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Los Angeles Times

Plan to Cut Drug Prices Proposed;

L.A. councilman suggests city residents could join consortium to buy medicine in bulk.

by Noam N. Levey, Times Staff Writer
March 18, 2004

Thrusting Los Angeles into the nationwide effort to control prescription drug costs, City Councilman Antonio Villaraigosa said Wednesday that he would propose a plan to create a purchasing pool to negotiate drug discounts for city residents, many of whom do not have health insurance.

"This city has more uninsured than anywhere in the country," said Villaraigosa, who is working on the plan with the Santa Monica-based Foundation for Taxpayer and Consumer Rights.

"We want to look at how we can generate savings for the city and for the residents of our city, and hopefully begin a conversation among public opinion leaders about what we can do to address escalating healthcare costs," he said.

Federal, state and local governments, as well as private employers, are struggling to find ways to control the price of prescription drugs.

But with healthcare costs continuing to skyrocket, critics have complained that the federal government has yet to develop a national strategy for expanding access to pharmaceuticals, particularly for the millions of people without health insurance

Villaraigosa and other Southern California leaders say they hope a city bulk purchasing plan will help address the problem at a local level.

The councilman has yet to introduce a specific plan or outline the potential cost of such a program. Jerry Flanagan of the rights foundation said Villaraigosa and the group are drawing up language for an ordinance that could be introduced as soon as next week.

In general terms, the proposal would create a nonprofit consortium that city residents, employees and small businesses could join for a fee. The consortium in turn would negotiate with pharmaceutical companies to buy selected prescription drugs at lower prices made possible through volume purchasing.

That could save the city money if the consortium could get a better price for the drugs than the city's healthcare providers.

"If done right, a lot of money can be saved," said Los Angeles County Health Services Director Dr. Thomas Garthwaite.

Across the country, a number of states have developed bulk purchasing plans, although most have focused on delivering lower-cost prescription drugs to government employees or very specific populations.

If the City Council adopted Villaraigosa's proposal, Los Angeles would be the first city to expand the benefits of bulk purchasing to residents, said the foundation's Flanagan.

California Small Business Assn. President Betty Jo Toccoli said she hoped the plan could help small business expand health coverage for employees as long as it did not hurt independent pharmacies.

Jim Lott, vice president of the Hospital Assn. of Southern California, said a bulk purchasing plan for city residents would also be a boon to hospitals, many of which are struggling to handle uninsured patients who clog emergency rooms with ailments that could have been treated with prescription drugs.

More than 1.7 million county residents have no health insurance, according to the latest survey by the county Department of Health Services.

"Having a metropolis like Los Angeles step up will give the idea traction that it hasn't had before," Lott said. "I think we have the beginnings of a movement here."

Wanda Moebius, a spokeswoman for the Pharmaceutical Research and Manufacturers of America, said that the industry group had not seen Villaraigosa's plan.

But the organization has expressed reservations in the past about how bulk purchasing plans buy and distribute drugs.

"We do ... have serious concerns about how lists of drugs to be purchased will be created," Moebius said in a statement.
Times staff writer Jessica Garrison contributed to this report.