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The San Jose Mercury - EDITORIAL

Memo to state: volume discount

April 26, 2004

Software, electricity, automobiles, gasoline.

Appliances, office equipment, tires, food supplies.

The state of California buys those items in bulk at immense savings to taxpayers.

Why not prescription drugs?

A crucial bill, AB 1958, sponsored by Assemblyman Dario Frommer, D-Glendale, continued its march through the Assembly committee process last week by advancing to the appropriations committee. The Legislature should improve its budget outlook and reduce drug costs for state and local agencies and individuals by passing it.

If you want to know, in part, why the state's budget crisis is so severe, check out what happened to Medi-Cal's budget this year. Medi-Cal's prescription drug costs jumped from $2.9 billion in 2003 to an expected $3.8 billion this year.

AB 1958 would allow state and local agencies to purchase drugs more cheaply by joining a bulk purchasing pool run by the California Public Employees Retirement System (CalPERS). The California Medical Association, consumer groups, labor groups and the AARP are lined up in support of the bill.

Businesses watching their health care costs balloon should jump on the bandwagon. As should all taxpayers.

Standing firmly in opposition is the pharmaceutical industry, which increased its national budget for lobbying this year by 23 percent to $150 million, with a third of that targeted to fight state efforts to lower drug prices.

The industry argues that it needs to keep charging Americans exorbitant prices -- substantially higher than it charges other countries around the world -- in order to sustain innovation.

But much of the recent ``innovation'' by drug companies has been to create drugs that are only marginally more effective than current products. While one-third of Americans report that they are unable to afford their prescriptions, the pharmaceutical drug industry continues to rake in huge profits.

The state's budget crisis has gone well past the point where it can continue to pick the pockets of taxpayers while lining the pockets of pharmaceutical companies. California should demand the same deal it gets on office equipment or tires: Big buyers get better prices.