PROPOSITIONS 78 AND 79

PROPOSITIONS 78 AND 79

Oh, boy!  Just what so many of us need: across-the-board assistance in obtaining the drugs prescribed by our physicians that those of us without prescription drug coverage otherwise cannot afford.  On the face of it, either of these two propositions sound good - so why not vote Yes on both of them?

Well, I'll tell you why I'm voting no on both of them.  But first, a bit about the propositions.

PROP. 78 (CAL RX)
Sponsored by the Pharmaceutical Researchers & Manufacturers Association (PhRMA ).  PhRMA would create the California State Pharmacy Assistance Program (Cal Rx), a discount card program.  Discounts will be given voluntarily by pharmacies and those drug companies that chose to participate.

ELIGIBLE:

• Low- and middle-income people who do not have any drug coverage, whose income does not exceed 300% of the federal poverty level (~$29,000 for individual, $58,000 for family of four), who have had no such coverage in the past three months.  Low income people currently receiving drugs through Medi-Cal are excluded from participating in Cal Rx so long as they are covered by Medi-Cal and for three months after they cease being eligible for Medi-Cal.


• Medicare beneficiaries: only for those drugs not covered by the soon-to-be-implemented Medicare Part D. 



Oh, yes - didn't you realize that?  Medicare Part D, Medicare's new "drug coverage", does not cover drugs nor pay for drugs. Medicare has just 'certified' existing free-standing drug assistance plans already out there, along with those HMOs and Medicare Advantage plans currently providing health care and prescription drugs to Medicare beneficiaries.  Medicare beneficiaries, which include the frail elderly and the disabled, will have to find out on their own which programs are approved by Medicare in their state, and then query each program to try to find out which one program will cover most of the drugs they are currently taking. 

Note I said most, not all.  If their doctors prescribe other drugs down the line that are also not covered by the plan the Medicare beneficiary chose, tough.  They are stuck with the plan for a year.  If they want to switch to another plan mid-year, or join a second plan, they will not be allowed to do so.

Once the Cal Rx application for participation is approved by the Cal Rx administrator, those deemed eligible will pay an annual application fee, currently estimated at $15. This will get them a discount card that they will show to pharmacies when they order their prescriptions.  Re-application will be required every year, along with another application fee.

THE HITCH
The success of this program depends on pharmacies discounting their prices to this population of eligibles, AND on the drug companies discounting their prices to the pharmacies.  Participation is strictly voluntary.  Drug companies do not have to participate.  If they do choose to participate, they do not have to discount every drug they currently make and sell. 

If the state decides that the discounts obtained from drug companies and pharmacies weren't enough, the state can terminate the Cal Rx program. 

Another possible side-effect of Cal-Rx: Employers who currently provide prescription drug coverage to their employees may reduce the scope of coverage to employee classes who would qualify for Cal Rx under the 300% FPL, or eliminate it all together.  This would throw more people into the pool of those eligible for Cal Rx, thereby increasing administrative costs without necessarily increasing drug company and pharmacy participation.  And, since Cal Rx will not be covering all drugs, these employees, people already at risk financially, may find themselves paying more out-of-pocket for their prescription drug needs than they did before Cal Rx.

A Note About The Cal Rx Administrator
There isn't one yet.  Nor has a third party company (i.e., an existing for-profit corporation) been lined up to administer the program.  So, unknown is the actual cost of administering the program ( though it is currently estimated in the millions of dollars), as is whether any third party company will find it profitable enough to keep doing administering it once all the bugs are worked out.  Thus Cal Rx may collapse if the state isn't able to take it over.  Which is currently isn't.

Cal Rx program also depends on the competency of the plan administrator and state in cajoling the drug companies and pharmacies into giving as deep a discount on as many drugs as possible, and to keep the plan itself going, getting new eligibles to sign up, and managing the year-to-year renewals of those who can prove they remain eligible for the Cal Rx program.

Key points for me:  Not all drugs will be discounted, but I won't know until I get a prescription filled; discounts may not result in much of a savings, though they might be enough to cover the cost of the annual fee; if the state doesn't feel there has been as much drug company participation and discounting as they anticipated, or to justify the cost of administering the program, the program will be cancelled.  This has happened before in California, when the drug companies didn't participate in a previous voluntary program as much as the state had hoped. 

