• State Would Use Purchasing Power to Negotiate Best Possible Price for Millions
  • Drug Industry Spent $80 Million in Ballot Battle Last Year Against Concept
  • Also Signed: Website to Assist Comparison Shopping for Affordable Prescription Drugs
  • Also Signed: Extensions of MRMIP, CHBRB

With less than 48 hours before the deadline, Governor Arnold Schwarzenegger signed into law a landmark prescription drug discount program, AB2911(Nunez/Perata), designed to provide significant savings to millions of Californians without adequate drug coverage.

Schwarzenegger also signed AB2877 (Frommer) that would create a website listing safe places where Californians could purchase safe and affordable prescription drugs. Other bill updates are at the end of this article; for an updated list of health bills and whether they have been signed or vetoed, visit the Health Access website at:

AB2911’s enactment is expected not just to provide relief to seniors and uninsured families, but to have national policy implications, since it allows the state to use its massive purchasing power to negotiate on behalf of eligible Californians for lower drug prices, a much-debated concept in other states and in Washington, DC.


The prescription drug industry spent $80 million dollars last year to oppose a similar concept in Proposition 79, breaking the record for the most expensive ballot campaign in the nation’s history. The drug companies even proposed a competing measure, Proposition 78, which offered a prescription drug program that only provided for voluntary compliance by pharmaceutical manufacturers.

Both measures went down to defeat with voter confusion, but Speaker Fabian Nunez and Senate President Pro Tem Don Perata put forward the framework of this compromise between the two approaches on the ballot.


Eligible Californians–those without prescription drug coverage under 300% of the federal poverty level ($60,000 for a family of four), seniors, and those with high health costs–get a discount card for a nominal $10 annual fee. For the first three years, the card provides discounts that are voluntarily provided by the drug companies, allowing them to fulfill their commitments from the campaign.

However, after three years, there is accountability. If the drug companies do not participate or do not provide sufficient discounts, the state has the ability to steer some business (of the $4 billion that Medi-Cal now spends on prescription drugs) to those drug companies that do offer good discounts. This uses the same process the Medi-Cal program now uses to get rebates for the state, but broadens the benefit for the uninsured. The discounts are pegged to be around 40-60%–similar to the discounts that large insurers or the state Medi-Cal program gets.


This action potentially creates the largest prescription drug discount program in the nation. California would follow Maine as the only other state to implement this type of discount program (some states provide full coverage and/or have programs to more specific populations, such as just seniors). Many other states have been considering similar discount programs. Ohio considered such a proposal, but after a launch of lawsuits from the drug industry, they implemented a purely voluntary proposal, but with disappointing results to many consumer advocates. Colorado, for example, recently defeated a purely voluntary proposal proposed by the drug companies earlier this year, and is considering a more ambitious proposal like AB2911.

The impact of the California plan is expected to have implications not just in other states but in the national debate on health reform, prescription drug prices, and in particular about Medicare Part D. For example, the California discount program provides some relief to those seniors who find themselves lacking coverage through the “donut hole.” It also promotes the concept of government negotiating for the best possible price, something explicitly–and controversially–prohibited by Part D.

Prescription drug costs have been a major issues, as a recent Kaiser Family Foundation survey indicated that half of adults report taking prescription drugs on a daily basis, and a fifth of California families report not filling a prescribed medication due to cost. More than half of these families reported that their health conditions grew worse as a result.

The signing of the bill was the result of over three years of campaigning, working on bills and ballot measures, by a broad coalition of health, consumer, senior, labor, and patient organizations, including the AIDS Healthcare Foundation, AARP, Breast Cancer Action, CALPIRG, Consumers Union, California Consumers United, Congress of California Seniors, California Alliance for Retired Americans, California Labor Federation, Gray Panthers, Greenlining Institute, Health Access California, Latino Coalition for a Healthy California, MALDEF, Older Women’s League, Senior Action Network, and Service Employees International Union.


With just one day left, the governor also signed SB1702 (Speier) extending the sunset for the a part of the state’s high risk pool for the uninsurable, Managed Risk Medical Insurance Program until 2008, and SB1704, which extends the California Health Benefits Review Board until 2011.

Schwarzenegger has until midnight, Saturday, September 30th to sign the roughly 400 bills remaining on his desk.

We will update advocates on the outcome of these bills in the coming days.

For information, please call Hanh Kim Quach, policy coordinator at 916.497.0923 x 206 or

Health Access California promotes quality, affordable health care for all Californians.
VIEW THE FILE Uncategorized

Leave a Comment

%d bloggers like this: