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Read Making a Killing

home / healthcare / in the media

The San Francisco Chronicle
Jan 12, 2005

by Victoria Colliver, Chronicle Staff Writer

Prescription benefit amid health care cuts;

Plan relies on help from drugmakers
In a budget plan that imposes significant cutbacks on state health care spending, Gov. Arnold Schwarzenegger has proposed a program to help low-income Californians pay for prescription drugs, one of a handful of new health programs for the next fiscal year.

The governor's 2005-06 proposed state budget, announced Monday, earmarks $3.94 million for Cal Rx, as the program is called. The administration says it will deliver cost savings of about 40 percent by relying on voluntary discounts from drug manufacturers and pharmacists.

"In the state budget generally, as in the health portion of the budget, there are not a lot of new programs. At a time when there's a strong downdraft, it's saying something (to add the Cal Rx program)," said Dan Carson, director of the health section for the California Legislative Analyst's Office.

Among Schwarzenegger's initiatives to rein in costs are proposals to cap dental benefits for the poor, shift more Medi-Cal recipients into private managed-care plans and charge some beneficiaries a monthly fee for Medi-Cal services.

In addition to Cal Rx, the governor proposes to spend $6 million on a new obesity prevention initiative and $15 million to expand an existing newborn genetic screenings program to include 37 additional treatable diseases.

An estimated 5 million Californians who earn less than 300 percent of the federal poverty level will be eligible for Cal Rx, which would go into effect Jan. 1, 2006, if approved by the Legislature this year.

The discount program is backed by a number of groups, including the California Medical Association, the California Pharmacists Association and the AARP. But several consumer groups and legislators have come out against the plan, questioning the level of savings it will offer and criticizing its reliance on voluntary discounts from drug companies.

"Gov. Schwarzenegger's health cuts mean the lowest-income Californians will have to pay more for health care, and the rest will go unprotected in the marketplace," said Jerry Flanagan, director of health policy for the Foundation for Taxpayer and Consumer Rights. "Instead of a real reform, the governor has put the drug companies in charge and let them set the rates."

Cal Rx is not open to enough Californians who need drug coverage, Flanagan said. He instead urged negotiating a low-rate bulk-drug purchasing pool involving all residents.

"The governor seems absolutely confident he can bring the drug companies to the table to talk about these discounts in a meaningful way," said Lynn Rolston, chief executive officer of the California Pharmacists Association. "As long as that's true, the pharmacists are willing to do a discount that's reasonable."

In a statement from the Pharmaceutical Research and Manufacturers of America, which represents the drug industry, Chief Executive Officer Billy Tauzin said Cal Rx "balances the immediate heath needs of patients without compromising on the promise of future research and development."
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E-mail Victoria Colliver at vcolliver@sfchronicle.com

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