Libertarians blast both prescription drug initiatives

By: WILLIAM FINN BENNETT - Staff Writer | Saturday, October 29, 2005 11:41 PM PDT ∞

In the home stretch of the Nov. 8 special election in California, opposing camps are pushing voters to say yes to one or the other of two competing prescription drug initiatives. But at least one San Diego party is encouraging people to vote down both proposals.

The San Diego Libertarian Party doesn't like either measure, both of which are designed to regulate the price of prescription drugs.

"These measures would no more reduce the cost of medical care than gasoline price controls would reduce the cost of driving," a party news release said last week.

Consistent with the Libertarian Party's philosophy that "lesser government is usually better government," the release goes on to state:

"Make no mistake ---- any discount forced upon drug companies would be shouldered by the taxpayer, their customers and shareholders. This would also limit incentives to research medicines, or to start new drug companies."

In San Diego County, Democrats and Republicans outnumber Libertarians by more than 100 to one.

County registrar of voter records show that 550,740 are registered Republicans, 474,325 are registered Democrats and just 8,911 Libertarians are registered in San Diego County as of Oct. 3. But don't let the numbers fool you, San Diego Libertarian Party Chairman Edward Teyssier said, adding that he believes voters may end up supporting his party's position on the two measures.

"We are the voice of logic, reason and responsibility ---- the one the taxpayers look to for advice on matters like this," Teyssier said, adding that Libertarian ideas are often adopted by people outside the party.

Proposition 79, backed by a coalition of labor organizations and a consumer advocacy group, would allow the state to punish companies that don't discount drugs to its satisfaction.

Proposition 78, created in response to Prop. 79, is backed by the pharmaceutical industry and would allow pharmaceutical companies to voluntarily discount prescription drugs.

Having made more than $80 million in campaign contributions to defeat the mandatory discounts measure and get their own voluntary plan approved, pharmaceutical companies have set a record for campaign donations by a single side for any initiative campaign in state history, according to officials with the nonprofit California Voter Foundation.

Meanwhile, proponents of the competing measure have some major catching up to do in terms of funding, having received and spent $2 million in contributions, Yes on 79 spokesman Anthony Wright said last week.

The two biggest backers for the mandatory discount measure are Consumers Union, the nonprofit publisher of Consumers Report magazine, and an organization called Alliance for a Better California. The alliance is a coalition of union and education groups opposing Prop. 78, as well as four other measures strongly supported by Gov. Arnold Schwarzenegger.

If more people vote yes on each of the measures than vote against them, the one with the most yes votes will win. The other proposal will die.

The state's Democratic and Republican parties have come down on opposite sides of the two measures, with Democrats supporting Prop. 79 and Republicans favoring Prop. 78.

Both measures propose reducing the cost of prescription medications to many low- and moderate-income Californians by allowing the state to negotiate discounts on the price of prescription drugs. Of the two, however, Prop. 79 stands to cost drug companies much more as it gives the state more clout in negotiating price reductions.

One of its most salient features would allow the state to punish those companies that do not discount their drug prices to its satisfaction, by removing their drugs from a list of medications preapproved by the state.

Prop. 79 also includes two other features that drug manufacturers say could adversely affect them.

It calls for the establishment of a Prescription Advisory Board to review drug pricing and provide regular reports to state officials on those prices.

It also would make it a civil violation for drug-makers to engage in what it calls "profiteering" from the sale of prescription drugs, exposing those companies to prosecution or lawsuits.

Opponents of the mandatory discounts measure say it will unfairly penalize low-income Californians who receive Medi-Cal subsidies on their prescriptions. Those same proponents say that if Prop. 79 wins, the state could remove its price supports for a company's drugs for Medi-Cal patients if the company didn't discount its medications sufficiently for other patients.

In effect, they say, that would seriously penalize Medi-Cal patients as middle class families reap the benefits of lower drug costs.

Proponents of the mandatory discount measure, however, say that drug companies are merely trying to cut their losses by getting Prop. 78 approved and Prop. 79 defeated.

They say that the real reason the pharmaceutical industry is investing so heavily in the defeat of mandatory discounts is, they know that if Californians approve Prop. 79, it is likely to set a trend that would lead other states to approve similar measures and end up costing the drug companies billions.

In a Tuesday interview, Teyssier made it quite clear that he supports the free market principal of allowing pharmaceutical companies to charge whatever the market will bear for their products.

However, he said he agreed that drug companies had resorted to trying to get the voluntary discounts measure passed as a damage-control measure that would avoid the still-greater hit to their profits should Prop. 79 pass.

"Initiatives can be used as a sword or a shield," he said. "In this case, it's probably for a shield."

Both measures are wrong, he said.

"What they are trying to do is regulate price and the market place," Teyssier said. "The most expensive lunch you will ever have to pay for is free."

If drugs are overpriced, the market place will correct those prices in due time, he said. Large profits attract competition, he said. And as competition increases, prices go down. By artificially holding down prices, Teyssier said, the only result is less competition and less innovation.

"The only reason these medications exist in the first place is because companies believed at the time they invested all those fixed costs, they would be able to receive significant profits later on," Teyssier said.

Contact staff writer William Finn Bennett at (760) 740-5426, or wbennett@nctimes.com.