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Schwarzenegger Proposes Mandatory Prescription Drug Discounts July 24, 2006 Gov. Arnold Schwarzenegger's (R) administration on Saturday proposed a prescription drug program that would require pharmaceutical companies to provide discounts to uninsured families with annual incomes less than $60,000 or be excluded from Medi-Cal, the San Jose Mercury News reports. Schwarzenegger would open the program to families with annual incomes lower than $68,700 who face catastrophic illnesses and have unreimbursed medical expenses equal to 10% or more of their income. Under the plan, companies would have five years to voluntarily offer discounts of 40% for brand-name drugs and 60% for generic drugs (Folmar, San Jose Mercury News, 7/22). If the companies do not provide the discounts, they could be cut from Medi-Cal, which purchases about $4 billion in medications for low-income individuals and the elderly each year, the AP/Los Angeles Daily News reports (Thompson, AP/Los Angeles Daily News, 7/23). The plan could provide discounts for as many as five million people (San Jose Mercury News, 7/22). Assembly Speaker Fabian Nuñez (D-Los Angeles) and Senate President Pro Tempore Don Perata (D-Oakland) have introduced legislation (AB 2911 and SB 1702) that would require drug companies to provide discounts to families of four with annual incomes up to $66,000 annually (Nicholas, Los Angeles Times, 7/22). The bills also would require companies to establish discount programs within three years, rather than five (Benson, Sacramento Bee, 7/22). Schwarzenegger's aides say the governor will not sign the bills as they are written but would approve the legislation if amendments were included to change the eligibility requirements (Los Angeles Times, 7/22). Democratic gubernatorial candidate Phil Angelides said Schwarzenegger's plan does not go far enough (Chorneau, San Francisco Chronicle, 7/23). Angelides said the proposal basically amounts to "crossing your fingers and waiting five years for the drug companies to lower their prices" (AP/Los Angeles Daily News, 7/23). Angelides also noted that the governor has vetoed several bills that sought to reduce prescription drug and other health costs (San Jose Mercury News, 7/22). CaliforniaHealthline is published daily for California HealthCare Foundation by The Advisory Board Company. © 2004 The Advisory Board Company. All Rights Reserved.

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