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Sacramento Bee
Feb 14, 2005 - 01:00 AM

by ANDY FURILLO and GARY DELSOHN

Drug companies approve $10 million for California ballot fight

SACRAMENTO, Calif. -- Rumblings about an historic off-year election in California this fall grew
louder Monday when it was learned that the nation's biggest drug companies have committed to spending $10 million to put three initiatives on the statewide ballot.

The Pharmaceutical Research and Manufacturers of America's approved the expenditure last week to fund one initiative that is the industry's answer to reducing prescription drug costs, a second that will prevent public employee unions from using members' dues for political purposes and a third that would cut trial lawyers' contingency fees.

"PhRMA would prefer to work on these complicated issues in the Legislature, but is prepared to take its case to the people if necessary," said Frank Schubert, a Sacramento political consultant who has been retained to run the drug companies' campaign.

A spokeswoman for the drug group declined to comment on the expected $10 million expenditure or to confirm the industry's involvement in the campaigns. The manufacturers released a statement by PhRMA Senior Vice President Ken Johnson expressing its support for a prescription drug bill backed by Schwarzenegger and state Sen. Deborah Ortiz, D-Sacramento.

A proposed initiative that reflects the governor's "California Rx" plan, as well as the labor and lawyer measures, have all been filed with the state Attorney General's Office by the Sacramento law firm representing the manufacturers, Bell, McAndrews & Hiltachk. The firm also does work for
Schwarzenegger.

It remains to be seen whether the $10 million - approved by the PhRMA board last week, according to sources - is a big-time bluff or the first major money move in what is shaping up as a hard-hitting off-year election this fall. No contributions have been documented on the Secretary of State's Web site, nor has the formation of the pharmaceutical-backed campaign committee been officially reported.

Election Watchdog, a campaign group funded in part by the labor-and-lawyer-backed Foundation for Taxpayers and Consumer Rights, last month filed a series of ballot measures targeting pharmaceutical industry profits as a way to drive down drug costs. The package seeks to thwart "illegal profiteering" by the companies, allow "joint purchasing" agreements to increase the public sector's bargaining power and force disclosure of health risks associated with certain drugs.

The drug companies responded with last week's initiative that encompasses the Schwarzenegger-Ortiz plan and promises to "reduce the out-of-pocket costs of prescription drugs for millions of Californians," according to Johnson's statement. It criticized the Election Watchdog initiatives as being "political in nature" and offering "little to provide real relief to Californians who need help."

The statement did not mention the other two initiatives, but the intent of the two seemed clear.

"This is Politics 101," said Sacramento-based Republican political consultant Kevin Spillane. "If public employee labor unions are going to file initiatives that go after the pharmaceuticals, they have the resources to fire back with their initiatives of their own, and that's what we're seeing."

Spillane characterized the labor measure as a "warning signal" to the governor's opponents and "another sign that we're looking at the mother of all political wars this fall."

Jamie Court, head of the Santa Monica, Calif.-based taxpayers and consumers foundation, called the Schwarzenegger and Ortiz plan a "smokescreen" designed to undercut the Election Watchdog plan.

"This is basically them trying to put a gun to the head of labor unions and attorneys and others (involved in) prescription drug reforms and say, 'If you go forward in funding an initiative that does something too big and takes our profits and provides cheaper drugs, then we're going to come after you and take your power and your money,' " Court said.

The labor initiative proposed by the drug companies is similar to Proposition 226, defeated by California voters in 1998, that would have prevented union dues from being converted into campaign contributions. The firms' measure would be limited to public employee unions.

Although the pharmaceutical companies' initiatives fall in line with Schwarzenegger's own drug plans as well as his recent rhetorical blasts at public employee unions and trial lawyers, the governor's communications director, Rob Stutzman, said there has been no coordination between two camps.

"Someone who is working with them has informally told me about it, but that's been the extent of it," Stutzman said.

The governor already is threatening to go to the ballot with proposals to change legislative redistricting, institute merit pay for teachers, control state spending and alter its public employee pension plan.




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