Prop.’s 78 and 79 Both Offer Drug Discounts

The basic difference is 79 has a mechanism to enforce the
Gilroy – Two November ballot initiatives promise a discount on prescription drugs. Both offer price reductions for the poor and elderly. Both negotiate rebates from drug makers.

But critics of Proposition 78 argue the governor’s initiative is impossible to enforce and shortchanges millions of needy patients, while critics of Proposition 79 say it won’t save anyone a penny.

On the surface, Proposition 78 and Proposition 79 appear nearly identical.

Proposition 78 offers prescription drug discounts to residents and families with an annual income at or below 300 percent of the poverty level – about $58,000 for a family of four.

Proposition 79 will require drug makers to provide prescription drug discounts for state residents at or below 400 percent of the poverty level – about $77,000 for a family of four.

“The basic difference is that 79 has a mechanism to make it enforceable to get the discounts,” said Trudy Schafer, program director and advocate for the California League of Women Voters in support of Proposition 79. “And it would cover twice as many people. Estimates are between eight and 10 million (people). The expectation is that the discounts would be deeper.”

A 50 percent cost-savings on prescription drugs is anticipated under Proposition 79, she said.

The measure changes state law making it illegal for drug makers to profit from the sale of prescription drugs, giving the public the right to sue pharmaceutical companies that jack up prices on the drugs they sell. Since it also changes the state’s Medi-Cal program, it requires approval from the federal government.

Profiteering under Proposition 79 means demanding “an unconscionable price” for drugs.

Critics believe litigation lawyers will tie up the court system with lawsuits claiming prices are too high, preventing discounts from ever happening.

“That just seems like a fatal flaw,” said Kristine Yahn, executive director of Californians for Patient Care.

“It does not appear to be something that’s legal,” she said, citing a similar program started in Maine that has been caught up in the court system.

But supporters of Proposition 79 deny this is the case.

“That’s just campaign talk,” Schafer said. “There’s always the possibility that any initiative that passes will be challenged in court. The pharmaceutical companies that sponsor Proposition 78 would like you to think the discounts are nothing at all (for Proposition 79).”

Under Proposition 78, federal approval of the initiative is not required and is effective immediately.

All drugs are eligible for discounts, and the average cost savings is estimated to be about 40 percent off retail prices.

“We see it as a public-private program that can go into effect immediately,” Yahn said.

She has been a nurse for the past 37 years and believes Proposition 78 will be easier for patients to utilize because they can just sign up at their local pharmacy.

Opponents reason that since drug companies choose whether or not to offer discounts under Proposition 78 the system is designed for failure, citing a 2001 approach operating on similar grounds that was canceled because not enough drug companies participated.

However, Yahn believes Proposition 78 is an opportunity to set up a successful prescription drug discount program that will be copied nationwide.

“It really benefits people quickly and the (pharmaceutical) industry has a lot at stake to make it work. They don’t want it to be highly regulated,” she explained. “The pharmaceutical companies aren’t going to plow $50 million into a proposition and then walk away.”

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