California weighs dealing out new Rx discount card

February 7, 2005

California is debating the details of a state-sponsored prescription drug discount card set to launch next January. The state's Republican governor, Arnold Schwarzenegger, unveiled the California Pharmacy Assistance Program, dubbed Cal Rx, last month.

California is debating the details of a state-sponsored prescription drug discount card set to launch next January. The state's Republican governor, Arnold Schwarzenegger, unveiled the California Pharmacy Assistance Program, dubbed Cal Rx, last month.

"Millions of Californians lack coverage for the prescription drugs they need," Schwarzenegger said in the annual State of the State speech. "Many of these people are the working poor who do not qualify for assistance. Therefore, I am announcing a prescription drug discount card.... We will make prescription drugs available to nearly five million low-income Californians at prices competitive with those from Canada."

The governor's office released a list of 20 healthcare organizations and associations that support Cal Rx, including the California Pharmacists Association. "We are not on board with Cal Rx so much as we are at the table," said CPhA CEO Lynn Rolston. "We are on the team, helping to design a plan that is good for consumers and fair to pharmacists. This is not the time to stay on the sidelines."

The California Health & Human Services Agency (CHHSA) will request discounts and rebates from drug manufacturers. In order to participate, drugmakers must provide products at prices no higher than the lowest price paid by any commercial buyer in the state. The Department of Health Services (DHS) estimates minimum discounts of 17% and an average discount of 20%.

Retail pharmacies will be asked to provide an additional 20% discount off usual-and-customary retail prices.

In addition, the Pharmaceutical Research & Manufacturers of America has agreed to provide $10 million over two years. The money will fund a clearinghouse to publicize existing patient assistance programs and help patients enroll. The clearinghouse is set to begin operating this spring.

The net result, according to CHHSA figures, is a 40% savings off retail pharmacy cash prices. Neither the agency nor the governor's office have yet explained how, how often, or how much pharmacists would be paid under Cal Rx; how often program prices would be updated; or other crucial elements.

"Those kinds of details are still open," Ralston said. "Pharmacists have a real opportunity. If it is not a good plan at the end of the day, there just will not be much uptake" by pharmacy.

Consumer groups and Democratic legislators are even more concerned about the lack of enforcement authority in Cal Rx. By making discounts voluntary, critics say savings will be closer to 20%, comparable to prices currently available at Costco and other high-volume retailers.

"We think this is a real missed opportunity to harness the state's purchasing power," said Jerry Flannigan of the Foundation for Taxpayer and Consumer Rights (FTCR). "At best, it would provide minimal savings to a few and no help at all to most Californians. Relying on the goodwill of drug companies is not a bulk purchasing plan, it is naive and will never get to the underlying need for the biggest possible purchasing pool capable of negotiating the best price. Cal Rx does not have the policy strength or the teeth to do justice to Californians."

How the governor responds to program criticism is anybody's guess. Cal Rx is being pushed by State Senator Deborah Ortiz (D, Sacramento). She amended an Rx discount card bill introduced last December, SB 19, to fit the Schwarzenegger proposals.

As introduced, Cal Rx would cover residents earning up to 400% of the federal poverty level. Other provisions, originally contained in SB 19, have disappeared entirely. SB 19 originally gave DHS authority to pressure drugmakers by requiring prior authorization for state Medicaid drugs if manufacturers did not provide Cal Rx rebates matching the lowest price paid by the federal government. Consumers would also have been given information on obtaining Rx drugs from Canada and other non-U.S. sources as well as other private and public drug discount programs.