Americans pay more for prescriptions than consumers in many other wealthy nations, in part because those governments are able to negotiate discounts from the drug industry on behalf of their citizens.
If voters approve Proposition 79 on the Nov. 8 ballot, California will be able to use its significant purchasing power to negotiate lower prescription drug prices for seniors, and for low and middle income families.
The Cheaper Prescription Drugs for California Act would build on the success of Medi-Cal, which negotiates prescription discounts of 50 percent or more for its recipients, saving taxpayers $5 billion in the last 10 years. Prop. 79's drug discount program would use the same mechanism to negotiate discounts for up to 10 million eligible Californians.
Consumers would pay less out of their own pockets for prescriptions, but drug companies, not taxpayers, would make up the difference.
Prop. 79 is backed by Health Access California, Consumers Union, the Congress of California Seniors, California Association of Retired Americans, the League of Women Voters, Breast Cancer Action and dozens of other health, senior and consumer advocacy groups.
Under Prop. 79's drug discount program, manufacturers would have to provide drugs to the program at the lowest commercial price available in California. Combined with discounts from participating pharmacists, the average price of a prescription would be at least 50 percent below retail. If the state negotiates lower prices, consumers would save even more.
Unlike Prop. 78, a competing measure bankrolled by the pharmaceutical industry, Prop. 79 includes an enforcement mechanism. If a drug company refuses to provide discounts, the state can shift its business away and buy more from other drug companies.
Prop. 78, on the other hand, gives drug companies the option to offer discounts voluntarily, but does not allow the state to enforce the program. In 2001, the state tried to offer a voluntary drug discount program, but it failed when only 14 of the more than 500 drug manufacturers agreed to participate.
Between 8 and 10 million Californians would be eligible for discounts under Prop. 79 — twice as many as under Prop. 78.
Eligible individuals would include:
- 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 whose drug costs not fully covered.
- Seniors, the chronically ill and others with inadequate drug coverage through private insurers or their employer.
By making affordable drugs more accessible, fewer people would need to fall back on Medi-Cal and other public programs, or use taxpayer funded emergency rooms. More people would be able to afford needed medications now rather than get more expensive care later.
For more detailed information on Prop. 79, visit Health Access California.
The differences between Props. 78, 79
| Proposition 78 |
Proposition 79 |
| Supported by the prescription drug industry as a smokescreen and designed to fail. |
Supported by health, senior, and consumer advocates as a genuine approach to providing prescription discounts. |
| Relies on drug companies to provide discounts voluntarily. |
Includes an enforcement mechanism. |
| Covers 4-5 million Californians. |
Covers 8-10 million eligible Californians, including the uninsured and those with catastrophic medical expenses or inadequate drug coverage. |
| Bases discounts on the "lowest commercial price" set by the drug companies, subject to change at any time. |
Builds on Medi-Cal's success, using the same mechanism to negotiate discounts of 50 percent or more. |
Warning Signs
Local chapters should be alert for the following signs of trouble afoot in the health care arena.
Increasing co pays and deductibles: Reducing benefits and increasing your share of the burden does not lower the cost of health care; it only lowers the district's share of the cost.
Districts crying wolf: Rising healthcare costs may not mean the district is spending a larger percentage of its budget on health care.
Untrained district insurance committees: Make sure insurance committees receive training and orientation from CTA staff, not just from brokers or industry representatives.
Health Savings Accounts: These high-deductible, so called "consumer driven" health care plans harm your district's risk pool and will lead to higher costs in the long term.
Encouraging signs
Local chapters can take heart when these steps are undertaken.
Local efforts to organize purchasing pools: Organizing purchasers to focus on quality and price is often an effective way to help control healthcare costs.
Local member education: Educating the membership about their health plans and healthier living can help keep the plan affordable.
The California Health Insurance Reliability Act (SB 840): Working for passage of SB 840, which would establish a single-payer health care financing system in the state, could help bring about substantive change.