PROP 79 (CAL RX PLUS)
Sponsored by a number of consumer advocacy groups, unions, and nonprofit organizations, this would also create a state-operated discount card program.  Acceptable discounts must by given by any drug company that wants to continue to sell drugs to California's Medi-Cal program via Medi-Cal's pre-approved list.  Drug companies who fail to participate, or participate as much as the newly appointed (if this proposition passes) nine-member panel whose job it is to review the drug companies participation in, and eligibles access to, and pricing of, drugs.

ELIGIBLE

• Low- and middle-income people whose income does not exceed 400% of the federal poverty level (~$38,000 for individual, $77,000 for family of four), or who have unreimbursed medical expenses exceeding 5 percent of their income. 


• Low income people currently receiving drugs through Medi-Cal are excluded from participating in Cal Rx Plus, but people who have third-party drug coverage who otherwise meeting the income and out-of-pocket criteria above would be eligible for Cal Rx Plus, including Medicare beneficiaries who have enrolled in a free-standing discount drug card program when that program doesn't cover the all of the drugs they need.

THE HITCH
Because it will potentially cover more people, Cal Rx Plus (Prop 79) this looks like a better option than Cal Rx (Prop 78), but it will increase the interference of bureaucrats into the lives and health of the program eligibles.  As it is now, doctors and pharmacists spend too much time filling out Treatment Authorization Request (TAR) paperwork on drugs that should already be on the pre-approved list. 

In fact, as a way to cut the amounts paid out, Medi-Cal has already started cutting the amounts pharmacists are allowed to dispense and demanding TARs on pre-approved drugs if the beneficiary's total number of monthly prescriptions exceed a certain amount.

I've written before about my very ill friend Julia, who subsists on Medi-Cal and SSI.  She is dealing with numerous health problems, and presently requires 6 different maintenance drugs a month, plus additional drugs as prescribed by her physicians to treat systemic infections, eye disease, severe body and limb pain, crippling headaches and sleep problems. 

One of her maintenance drugs is thyroid medication, essential to her basic functioning.  Medi-Cal bureaucrats, in their infinite wisdom, have decreed that her pharmacist can only dispense 10 pills at a time.  Thus, Julia has to call the pharmacy every 8-9 days (she is not allowed to call any earlier) to request a refill.  The pharmacy can then dispense the refill on day 10 for the next 10 days.  Julia then has to repeat this again in 9-10 more days.  Medi-Cal counts that as THREE of her allowed SIX prescriptions a month!  She can only fill another three of her prescriptions before the pharmacy is required to fill out a TAR for any other maintenance or new prescriptions.

So, even those these drugs are critical to Julia's survival and basic functioning, and even though they are on Medi-Cal's pre-approved list of drugs that can be dispensed without the time consuming hassle of TARs, the pharmacy is forced to waste more time filling each of her prescriptions because Medi-Cal won't let the pharmacy dispense covered drugs as ordered by the physician. 

For sake of comparison, I, too, have to take daily thyroid medication.  I pay $17.87 out of pocket every three months for 90 tablets.  I order online from a brick-and-mortar pharmacy chain that offers discount drug pricing, with steeper discounts for orders placed via their website.  They ship the prescriptions for free, and even include a regular pull-off (non-childproof) cap in the shipping bag for me because I can't get the childproof ones off.

Anyone who has researched pharmacy economics already knows that discount pharmacies are already running close to the bone.  One of the key ways they are able to obtain discounts from drug companies and wholesalers and pass those savings on to their customers is to buy in quantity and dispense in quantity - and fill lots of prescriptions with lots of pills or ounces in each bottle. 

The local discount pharmacy I use for some other drugs (having been cognitively and physically able to comparison shop, something too many elderly and disabled are not able to do) does a brisk business servicing the local ambulatory elderly and disabled population, as well as nursing homes, hospices, and Medi-Cal beneficiaries.  This pharmacy isn't going to be able to discount its prices to consumers much more than it does, not unless it gets a bigger discount from the drug companies.

