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The San Diego Union-Tribune
Oct 01, 2004 - 01:00 AM

by Bill Ainsworth, Copley News Service

Governor vetos Canadian-drug bills

SACRAMENTO -- Gov. Arnold Schwarzenegger vetoed a series of bills Thursday aimed at giving California residents access to low-priced Canadian prescription drugs, but promised to move ahead with his own discount plan.

The governor, in a veto message, said importing drugs from Canada would violate federal law and could expose the state to liability.

The measures, he said, "oversimplify the complex safety, trade, supply and pricing issues involved in this marketplace."

The bills, among the top priorities for Democrats, would have set up a state Web site informing consumers about prices charged by reliable Canadian pharmacies and encouraged the state to use its buying power to purchase drugs from Canada for state programs, including prisons.

Another bill would have allowed the Public Employees Retirement System, or

CalPERS, to set up a consortium to purchase drugs for small businesses, individuals and nonprofit companies.

Canadian drugs typically cost about half the price of those sold in the United States. Canada, which has a national health system, bargains for discounts with drug makers to yield lower prices.

Consumer advocates portrayed these bills as a choice between the special interests the governor vowed to fight and the people he pledged to protect.

Pharmaceutical companies, which fought fiercely against the legislation, have given the governor about $335,000 in contributions, according to the advocacy group Foundation for Taxpayer and Consumer Rights.

"The governor is clearly siding with his campaign contributors in the prescription drug industry over senior citizens and the poor who are finding it hard to afford prescription drugs," said Anthony Wright, executive director of Health Access, a consumer group that favors importing Canadian drugs.

Drug makers and their allies argue that the higher prices Californians pay are needed to fund the research to develop new drugs.

"I'm very pleased. It's in the best interests of patients and the industry," said Stephen Chang, who heads Astral Therapeutics of San Diego and leads a coalition that opposes Canadian purchases.

In his veto message, the governor said providing access to affordable prescription drugs is a top priority for his administration. He plans to propose legislation in January.

In August, at the end of the legislative session, Schwarzenegger outlined a discount program, now called "California RX." The plan relies on an existing state discount program and new efforts by the state to negotiate bigger savings.

Schwarzenegger, who has been calling drug company executives to drum up support for the voluntary plan, said his program is off to a mixed start.

Some companies have offered concrete suggestions. But, he wrote, he is "disappointed that many companies have not yet stepped up and offered meaningful discounts for this population."

The program would be open to all uninsured Californians who earn less than 300 percent of the federal poverty level.

For a family of four, that's an income of about $55,000.

Kimberly Belshe, secretary of the state Health and Human Services Agency, said Thursday that if enough companies don't agree to offer discounts, the administration would consider using leverage, but she did not provide specifics.

Some states have gained leverage by getting federal permission to demand that drug companies expand the discounts they must provide for the state-federal joint health program that covers the poor, known in California as Medi-Cal.

A preliminary analysis by the Legislative Analyst's Office said the governor's program is unlikely to offer any greater discounts than existing state programs unless it adds leverage.

A purely voluntary program, the office said, is likely to produce only 12 percent to 15 percent discounts.

State Sen. Deborah Ortiz, D-Sacramento, who sponsored one of the vetoed bills to encourage importing drugs from Canada, SB 1149, called Schwarzenegger's program "heavily reliant on the goodness of prescription-drug companies."

"It's clear that his program is nowhere near the 40 percent to 50 percentaverage discount that would be realized by importing drugs from Canada," she said.

Ortiz said she planned to introduce a bill next year.

Ortiz and other Democrats argue that their bills do not violate federal law. For one thing, other states, including Minnesota, headed by a Republican governor, offer similar informational Web sites and haven't been shut down by the Food and Drug Administration.

Furthermore, they say, Web sites enable individuals to buy from reliable pharmacies. They don't sell directly to consumers.

"People are using them already and saving money on prescription drugs," said Assemblyman Dario Frommer, D-Los Angeles, who sponsored two bills rejected by the governor, AB 1957 and AB 1958.

Astral Therapeutics' Chang, who opposed the bills, said Schwarzenegger's vetoes would clear the way for new discussions that might lead to a practical program for giving drug discounts to the needy.

Schwarzenegger's popularity could help him persuade drug company executives to participate in a voluntary program, Chang said.

"Companies would want the positive publicity that comes from this," Chang said. "If I were a CEO of a major pharmaceutical company, I wouldn't want to be singled out by Schwarzenegger as a guy who didn't want to play."

Consumer advocates and Democrats had urged the governor to sign the bills so millions of seniors could have access to low-priced Canadian drugs.

"No one should have to be making a decision between paying rent or getting the medicine they need to be healthy," said Assembly Speaker Fabian Nunez, D-Los Angeles.

California's effort is part of a national consumer movement seeking relief from soaring prescription drug prices.

San Francisco Mayor Gavin Newsom said this week that a city-operated Web site would provide information about buying Canadian drugs if Schwarzenegger vetoed these bills.

Schwarzenegger vetoed SB 1144 from Senate President Pro Tem John Burton, D-San Francisco, which would have sought permission to buy Canadian drugs for prisons, hospitals and mental health facilities.

He also vetoed SB 1333, carried by Sen. Don Perata, D-Oakland, which sought to encourage health care providers to purchase drugs from Canada.

The governor also signed legislation sought by the California Public Interest Research Group. SB 1765, by state Sen. Byron Sher, D-Palo Alto, curtails the drug-industry practice of giving gifts to doctors to influence prescriptions.




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