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Proposition 78 would also require the state to administer discounts and rebates on drugs, but here the similarity ends. Company participation would be entirely optional, discounts might be very small because they are not tied to Medi-Cal rates, and there would be no enforcement mechanism, such as Proposition 79's ability to remove drugs from Medi-Cal's preferred list. It would also cover about half as many people as Proposition 79 — uninsured Californians with maximum incomes of $29,000 for individuals or $58,000 for a family of four.

Big drug companies' Rx for victory
They are using Proposition 78 as a decoy to draw votes from the real reforms of 79.
By Marcia Angell
MARCIA ANGELL, a senior lecturer in social medicine at Harvard Medical School and former editor in chief of the New England Journal of Medicine, is the author of "The Truth About the Drug Companies"
October 28, 2005

CALIFORNIANS ARE in danger of being rolled by the big drug companies on Nov. 8. On the face of it, the two propositions on the ballot dealing with prescription drug discounts might seem to be different ways to achieve the same goal: lower prices for vulnerable Californians. But in fact, Proposition 78 is a decoy created by the drug companies to draw votes from Proposition 79, which actually would lower prices.

Let's look more closely at the two propositions.

Proposition 79 would cover uninsured Californians with maximum incomes of $38,000 for individuals or $77,000 for a family of four, and also people at higher income levels if they have medical expenses above 5% of their income. An estimated 8 million to 10 million people would be eligible. It authorizes the state to bargain with drug companies for discounts as steep as those offered to Medi-Cal, which pays the lowest prices in California — about half what uninsured patients pay. If the drug companies refuse, their drugs could be removed from Medi-Cal's list of preferred medicines (but only if there are medically equivalent substitutes available). That is a powerful club to wield, because Medi-Cal is the state's largest purchaser of prescription drugs.

The plan is supported by a broad array of consumer, education and labor groups, including the AARP, Consumers Union and the League of Women Voters. As of the end of September, proponents had raised about $2 million to promote it. All of the top 10 contributors are state organizations.

Proposition 78 would also require the state to administer discounts and rebates on drugs, but here the similarity ends. Company participation would be entirely optional, discounts might be very small because they are not tied to Medi-Cal rates, and there would be no enforcement mechanism, such as Proposition 79's ability to remove drugs from Medi-Cal's preferred list. It would also cover about half as many people as Proposition 79 — uninsured Californians with maximum incomes of $29,000 for individuals or $58,000 for a family of four.

In sum, Proposition 78 is a recipe for a short-lived program of minimal discounts. As if to underscore that fact, there is an explicit provision for the program to end if there are "insufficient discounts" to make it "viable." Of course, if drug companies really wanted to give Californians a break, they could simply drop their prices; they don't need Proposition 78 to do that.