Welcome to Consumer Reports Advocacy

For 85 years CR has worked for laws and policies that put consumers first. Learn more about CR’s work with policymakers, companies, and consumers to help build a fair and just marketplace at TrustCR.org

Schwarzenegger Signs Drug Price Negotiation Law for California

Friday, Sept. 29, 2006

Schwarzenegger Signs Drug Price Negotiation Law for California
Why Can’t Congress do Same for Medicare Beneficiaries?

(Sacramento, CA) – Gov. Arnold Schwarzenegger’s scheduled signing today of a landmark bill calling on drug companies to significantly discount prescriptions for the low-income and uninsured should send a message to Congress that similar savings could be achieved for seniors by negotiating prices in the Medicare Part D program, Consumers Union said.
“If California can use its purchasing power to negotiate lower drug prices for the needy and uninsured, why shouldn’t Medicare do the same for seniors and the disabled?” said Earl Lui, senior attorney for Consumers Union, publisher of Consumer Reports.
“California’s leaders on both sides of the political aisle agree that drug price negotiation makes sense, not only for patients, but for taxpayers as well,” Lui added. “Congress should do the same and remove the roadblock it specifically put in the Medicare program against price negotiation.”
Schwarzenegger has scheduled a signing ceremony at the Capitol Rotunda for AB 2911 that creates a prescription drug discount program for residents lacking drug coverage or with inadequate drug coverage. An estimated 5 million to 6 million residents will be eligible to participate. The program will provide up to 40 percent savings on brand name drugs, and up to 60 percent savings on generics, to uninsured residents with incomes below 300 percent of the federal poverty level.
Drug manufacturers have three years to voluntarily provide those discounts. If a pharmaceutical company fails to provide discounts at the prescribed benchmark levels, the state would have the authority to remove a manufacturer’s drug or drugs from the preferred list for the state’s Medicaid program.
California’s Medicaid program (Medi-Cal), like many other state programs, currently uses this same leverage to negotiate lower prices from drug companies for drugs it purchases. AB 2911 simply takes this existing mechanism and uses it to benefit other low-income residents.
In passing the Medicare Part D drug benefit, Congress specifically prohibited Medicare from negotiating lower drug prices from the pharmaceutical industry for seniors and the disabled, even though the Department of Veterans Affairs negotiates discounts of more than 40 percent for its beneficiaries.

Earl Lui: 415-601-6747 (cell) or
Susan Herold, 202-462-6262