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January 5, 2005

CONTACT: Jerry Flanagan, 310-392-0522 x319 or cell: 415-497-1710

Schwarzenegger Prescription Drug Proposal Puts Drug Firms in Control, Leaves Most Seniors Without Protection

Consumer Group Vows To Propose Ballot Measure

Governor Schwarzenegger's prescription drug plan allows drug manufacturers to decide the amount of discounts and bars access for most consumers and all businesses, according to a consumer group which has reviewed the governor's proposal. The Foundation for Taxpayer and Consumer Rights (FTCR) vowed to propose a ballot measure to include all Californians and achieve discounts on par with those available in Canada. The Governor is expected to discuss his plan tonight during the State of State address.

"Relying on the goodwill of drug companies who will stop at nothing to make a profit -- including selling dangerous drugs -- is like asking the wolves to mind the hen house. Drug companies may promise good discounts to help their public image, but only hard-nosed negotiations will guarantee California fair prices," said Jerry Flanagan of FTCR. "Instead of hoping for drug company hand-outs, California should take the Costco approach to drug buying by using its huge purchasing power to negotiate volume discounts."

The Schwarzenegger proposal:

** Limits participation in the drug program to low-income Californians whose annual income is below 300% of the Federal poverty level. Many consumers and seniors, and all business owners who need access to affordable prescription drugs to offset huge health care costs, are needlessly barred from accessing discounts.

** Relies on voluntary discounts from drug companies. The plan fails to capitalize on California's enormous purchasing power that could be used to negotiate deep discounts with drug companies.

"Anything short of a state-wide plan open to every Californian is a sell-out to drug companies," said Jerry Flanagan. "The Schwarzenegger proposal is little more than a PR boost for some of governor's largest campaign contributors."

Governor Schwarzenegger has received $367,200 in contributions from drug companies to his various fundraising committees.

FTCR recently organized two chartered train trips to Canada to dramatize the savings potential for bulk purchasing of prescription drugs. The group is planning to introduce its own California-wide ballot initiative that will require drug companies to negotiate discounts and allow any individual or business owner to participate in the program. With a population larger than all of Canada, a California-wide bulk-purchasing program could negotiate discounts even greater than the 30-60% achieved by the Canadian program.

Drug prices are lower in Canada, Ireland, England, France, and Germany because those countries negotiate bulk discounts on behalf of all patients. The California Public Employees Retirement System (CALPERs) negotiates bulk drug discounts on behalf of state employees, including elected officials. Under pressure from the pharmaceutical industry, President Bush and Congress opposed bulk purchasing in the 2003 Medicare prescription drug law, which banned the 41 million-member Medicare program from negotiating volume discounts with pharmaceutical companies.

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The Foundation for Taxpayer and Consumer Rights is the state's leading nonpartisan and nonprofit consumer advocacy organization. For more information, visit us on the web at: