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Require oversight of the DHS’ Medi-Cal rebates for drug purchases to ensure the state collects the billion it’s owed

September 8, 2004
The Honorable Arnold Schwarzenegger
Governor of California
State Capitol
Sacramento, CA 95814
Re: Request for Signature on AB 1959 (Chu)
Dear Governor Schwarzenegger:
Consumers Union, the nonprofit publisher of Consumer Reports magazine, respectfully requests your signature on AB 1959 (Chu). The bill would require the State Auditor to conduct an audit to determine whether state departments and agencies buying prescription drugs are getting the best value for the drugs they purchase.
Drug prices in the United States are the highest in the world. From 1997-2002, prescription prices in the U.S. have increased an average of 17% per year, far greater than the rise in inflation. The 17% annual increase from 1997-2002 is not sustainable. Obviously, this is a major problem for states, who are major purchasers of drugs.
In response, many states, such as Maine, Vermont and Oregon, have implemented innovative programs to lower prescription drug costs. California was an early leader in such efforts through programs such as the Medi-Cal supplemental rebate system. Our state, however, must not rest on its laurels. We must ensure our efforts to control rising drug costs are state-of-the-art. This bill will help us make this determination by requiring the auditor to compare our drug costs with those of other major purchasers and to examine whether we are using all available means to control costs.
For these reasons, we support AB 1959.
Earl Lui
Senior Attorney
cc: Assembly Member Chu