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California Proposition 79, Prescription Drug Discount Program (2005)

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California Proposition 79 was on the November 8, 2005 special statewide ballot in California, where it failed. The measure was an initiated state statute.

Had the measure passed, it would have created a new state drug discount program to reduce the costs that certain residents of the state, including persons in families with an income at or below 400 percent of the federal poverty level, would pay for prescription drugs purchased at pharmacies.

Proposition 79 competed with Proposition 78 (2005). Both propositions failed.

Election results

Proposition 79
Result Votes Percentage
Defeatedd No 4,625,132 60.7%
Yes 3,003,912 39.3%
Total votes 7,634,315 100.00%
Voter turnout Of registered voters: 50.1%

Text of measure

Title

The ballot title was:

Prescription Drug Discounts. State-Negotiated Rebates. Initiative Statute.

Question

The question on the ballot was:

"Should the state of California create a new prescription drug discount program for residents at or below 400 percent of the federal poverty level, and change state law to make it illegal to engage in profiteering from the sale of prescription drugs?"

Summary

Website banner for "Yes on 79" campaign

The official summary provided to describe Proposition 79 said:

  • Provides for prescription drug discounts to Californians who qualify based on income-related standards, to be funded through rebates from participating drug manufacturers negotiated by California Department of Health Services.
  • Prohibits new Medi-Cal contracts with manufacturers not providing the Medicaid best price to this program, except for drugs without therapeutic equivalent.
  • Rebates must be deposited in State Treasury fund, used only to reimburse pharmacies for discounts and to offset costs of administration.
  • At least 95% of rebates must go to fund discounts.
  • Establishes oversight board. Makes prescription drug profiteering, as described, unlawful.

Fiscal impact

See also: Fiscal impact statement

The fiscal estimate provided by the California Legislative Analyst's Office said:

  • One-time and ongoing state costs, potentially in the low tens of millions of dollars annually, for administration and outreach activities for a new drug discount program. A significant share of these costs would probably be borne by the state General Fund.
  • State costs, potentially in the low tens of millions of dollars, to cover the funding gap between when drug rebates are collected by the state and when the state pays funds to pharmacies for drug discounts provided to consumers. Any such costs not covered through advance rebate payments from drug makers would be borne by the state General Fund.
  • Unknown potentially significant net costs or savings as a result of provisions linking state Medi-Cal rebate contracts and the new drug discount program.
  • Unknown potentially significant savings for state and county health programs due to the availability of drug discounts.
  • Unknown costs and revenues from the provisions regarding lawsuits over profiteering on drug sales.
  • Potential unknown effects on state revenues and expenditures from changes in prices and quantities of drugs sold in California.

Support

"Yes on 79" website banner from the Yes on 79 website

Supporters

The official voter guide arguments in favor of Proposition 79 were signed by:

  • Henry "Hank" Lacayo, state president of the Congress of California Seniors
  • Elizabeth M. Imholz, west coast office director of the Consumers Union
  • Lupe Alonzo-Diaz, executive director of the Latino Coalition for a Healthy California
  • Betty Perry, public policy director of the Older Women's League of California
  • Michael Weinstein, president of the AIDS Healthcare Foundation
  • Jacqueline Jacobberger, president of the League of Women Voters of California
  • Barbara A. Brenner, executive director of Breast Cancer Action
  • Ramon Castellblanch, policy advisor to the Senior Action Network
  • Kathy J. Sackman, RN, president of the United Nurses Association of California[1]

Arguments in favor

Supporters of Proposition 79 made these arguments in its favor in the state's official voter guide:

  • "As prescription drug prices soar, more and more Californians are forced to choose between vital medicines and other necessities."
  • "There are two prescription drug measures on the ballot. Prop. 78 is sponsored by drug companies. Prop. 79 is sponsored by consumer, senior and health organizations, and labor unions."
  • "The pharmaceutical industry has pledged to spend 'whatever it takes' to defeat Prop. 79, launching what could be the most expensive initiative campaign in California history."
  • "Prop. 78 is completely voluntary for drug companies: they are free to choose whether or not to offer discounts. But California has tried a voluntary drug discount plan before. The pharmaceutical industry refused to participate so the program dissolved in 2001. Prop. 79 has an enforcement mechanism. If a drug company refuses to provide discounts, the state can shift business away from that company and buy from other drug companies that offer discounts."
  • "Americans pay more for their prescriptions than consumers in many wealthy nations. That’s in part because these other governments negotiate discounts from the drug industry on behalf of their citizens. California does something similar through Medi-Cal, negotiating discounts of 50 percent and more, saving taxpayers $5 billion in the last 10 years. Prop. 79 builds on this success, using the same mechanism to negotiate these discounts for eligible Californians. As a result, consumers will pay less out of their own pockets for prescriptions at the expense of the drug companies, not taxpayers."
  • "Under Prop. 79, eligible Californians would get a drug discount card to present to their pharmacist to receive discounts of up to 50 percent or more."
  • "Nearly twice as many Californians will be eligible for discounts under Prop. 79 than under Prop. 78, including Californians with catastrophic medical expenses who spend at least five percent of their income on medical expenses; the uninsured who earn up to 400 percent of the Federal Poverty Level ($64,360 for a family of three); Californians on Medicare for drug costs not fully covered by Medicare; seniors, the chronically ill, and others with inadequate drug coverage through private insurers or their employer."
  • "By making affordable drugs more accessible to more people than Prop. 78, fewer people would fall onto Medi-Cal or other public programs, and need to use taxpayer-funded emergency rooms. Prop. 79 can reduce employers’ health premiums by authorizing a new purchasing pool to reduce drug prices for employer-paid coverage."[1]

