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Read Making a Killing

home / healthcare / in the media

San Jose Mercury News
Mar 12, 2005

by Kate Folmar, Mercury News Sacramento Bureau

Big money put behind drug-cost campaign;

PHARMACEUTICAL INDUSTRY WANTS TO SEIZE INITIATIVE
SACRAMENTO - The pharmaceutical industry has raised $7.7 million in two weeks to promote a low-cost prescription drug ballot initiative and take on trial lawyers and labor unions.

The drug measure seeks to derail more far-reaching alternatives. The industry's other initiatives aim to reduce lawyers' contingency fees and limit unions' political spending.

How big is $7.7 million at this stage before a special election has even been called? A ton. The group hopes to reach $10 million.

By contrast, the main group backing Gov. Arnold Schwarzenegger's plans to revamp pensions, teacher tenure and more had collected about $2.6 million by late Friday. It also hopes to collect $10 million.

The primary issue is whether millions of poor and middle-class Californians will get better access to prescription medicines -- and who will set the prices they pay. It's a matter that has consumed lawmakers over the past year and could wind up in voters' hands if Schwarzenegger, as expected, calls a November special election.

The drug companies are promoting an initiative version of Schwarzenegger's Cal Rx drug plan -- a voluntary plan that drug companies prefer over mandatory ones. Other, more stringent plans sponsored by consumer groups are also vying for ballot space.

In addition, the Pharmaceutical Research and Manufacturers of America -- an industry trade group commonly known as PhRMA -- is making a pre-emptive strike at two potential monied adversaries: unions and trial lawyers. The group is behind initiatives that would reduce lawyers' contingency fees and limit unions' political spending, confirmed campaign spokesman Dave Puglia.

The fast infusion of money into the drug-company account shows that the industry means business, said Dan Schnur, a GOP consultant not affiliated with the campaign. So does the fact that it has lined up a high-profile campaign team including former Democratic Assembly Speaker Willie Brown and Bob White, a former Schwarzenegger aide and chief of staff to Republican Gov. Pete Wilson.

"This is the 'Untouchables' school of initiative politics,'' Schnur said, referring to the movie version of law enforcement attempts to bring down Al Capone. "They pull a knife, you pull a gun. They send one of your guys to the hospital, you send two of theirs to the morgue. That's the way both
sides play when the stakes get this high.''

Just Tuesday, Schwarzenegger had a re-election fundraiser in Washington, D.C., hosted by a national lobbyist for PhRMA. Both the administration and the lobbyist have said the governor's policy decisions are not influenced by campaign contributions.

PhRMA's main initiative is modeled after Schwarzenegger's Cal Rx plan, SB 19, which calls for drug companies to give voluntary discounts to nearly 5 million low- and middle-income Californians. Schwarzenegger negotiated the bill after vetoing several measures last year that would have allowed for low-cost drug imports from Canada.

Passing the compromise measure through the Legislature "certainly is our preference,'' said Puglia. But, "we're prepared to go to the voters.''

"I think it will become immensely clear that our program will actually deliver lower-cost prescription drugs to Californians,'' he said. "And that the competing proposals will harm patients who need access to prescription drugs.''

Health and activist groups beg to differ.

They're working to place more sweeping measures on a special-election ballot. And they hope to get support from a new, labor-backed group, Seriously, Saving California, that plans to fight many of Schwarzenegger's proposed changes.

"They're declaring war on consumers,'' and the unions and lawyers who represent them, said Art Pulaski, the chief officer of the California Labor Federation. "It's all about how much money they can make for themselves. If they get this phony discount-drug plan through, they stand to soak the consumers for years to come.''

Jerry Flanagan, a frequent Schwarzenegger critic, who backs one of the consumer-oriented initiatives, said the drug industry is adopting a "nuclear strategy'' with its three initiatives.

"It's a complex game that the industry is playing,'' he said. "They're supporting red-herring reform. And they are also engaged in an all-out war with two groups that they suspect to be their opponents,'' unions and trial lawyers.

Assemblyman Dario Frommer finds the whole situation ironic, given that Schwarzenegger may call a special election because the Legislature isn't acting on his wishes.

"Here's an issue where the Legislature has stood up for the people against the special interests and stood for reform,'' he said. "And the governor's allies in the pharmaceutical industry are using this special election to thwart real reform."

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