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San Diego Union-Tribune

Discounted drugs urged for uninsured Californians;

Official rejects Canadian medications as illegal

August 20, 2004

SACRAMENTO -- As an alternative to importing low-cost drugs from Canada, Gov. Arnold Schwarzenegger's administration is calling for a sweeping new program to offer drug discounts to uninsured, low-income California residents.

Kimberly Belshe, the state's health and human services secretary, outlined the proposal in a letter sent yesterday to legislative leaders.

In the first extensive discussion of the issue from a top administration official, Belshe rejected legislative plans to set up a Web site for California residents to facilitate the purchase of Canadian drugs.

Such a proposal would expose the state to civil and criminal liability because it would violate a federal prohibition against importing drugs from Canada, she wrote.

Belshe said the legislation "would at best be a symbolic gesture that would never be implemented and never bring relief to Californians who desperately need assistance."

Instead, she said, the administration wants to take advantage of free drug programs sponsored by pharmaceutical companies and renew efforts by the state to use its leverage to negotiate discounts. She added that the free drug programs have not been sufficiently publicized or made accessible to people who qualify.

Under the plan, participants would get a card they could present to a pharmacist, who would then find the lowest price for the drugs, whether through state-leveraged discounts or a manufacturer's patient-assistance program.

In addition, the state would contract with an outside vendor to negotiate price discounts from drug manufacturers and operate an enrollment system.

The push for lower-cost Canadian drugs has been bolstered nationwide by a groundswell of support from seniors, consumers and others. One consumer group is sponsoring a special train to take senior citizens and others to Canada to buy prescription drugs.

The Democratic-controlled Legislature has given preliminary approval to two proposals for obtaining Canadian drugs. One would create a state Web site to make it easier for Californians to buy the cheaper drugs, while the other would put state agencies on the road toward buying them.

Prescription drug costs in Canada tend to be lower, in part, because of government cost controls, regulation and bulk buying.

The bills had been expected win final approval and sent to the Republican governor's desk next week.

The legislation presents a political dilemma for Schwarzenegger, who has portrayed himself both as a champion for populist causes and an advocate of easing burdens on businesses.

Vetoing the bills could risk alienating consumers, but signing them would go against the powerful California biotechnology industry, which has made substantial contributions to his political committees.

With his plan, Schwarzenegger can veto the prescription drug bills, while making moves to address the problem of high drug costs.

Belshe's letter asks an author of the bills, Assemblyman Dario Frommer, D-Los Angeles, to amend his measure with the administration changes. But it was unclear late yesterday whether Frommer or other Democrats would agree to the changes.

Belshe's request would dramatically change Frommer's legislation, which would run counter to Schwarzenegger's criticism of "gut and amend" bills late in the legislative session. The Legislature is scheduled to adjourn Aug. 31 and may do so even sooner.

While the governor's program would be targeted toward uninsured, lower-income residents, it would be available to families with incomes of up to 300 percent of the federal poverty level, or about $55,000 for a family of four.

Stephen Chang, who has led the charge against importing Canadian drugs, said a new program expanding access to poor Californians could resolve many complaints.

"Despite all the emotional discussions on this issue, it's really a matter of access," said Chang, who heads Astral Therapeutics of San Diego and is a leader of Cures, a pharmaceutical industry coalition that opposes Canadian drug purchases.

But Anthony Wright, executive director of Health Access, a coalition of consumer groups that favors importing drugs from Canada, said such a proposal would leave middle-class seniors with steep bills that could force them to choose between living expenses and medications.

"He shouldn't hide behind a fig leaf," Wright said of Schwarzenegger. "He should sign the bills to bring down the inflated prices of prescription drugs."

For months, both houses of the Legislature have held hearings on the issue of opening the Canadian market and using the leverage of the state and its giant employee pension plan, CalPERS, to lower drug prices.

Consumer advocates argue that providing access to Canadian drugs could slash the costs of prescription drugs by more than 50 percent, including those taken for high cholesterol, arthritis and high blood pressure.

But opponents, including advocates for the pharmaceutical and biotech industries, counter that the higher prices paid by Americans fund innovative research that improves people's health and supports thriving industries. "Eventually, you'll see jobs disappear" if these bills become law, Chang said.

Earlier, backers of the bills said the governor should live up to his rhetoric. Since taking office, Schwarzenegger has repeatedly condemned special interests, saying they distorted state policies by influencing legislators with contributions.

Jerry Flanagan, a spokesman for the Foundation for Taxpayer and Consumer Rights, said the governor and his committees have received about $325,000 from the pharmaceutical industry, which opposes importing drugs from Canada.

"It's certainly a litmus test on the governor's pledge to stand up for the people and oppose special interests," Flanagan said.

California pharmacists oppose the bills, in part because they believe patients should buy drugs in settings where pharmacists can provide advice.

"There are issues about patient safety that can't be solved," said Carlo Michelotti, chief executive officer of the California Pharmacists Association, which represents 5,500 pharmacists.

Opponents to buying Canadian drugs raise safety concerns, noting that standards and dosages may differ.

State Sen. Deborah Ortiz, D-Sacramento, dismissed the argument about safety concerns from Canada as a "red herring," saying she frequently challenges opponents of importing drugs to cite Canadian safety problems, but they never do.

Even though federal law makes it illegal to import drugs from Canada, a variety of states are challenging the law.

Also, a top official from the U.S. Food and Drug Administration told The Associated Press recently that the regulatory agency would enforce the ban with a "lighter touch."

Several states are looking into buying Canadian drugs or making it easier for their residents to do so. Illinois Gov. Rod Blagojevich announced plans on Tuesday to set up a state Web site to facilitate individual purchases from Canada, Britain and Ireland.

In Minnesota, the first state to set up such a Web site, the idea was started by Republican Gov. Tim Pawlenty.

Ortiz, who is sponsoring a bill to set up a California Web site, said earlier this week that the state should challenge the federal law. She said a recent staff fact-finding trip to Canada found that Canada has well-regulated prescription drugs.

"Their standards for safety and distribution over the Internet exceed the standards in America," Ortiz said.