Opposition

Opponents

The official voter guide arguments opposing Proposition 79 were signed by:

  • Tom Murphy, chair of the California Arthritis Foundation Council
  • John Kehoe, policy director of the California Senior Advocate League
  • Rodney Hood, MD, president of the Multicultural Foundation
  • Rodrigo A. Munoz, M.D., past president of the San Diego County Medical Society
  • John Merchant, chair of California Citizens Against Lawsuit Abuse
  • Chris Mathys, president, Valley Taxpayers Coalition, Inc.

Arguments against

Opponents of Proposition 79 made these arguments against it in the state's official voter guide:

  • "We all want to provide cheaper prescription drugs to needy Californians, but Proposition 79 just won’t work. It’s based on a flawed proposal from the state of Maine that never went into effect, never delivered a single discount, and was ultimately abandoned by Maine. Californians don’t need another false initiative promise that will result in years of legal challenges and ultimately never go into effect."
  • Quoting Calvin Fuhrmann, MD, FCCP, Kennebunk Medical Center in Maine, "Maine residents were counting on a drug discount program that was just like California’s Proposition 79. But it was tied up in court and never received approval from the federal government. Not a single patient got a discounted drug as a result of that failed program."
  • "Backed by public employee unions, Proposition 79 sets up another big government program that will cost California millions. With huge budget deficits that already affect funding for critical programs, how can we take on a massive new government program? On top of that, Proposition 79 jeopardizes over $480 million in rebates that taxpayers currently receive from pharmaceutical companies."
  • "Because Proposition 79 changes the state’s Medi-Cal program, which is largely funded with federal dollars, the federal government would have to approve Proposition 79. No federal administration, Democratic or Republican, has ever approved a program like Proposition 79."
  • "Why won’t Proposition 79 receive federal approval? Prop. 79 risks the health of poor patients in order to provide drug discounts for people who make as much as $77,000 annually, including some people who already have health insurance. Proposition 79 says that if a drug manufacturer does not provide steep discounts to these higher income Californians, they can’t provide prescription drugs to help the poor, seniors, and disabled patients who depend on Medi-Cal."
  • "A hidden section in Proposition 79 will let trial lawyers file thousands of frivolous lawsuits simply by claiming the price charged for the product is too much or that the manufacturer’s profits are too high. The initiative doesn’t define what is a fair price or a reasonable profit! Worse, trial lawyers don’t need a client to bring these lawsuits and can keep for themselves 100% of the money they are able to force from a defendant!"
  • Quoting John H. Sullivan, president of the Civil Justice Association of California, "Last November, Californians passed Proposition 64 to prevent shakedown lawsuits. Proposition 79 would re-open the door to shakedowns, flood our courts with frivolous litigation, and drive up the cost of prescription drugs."
  • "Like so many previous initiatives, 79 won’t deliver what it claims. It will result in years of litigation and will ultimately be rejected by the federal government. It creates an expensive big government program, jeopardizes the health of low income Californians, and will result in a deluge of frivolous litigation benefiting trial lawyers at our expense."

Campaign finance

The campaigns for and against Proposition 79 were heavily related to the campaigns for and against Proposition 78. This chart displays spending on both campaigns; if a campaign committee registered itself as in favor of one proposition and opposed to the other, its spending is reflected in more than one column in the table.[2][3]

Committee name Spent for 78 Spent against 78 Spent for 79 Spent against 79
Pharmaceutical Research & Manufacturers of America, Yes on 78 and No on 79 $85,998,683 $85,998,683
Californians for Affordable Prescriptions, Yes on 78 $32,767,788
Yes on 79 and No on 78, a Coalition of Consumer Organizations for Affordable Prescription Drugs $811,356 $811,356
Californians against Arnold's Special Interest Election, No on 73, 74, 75, 76, 77 and 78 and Yes on 79 & 80 $47,960 $47,960
Alliance for a Better California, Yes on Proposition 79 and 80 $38,754,725
Californians Against the Wrong Prescription, No on 79 $37,351,418
Biotechnology Industry Organization Committee Against Proposition 79 $922,583

Path to the ballot

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See also: California signature requirements

$4,635,466 was paid to Kimball Petition Management to qualify the measure for the ballot.[4] As an initiated state statute, 373,816 valid signatures were required for ballot qualification purposes.

See also: California ballot initiative petition signature costs

See also

External links

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References