ease imports from the north.
SACRAMENTO -- The name they picked is Cures, but the drug makers, biotech millionaires and pharmacists who founded the group aren't searching for the next miracle drug.

They are looking for votes from the California Legislature.

The lobbying group is just one of several altruistic-sounding entities with financial links to the drug industry that have materialized around the Capitol. They want to kill a flood of legislation -- including four measures being voted on this week -- that would ease the way for drug imports from Canada.

"I consider this a threat," said Stephen Chang, a San Diego biotech entrepreneur and president of Californians United for Research, Economic Development and Saving Lives.

Drug companies are fighting because they believe that lawmakers across the country, seizing on a politically popular issue, could harm their financial bottom line and, along the way, slow research into newer and safer drugs.

Consumer groups, however, say drug companies are only concerned about profits and not individual drug tabs estimated at $4,900 a year in the U.S., compared with $2,800 in Canada.

The national debate is being played out this year in 42 state legislatures that are weighing 330 separate pharmaceutical-related bills, including 19 under consideration in California.

Amid this, drug companies have targeted California lawmakers with public relations campaigns warning about the potential dangers of imported drugs and have made campaign contributions to Gov. Arnold Schwarzenegger and influential lawmakers.

The industry's lobbying expenditures in California have jumped about 25% since last year, from $858,826 in the first quarter of 2003 to $1.08 million for the same period this year, records show.

Drug companies have also aggressively courted Latino health groups, with some apparent success. Several such groups -- including one that accepts money from the companies -- have broken with most other medical groups to oppose some of the legislation.

The bills would require the state to publicly promote Canadian pharmacies that sell drugs, to reduce the price the state pays for drugs it buys through its health programs. The state would either purchase drugs through Canada or simply take into account the lower prices of drugs there when negotiating contracts with drug companies.

The California effort to regulate prescription drugs mirrors, on a smaller scale, the lobbying activity in Washington in 2003, when Congress overhauled the Medicare system to provide drug benefits for senior citizens. States are now tweaking their own systems in response.

Most of the drug lobby's tactics are hardly novel. But in this debate, the industry has peeled away enough support in the medical community so it does not appear that the drug companies are standing alone.

Sponsors of some of the drug-importation measures say the industry has effectively spread stories about people made sick or killed by counterfeit drugs, with images of pills made in Pakistan and sent to Canada.

"The tactic is obviously to muddy the waters and create doubt, and I think on that end they have been successful to some degree," said Assemblyman Dario Frommer (D-Los Angeles), author of one of two bills that would create a state website where Californians could comparison shop for cheaper drugs across the border.

The drug lobby has courted Latino health care groups that would usually be expected to support the sort of measures proposed by Frommer and other Democratic legislators. Many of those groups cannot easily ignore the industry, because their existence is underwritten by industry contributions.

One such group is the California Latino Medical Assn., which says it represents 3,200 Latino physicians in the state. The association receives financial support from a number of drug companies, including Pfizer and Johnson & Johnson, according to its website, which devotes half of its home page to showcasing "our generous sponsors."

The group has broken with the California Medical Assn. in coming out against Frommer's bill and a similar measure in the Senate. The Latino association's argument mirrors the industry's: There is not enough assurance that imported drugs will be safe.

"Many members of the Latino community and physicians alike have experiencedfirsthand the damaging effects that these drugs can pose on patients," the association wrote.

The group, as well as the Latino Behavioral Health Institute, a Granada Hills organization that also opposed the bill, did not respond to requests for interviews.

"The component of using Latino organizations is the one [thing] that's most troubling to me," said Sen. Deborah Ortiz (D-Sacramento), who sponsored the bill. "It really speaks to the vulnerability of grass-roots organizations being subject to a significant influx of money."

Merrill Jacobs, regional director of industry trade association Pharmaceutical Research and Manufacturers of America, said that although he could not speak to the tactics of individual members of the group, its lobbying had focused on distributing information that addressed shortcomings and dangers of the measures being considered.

"We wanted to provide as much as we can from as many sources as we can," he said. "I find it ironic that they're running bills to inspect every hamburger patty that comes in from Canada to look for mad cow disease, but they're trying to not find a way to see what's in the pills."

Groups that stray from the drug companies' legislative positions face loss of industry support.

Lupe Alonzo-Diaz, executive director of the Latino Coalition for a Healthy California, a small nonprofit group made up of consumers and providers, said the coalition had seen its financial support from drug companies dwindle in recent years after refusing to allow the industry to help shape its views on public policy.

"We have had pharmaceutical companies indirectly state that they would be interested in funding our programs, but at the same time they have a concern that they be able to participate in the policy decision-making process," she said. "That for us is a no-brainer. We don't do that."

The group, which says it has 2,000 to 5,000 members, is supporting a bill that would require the state's Medi-Cal and AIDS drug assistance programs to reimburse pharmacies that get their drugs from Canada.

But lacking financial assistance on the level that used to come from drug companies, the coalition has decided not to take a stand on other major bills that it might otherwise back, Alonzo-Diaz said.

Drug companies are sponsoring events all over Sacramento to warn about what they call the dangers of imported drugs. A $35-per-person luncheon last week sponsored in part by the Chamber of Commerce asked if drug imports were a "Boon or Boondoggle?" Cures, the group Chang heads, has employed two Sacramento public relations firms to promote its message.

State records show that drug companies have donated $327,000 to the governor's ballot measure and election campaigns, according to the Foundation for Taxpayer and Consumer Rights.

Drug companies have an ally in the Food and Drug Administration, which has been monitoring the wave of state legislation, meeting with governors to warn them that importing drugs without federal approval is illegal, and sponsoring their own informational campaigns.

"We point out that these drugs won't be legal," said William Hubbard, associate commissioner of the FDA. "We don't sue over these things, and I hope we never do, but it's a difficult situation."

But some consumer groups, which are running their own aggressive lobbying effort this year, say the 2003 federal legislation didn't go far enough, and are concerned that lobbying efforts will water down legislation this year.

"Industry tactics were successful in hamstringing the Medicare prescription drug reform in D.C.," said Jerry Flanagan of the Foundation for Taxpayer and Consumer Rights. "Now the companies are coming out West to quiet reform."




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