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Sacramento Bee
Mar 25, 2005 - 01:00 AM

by Andy Furillo, Bee Capitol Bureau

Lawyers, drug companies huddle;

Talks aim at a truce over initiative campaigns that would hurt pocketbooks of both interest groups.
The president of the state trial lawyers association met Thursday in the Ferry Building in San Francisco with one of the top drug company lobbyists in the country and a private lawyer retained by the pharmaceutical industry - former Assembly Speaker Willie Brown.

The subject of the afternoon meeting by San Francisco Bay was the flurry of initiatives of interest to the lawyers and the drug manufacturers in their high-stakes sideshow to Gov. Arnold Schwarzenegger's threat to call a special election in November.

With an array of ballot petitions now on the streets, the Pharmaceutical Research and Manufacturers of America has raised nearly $8 million so far to fund three initiatives - including one aimed at the heart of the trial lawyers that proposes to cap their contingency fees.

The Consumer Attorneys of California, on the other hand, could represent a major threat to the pharmaceutical industry if attorney cash is used to help fund a pending initiative - already backed by organized labor - that is targeting prescription drug prices.

Even though it is a peripheral contest to Schwarzenegger's call for a state government overhaul, the face-off between the trial lawyers and the drug companies adds a complex overlay to fall's looming battle. The ongoing talks, however, signal that when it comes to this parallel universe of acrimony, the competing sides may be ready to step back and make a deal before it is too late, regardless of the Schwarzenegger initiatives.

"Once both sides get into this, and they realize what an unbelievably complicated and expensive thing it is, I think everybody gets to the point at some time where they start talking seriously about how to stand down," said Democratic political consultant Bill Carrick, who has worked on occasion for the trial lawyers.

Kevin Spillane, a Republican counterpart of Carrick, views the lawyers versus the drug industry as a sidebar to Schwarzenegger versus the public employee unions, with the talks representing one of many swings their confrontation figures to take before the point-of-no-return signature-gathering deadline hits home in another month or so.

"It's just one chapter in a very long, complicated story, and one that is going to twist and turn for quite some time," Spillane said.

Thursday's meeting was at least the third between the drug companies and trial lawyers, including one in Washington, according to representatives for both sides.

Neither Sharon Arkin, president of the Consumer Attorneys of California, who attended Thursday's meeting, nor Frank Schubert, the political consultant who is managing the PhRMA campaign, disclosed the contents of the discussions. Arkin and Schubert, however, described the talks as productive.

"We're hopeful," Arkin said of possibly concluding a deal within the next month.

"They've been very positive," Schubert said. "We want to see if there is an opportunity to resolve our differences and focus our activities in the Legislature. PhRMA believes these issues are best dealt with in the Legislature."

Arkin said she was joined at the meeting by David Casey Jr., the past president of the trial lawyers. Representing the drug companies were their Washington-based senior vice president in charge of state government affairs, Kurt Malmgren, and Brown, the former mayor of San Francisco as well as the legendary, longtime Assembly speaker and longtime ally of trial lawyers.

"He was a doll," Arkin said of Brown, who did not return phone calls Thursday.

The trial lawyers are not directly involved in any of the petitions now circulating. But Election Watchdog, an affiliate of the Foundation for Taxpayer and Consumer Rights, which is funded in part by trial lawyers, announced Tuesday it would not proceed with its petition targeting prescription drug prices.

The drug companies, meanwhile, have three initiatives awaiting title and summary with the Attorney General's Office. One would cap lawyers' fees. Another would prohibit public agencies from processing union dues from employees if the funds are used for political purposes. A third mirrors a pending bill backed by Schwarzenegger that would establish a drug-discount plan for low-income people that would involve only voluntary participation by drug companies.

Despite the talks, a union-backed prescription drug plan that would use state bargaining power to force discounts for low-income residents is making the initiative rounds, with help from paid signature gatherers. The author of the plan, Anthony Wright, said he is going forward no matter what.

"Absolutely," Wright said.

The Alliance for a Better California is funding Wright's signature-gathering effort. It has received a little more than $1.7 million so far, the vast majority of it from labor unions.

At the same time, Lew Uhler, president of the National Tax Limitation Committee, said he has no plans to drop his measure that would force public employee unions to get their workers' consent before they could spend dues money on political campaigns. Uhler's petitions are now on the streets, with signature gatherers being paid by still-secret sources.

"It's kind of crazy," Uhler said of the drug company-lawyer talks. "The vectors of force are moving in all kinds of directions."

While it's clear where the lawyers would benefit if the drug companies drop the attack on contingency fees, the pharmaceutical firms would still have to fight off Wright's initiative, even if the lawyers back away from the action. But the alliance supporting Wright would probably have to carry on its fight without any cash from the trial lawyers.

"Eliminating financial support for that measure decreases the likelihood that the measure will be successful," Spillane said.

As for the Republican governor's agenda, a member of the campaign committee backing Schwarzenegger's initiatives said any deal worked out between the drug companies and trial lawyers is "unlikely" to affect Schwarzenegger's overhaul plan on the main stage - middecade redistricting, merit pay for teachers, a longer waiting period for teacher tenure, a new public employee pension system, a new budget control mechanism.

"I don't see it having an impact on the overall reform package," said Jon Coupal of the Howard Jarvis Taxpayers Association and a board member of the Schwarzenegger-affiliated Citizens to Save California.

Added gubernatorial spokeswoman Margita Thompson: "We don't have a dog in that fight."
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The Bee's Andy Furillo can be reached at (916) 321-1141 or afurillo@sacbee.com




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