Gino DiCaro

Pharmaceutical Bills Vetoed

By Gino DiCaro, VP, Communications

Capitol Update, Sept. 30, 2004 Share this on FacebookTweet thisEmail this to a friend

Illegal Importation of Prescription Drugs
SB 1144 (John Burton, D-San Francisco), SB 1149 (Deborah Ortiz, D-Sacramento), SB 1333 (Don Perata, D-Oakland), and AB 1957 (Dario Frommer, D-Los Angeles)
While providing access to affordable prescription drugs is a top priority of the Governor's Administration, these proposals to import drugs from Canada or assist residents in doing so would violate federal law and could expose the state to civil, criminal, and tort liability. Currently, Canadian internet pharmacies are not held to the same regulatory oversight as in the United States, which explains the cause for concern and the potential harm to California patients.

Additionally, California biotech companies would be adversely affected by any of the proposed bills. Stephen Chang, CEO of a Californian biotech company, Astral Therapeutics, explained: "If artificially low price controls are imported into California, an adequate return for investors will erode along with their desire to continue investing. California's economic recovery depends heavily on the continued work of the biotech sector and it's imperative that investment dollars continue to flow here."

"There are a lot of unintended consequences with this legislation and so we need to stop and think about what we're doing and consider the impact this will have on Canadians, California and California's workers," concluded CMTA President Jack Stewart.

Mandate for Drug Manufacturers To Provide 5 Percent Discount
SB 1563 (Martha Escutia, D-Whittier) would have required pharmaceutical manufacturers to contract with qualifying entities for discounts related to the Medicaid best price. The Governor argued that this bill could have the unintended consequence of increasing drug costs to the California Medicaid program, other government purchasers, and potentially other beneficiaries of those plans. Because qualifying entities do not have exemption from disclosure under the Public Records Act, these discounts would become public knowledge. Increasing the risk for exposure of a manufacturer's contract price may encourage manufacturers to avoid entering into contracts for drugs at prices lower than their lowest publicly available price.

Pharmacy Benefit Standards
AB 1960 (Fran Pavley, D-Agoura Hills) would have required pharmacy benefit managers (PBM) to make various disclosures and establish certain standards and requirements with regard to PBM contracts. While CMTA understood the purpose of the bill was to shed some light on PBMs to ensure that they accomplish what they promise to their clients, we argued that the bill went too far and intruded on private contracting arrangements that may impede PBMs ability to negotiate the best price for employers. The Governor cited in his veto message a study from the Federal Trade Commission that indicated that the enactment of this bill would have limited competition and significantly increased the cost of prescription drugs.
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