Governor Schwarzenegger Reaches Agreement to Provide Significant Prescription Drug Discounts to Millions of Uninsured Californians

Governor Schwarzenegger Reaches Agreement to Provide Significant Prescription Drug Discounts to Millions of Uninsured Californians

Recognizing that bringing down the costs of prescription drugs is a component to addressing overall health care affordability, Governor Schwarzenegger today announced a deal with lawmakers to bring down the costs of medications for millions of uninsured Californians. The effects of not having access to affordable prescription drugs are serious - such as increased severity of disease, reduced productivity and compromised quality of life - which is why the Governor authorized an emergency relief program earlier this year to ensure a million seniors and persons with disabilities had access to their life-saving medications during the transition to new federal drug benefits. The Governor has worked for more than 2 years to develop a policy to bring down the cost of prescription drugs for up to five-million uninsured, low-income Californians.

"The Legislature has been a great partner. By working together, we are providing meaningful prescription drug discounts for the hard-working Californians who pay the most for their life-saving medications, but can afford it the least," said Governor Schwarzenegger.

"Until we are able to provide basic health care insurance to all California residents, programs like this prescription discount will provide relief to the most vulnerable of our citizens. It's progress-- and progress is always made in increments," said Senate President Pro Tem Don Perata.

"No Californian should ever have to choose between buying their prescription medicine or putting food on their table," said Assembly Speaker Fabian Núñez. "This long overdue agreement will provide low-cost medicines for seniors and working families paying higher drug costs than anyone else."

Although thousands of seniors who previously lacked prescription drug coverage started receiving coverage this year through the Medicare program, millions of low-income Californians are still unable to access prescription drugs at a reasonable price. According to the Kaiser Family Foundation, since 1994, pharmaceutical drug costs have increased an average of 8.3 percent every year. Studies show that individuals without insurance pay between 40 to 60 percent more for their drugs than government or private health insurance providers.

The Governor has been consistent that a voluntary approach can work and he looks to each and every manufacturer to help deliver these discounts. This proposal will give drug manufacturers three years to voluntarily participate until additional enforcement tools take effect. The enforcement tools cannot jeopardize the up to $300 million in drug rebates the state receives.

As called for by Governor Schwarzenegger, the California Discount Prescription Drug Initiative will:

+ Provide access to up to 40 percent savings on brand name and up to 60 percent savings on generic prescription drugs to:

§ Uninsured Californians with incomes below 300 percent of the federal poverty level ($60,000 for a family of four).

§ Californians with significant un-reimbursed medical expenses and incomes that fall below the state median family income ($68,310 for a family of four).

§ Eligible seniors whose drugs are not covered by Medicare, upon federal approval.
+ Protect continuity of care for Medi-Cal beneficiaries.

+ Include discount in part from drug manufacturers and in part from pharmacists.
+ Make signing up for the program as easy as possible by having a single point of entry, a simple application form and enrollment available at local pharmacies, doctors, clinics, the Internet, and a call center. There will be a modest $10 annual application fee to participate in the program.
+ Leverage the purchasing power of uninsured low-income Californians to negotiate discounts that will be passed on to consumers. Negotiate discounts on brand name drugs from manufacturers, and discounts on brand name and generic prescription drugs from pharmacies.
+ Include necessary safeguards to assure accurate pricing.
+ Consider three different benchmarks in negotiations with drug manufacturers: the Medicaid Best Price, the lowest price offered to private payers, and the average manufacturers' price minus 15 percent.
+ For the first three years, gives drug manufacturers the ability to voluntarily negotiate discounts. If after August 1, 2010, manufacturers do not provide discounts at the benchmark levels, the state may, upon federal approval, tie participation in Medi-Cal with participation in this program as long as imposing this linkage does not disrupt care of California's Medi-Cal enrollees and budget neutrality is maintained.

The Governor sent a letter in January 2006 to Congress calling for a change in federal law to allow consumers to safely import prescription drugs from other countries. During the transition to new federal prescription drug benefits, the Governor created an emergency relief program to ensure one million low-income seniors and persons with disabilities were able to access their life-saving prescription drugs. As a temporary and creative solution, the Governor signed SB 798, by Senator Joe Simitian, (D-Palo Alto) creating a voluntary program for counties to distribute surplus medications at no cost to the poor and uninsured.

http://gov.ca.gov/index.php/press-release/3650/