Saturday, October 2, 2004



  • Overall: Governor Sides With Industry, Against Consumers.
  • A String of Vetoes on Range of Health Issues
  • Also: Update on Proposition 72 TV Advertising


To the dismay but not the surprise of health advocates, Governor Arnold Schwarzenegger vetoed a half-dozen bills to address the issues of the high cost of prescription drugs. He did this along with many other vetoes on Thursday, the last day he had to decide on a range of issues.

The vetoes of the prescription drug bills, perhaps some of the highest-profile measures on his desk, capped off a gubernatorial signing season that saw numerous consumer protection measure get vetoed, in health care and other areas. In all, Governor Schwarzenegger vetoed nearly 25% of the 1270 bills sent to him, the highest percentage of vetoes since 1967 (excepting Governor Davis in 2002). BELOW is a recap of the final status of key health care consumer advocacy bills that reached the Governor’s desk.

NO DEAL WITH DRUG COS: The Governor’s efforts to announce an alternative proposal backfired. When indicating his inclination to veto these bills, the Governor suggested he would use the bills as leverage to bargain with the drug companies. Yet on Thursday, the bills were vetoed, and Secretary of Health and Human Services Kim Belshe had to hold a press conference with no deal to announce.

VETO MESSAGE: The Governor’s veto message says the Canadian reimportation bills “violate federal law” and references his “California Rx” alternative proposal, which he claims would use “the purchasing power of low income seniors and uninsured Californians up to 300% of the federal poverty level ($47,000 for a family of three) to secure meaningful discounts in prescription drug costs.” In the letter, he had to admit, “while I am encouraged by the concrete commitments made by some members of the industry, I am disappointed that many companies have not yet stepped up and offered meaningful discounts for this population.”

Similar to his message to hospitals about overcharging practices, the Governor admonishes the industry to deal with the problem voluntarily. “Over the next six weeks, I will continue negotiations to secure significant discounts for California’s low-income uninsured. If, however, specific companies and the industry as a whole are not willing to provide a real solution to this problem, I will work closely with the State Legislature to develop an approach that guarantees significant reductions in prescription drug prices for California’s low-income uninsured residents. …For a voluntary, negotiated model such as California Rx to word, the drug companies must come forward and negotiate in good faith… but if I cannot rely on the good faith negotiations of the industry, I will use all the options at my disposal to secure lower-cost prescription drugs for low-income, uninsured Californians.” Yet in her press conference, Secretary Belshe ruled out considering any bills facilitating Canadian reimportation. This position ignores the changing federal stance toward reimportation, and denies the Administration any negotiating leverage.

The Governor’s “veto messages,” is available on his web site, under his press releases, under “Legislative Update”, at:


Below are the fifteen bills that Health Access California and other consumer groups supported and that made it to the Governor’s desk, along with their final status. Only four of the fifteen were signed:


  • SB1144 (Burton) would have required the Department of General Services to include Canadian sources in its prescription drug purchases. [VETOED]
  • SB1149 (Ortiz) would have required the Board of Pharmacy to provide information on Canadian pharmacies that can safely provide prescription drugs to Californians. [VETOED]
  • AB1957 (Frommer) would have enhanced the safety of importation of prescription drugs from Canada. [VETOED]
  • SB1333 (Perata) would have allowed Medi-Cal and the AIDS Drugs Assistance Program (ADAP) to reimburse pharmacies that purchase drugs from Canadian pharmacies. [VETOED]


  • AB1958 (Frommer) would have authorized CalPERS to establish or enter into a pharmaceutical purchasing consortium with other private or public entities. [VETOED]
  • B1959 (Chu) will permit review of prescription drug contracts and procurement practices used by various state agencies, including Medi-Cal, CalPERS, mental health, and developmental disabilities. [SIGNED]
  • AB1960 (Pavley) would have regulated pharmaceutical benefit managers, including requiring disclosures of their revenues and formularies. [VETOED]
  • SB1765 (Sher) will codify the voluntary guidelines of Pharmaceutical Research and Manufacturers of America (PhRMA), requiring limits and disclosure on gifts, meals, and other inducements offered to doctors and other prescribing health providers. [SIGNED]
  • The Governor also vetoed SB1563 (Escutia), supported by community clinics to reduce their drug costs.

* HOSPITAL OVERCHARGING OF SELF-PAY PATIENTS: SB379 (Ortiz) would have provided self-pay hospital patients with basic consumer financial protections and would have protected self-pay hospital patients from being charged more than the insured. [VETOED]

* MATERNITY COVERAGE: SB1555 (Speier) would have ensured that maternity coverage is included in health insurance coverage. [VETOED]

* STUDY OF OUT OF POCKET COSTS: AB2289 (Chan), sponsored by Health Access California, would have required the Department of Managed Health Care and the Department Insurance to gather detailed information on what people with insurance pay in deductibles, co-pays and other out-of-pocket costs. [VETOED]

* HOSPITAL CLOSURES: AB2874 (Diaz) would have ensured notice in the event of the closure of an emergency room or hospital, to allow communities to consider purchasing the facility. [VETOED] (Governor Schwarzenegger also vetoed SB1540 (Margett), to enforce notice of emergency room closures.

* CHILD ASTHMA SUPPLIES: AB2185 (Frommer) will ensure that pediatric asthma devices such as inhaler spacers, nebulizers, and peak flow meters are included in health coverage. [SIGNED]

* EXPRESS ENROLLMENT: SB1196 (Cedillo) will permit information from a school lunch application to be used to determine eligibility for Healthy Families and other insurance programs, with parental consent. [SIGNED]

* MEDI-CAL BALANCE BILLING: AB2285 (Chu) would have protected Medi-Cal beneficiaries from the illegal and inappropriate billing that currently takes place. [VETOED]

Consumer groups also cited other bills that were vetoed, on car buying, consumer rebates, and other matters. Another health-related bill the Governor vetoed that was supported by consumer groups was SB 1487 (Speier) to require hospitals to provide data on hospital-acquired infections.


Doctors and nurses from the Yes on 72 coalition demanded this week that their opponents, funded by the California Restaurant Association, take down their false and misleading television ad.

The ad features a woman speaking in a restaurant. She identifies herself as family-run restaurant owner. She claims that Prop 72 will cost her over $100,000, yet she also claims that she already provides benefits for her employees. She also claims that Prop 72 would force her into a government run healthcare system.

In fact, if an employer provides good coverage to their employees, nothing in Proposition 72 requires them to change that coverage, period. The ad also fails to acknowledge that small businesses like the one she portrays (those under 50 employees) are not affected by Prop 72 – and, in fact, 93% of restaurants are smaller than 50 employees and thus not impacted.

The latest opposition ad is slated to run until October 10. For a transcript of the ad and the campaign’s response to it, go to

The Yes on 72 campaign is expected to debut its own ads, featuring real people telling the truth about the health care crisis, and about the content of Proposition 72, starting this coming Monday, October 4. The release of this ad will be the focus of a rally with Treasurer Phil Angelides Monday morning at 11:00am in Sacramento.

Health Access California promotes quality, affordable health care for all Californians.
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