Now, the Medi-Cal drug business is big business in California: of the 2003-4 $4.2 billion state agencies' drug budget, over $3 billion went to pay for Medi-Cal drugs.  The thinking behind Prop 79 is that the state can force the drug companies to give the California Cal Rx Plus eligibles the same discounts they give to pharmacies filling Medi-Cal prescriptions by threatening the companies with putting their drugs on the "requires pre-authorization" list - meaning that the pharmacy will have to spend more time writing TARs and the sick people will have to wait longer to get the drugs - and may never get them, if the bureaucrats decide they don't want the program to pay for the drugs, or pay for as much as the prescribing physician has written.

So, I'm having a hard time seeing how this punishes the drug companies.  The only entities being penalized under with this proposed carrot-and-stick system is the pharmacists, patients and physicians.  The drug companies, whose profits are comparable to those of oil companies, can just say "screw you".  They know that if the people really need the drugs, they will pay for them out of pocket, or get sicker and get on some other type of assistance program (with less of a discount), or die.  (Those of you existing on social security disability will have no problem recognizing the "make it so difficult that 50% or more of the people give up and go away or die" paradigm.) 

Some people may become eligible for the individual company's patient assistance program for a particular drug, and may get it at low cost or no cost from the company directly.  Since fewer people will be able to find their way through the Patient Assistance Program (PAP) thicket, even though the drug companies may be providing these particular drugs for free or minimal co-payment, they come out ahead because their pricing structure remains intact, and they get to write off the PAP expenses as good will and take tax deductions if the drugs are provided through various nonprofit programs or foundations.

Another big problem is that, while there is some provision for going after drug companies making unreasonable profits ("excess profiteering" is the language used in the Prop), who is it who defines what is excessive?  Just look at the gas prices we here in the Bay Area pay: despite having our having refineries right in our backyards, the oil companies keep telling us they have to charge us more because of [pick your favorite bullshit reason], pleading poverty while their CEOs are making millions and corporate quarterly profits are in the billions.  Yet they do it, quarter after quarter, year after year.  A few politicians make some noise now and then, but the profits keep rolling in as the prices keep going up.  (Don't tell me they go up and down - I have yet to see them drop down to the $0.32 a gallon they were when I first started driving at age 16.)

Take a look at Big Pharma.  These big boys have been around for decades, some having started in the 1800s.  Through the years they have bought smaller companies, merged with each other, bought some more, divested some, and along the way become multinational corporations with factories and research facilities and packing plants and distribution networks around the globe.

If the drug companies really wanted to help us poor folk, they would be doing it already.  Instead, people without drug coverage or Medicaid are paying 15% or more than those with third-party drug coverage.  Why not just lower the amount they charge to pharmacies across the board?  The less pharmacies are charged for the drugs, the less they have to charge us (theoretically speaking of course, since there's no oversight into any excess profiteering in this sector either, but there is market competition).

But the drug companies don't, and while the research they do is unquestionably expensive, they are still reaping huge profits.  But who is going to determine how much is too much?  Well, the state's attorney general can do so.  If he or she does, then we can assume that the cost for the suit will be borne by the taxpayers, with any awards will ultimately going to the taxpayers, presumably in the form of helping reduce the deficits in the General Fund.  (The penalty per violation, as spelled out in Prop 79, is up to $100,000 or three times damages, whichever is greater, plus legal expenses.)  And bigger discounts, assuming the spanked drug company doesn't just take their pharmacopoeia and go home.

Key points for me:  California is a big market, but that doesn't mean we are significant enough in the overall global market to get the drug companies to play ball on our field.   Bureaucrats are already mucking up patient access to drugs prescribed by their physicians and making life miserable for the pharmacies that service this population. 

Bottom Line For Me: 
The idea is good.  The intent is good.  There are too may ifs, too many holes, in these propositions.  We need lower prices across the board for those least able to pay for it.  Voluntary programs have failed before.  The carrot-and-stick may well backfire, with few participating drug companies creating more of a club to wield over the head of the California plan negotiators, rather than increased compliance and steeper discounts.

That's why I'm voting no on both.