Published July 18, 2005
SACRAMENTO, Calif. – Gov. Arnold Schwarzenegger (search) called a November special election last month to push several initiatives aimed at reshaping state government. But the fall ballot's costliest political skirmish so far has nothing to do with the governor's "year of reform" political agenda.
Two competing prescription drug (search) initiatives — one sponsored by consumer groups, the other by the pharmaceutical industry — already have attracted tens of millions of dollars.
The vast majority of that money has flowed in from the nation's major drug companies, who have a multibillion market in the state. They also don't want a successful consumer initiative in trend-setting California to trigger a wave of similar measures across the country.
Both initiatives are designed to reduce prescription drug prices for low-income residents and the uninsured, but they differ over how many people would receive coverage and how the drug companies would be compelled to participate.
Those differences have led to an initiative campaign expected to be the costliest in state history, surpassing the $66 million spent by Indian tribes in 1998 to legalize casino gambling on tribal land.
The drug industry is pushing Proposition 78 (search), a measure based on legislation Schwarzenegger supported last year to allow residents making $28,000 or less or a family of four earning up to $56,000 to buy prescription drugs at a discount.
Participation by drug companies would be voluntary, but most major manufacturers have indicated they are willing to take part. The measure is based on a similar program established earlier this year in Ohio, a compromise crafted by labor unions and drug companies.
The other measure, Proposition 79 (search), is backed by a coalition of consumer groups and unions. It would expand the pool of Californians eligible for the drug discounts to individuals making up to $37,000 and families of four making up to $75,000.
Proposition 79 also would penalize companies who refuse to provide the discounts by discouraging their participation in the state's $4 billion Medicaid program. That provision and another allowing citizens to sue drug companies for "illegal profiteering" have sparked fierce opposition from the nation's pharmaceutical industry.
"Proposition 79 is the wrong proposition for the people of California," said Jan Faiks, vice president for government affairs at the Washington, D.C.-based Pharmaceutical Research and Manufacturers Association of America. "We will spend as much as it takes to educate the voters. It is that important to us."
In the last month alone, pharmaceutical giants Pfizer, Merck & Co. and Glaxosmithkline each made identical contributions of nearly $8.4 million to the California Initiative Fund, an industry-controlled campaign account.
Novartis Pharmaceuticals, Amgen, Bristol-Myers Squibb and Eli Lilly and Co. have contributed nearly $4 million apiece.
All told, the fund has collected more than $53 million, a figure that is expected to rise significantly as the special election draws near. By contrast, the pharmaceutical industry spent a total of $9.4 million to affect federal elections in 2004, according to an analysis by the Washington, D.C.-based Center for Responsive Politics.
Supporters of the consumer initiative said they are not intimidated by the amount of money the industry has said it will spend, said Anthony Wright of Health Access California, the consumer group that drafted Proposition 79.
He said widespread anger over high drug costs will steer voters their way.
"The amount they've collected is breathtaking, and it shows how scared they are and how much trouble they think they're in," Wright said. "Is this a David and Goliath fight? Yes. But there are lots of Davids out there who are suffering through high drug costs — and remember, David won."
Voters can say yes or no to either or both of the initiatives. If both pass, the measure that receives the most votes becomes law.
A statewide Field poll released last month showed voters favoring both initiatives, with 64 percent saying they support the industry initiative and 54 percent supporting the consumer measure.
Even as the political war is about to be unleashed, both sides have tried to negotiate about ways to head it off. Last week, pharmaceutical association president Billy Tauzin (search) flew to Sacramento to meet privately with Schwarzenegger and top Democrats. Little progress was reported when he departed.
The obstacle to a deal, both sides say, is that the propositions can't be removed from the Nov. 8 special election ballot.
Even if a compromise were reached among the parties, it would have to be placed on the ballot and forced to compete with the other two — a recipe for voter confusion.
The pharmaceutical industry officials say that as long as Proposition 79 remains on the ballot, they have no choice but to spend money to campaign against it.
State Sen. Deborah Ortiz, D-Sacramento, co-sponsored the industry-backed bill last year and said a legislative solution could have been reached that would have eliminated the need for such an expensive ballot showdown.
She blamed "heavy handed" campaigning by opponents for derailing her bill.
"What's really unfortunate is all this aggressive opposition really had to do with politics, not policy," Ortiz said. "Shame on all of them."