California Gov. Arnold Schwarzenegger's (R) administration on Saturday proposed a prescription drug program that would require pharmaceutical companies to provide discounts to uninsured families with annual incomes less than $60,000 or be excluded from Medi-Cal, the state's Medicaid program, the San Jose Mercury News reports. Schwarzenegger would open the program to families with annual incomes lower than $68,700 who face catastrophic illnesses and have unreimbursed medical expenses equal to 10% or more of their income. Under the plan, companies would have five years to voluntarily offer discounts of 40% for brand-name drugs and 60% for generic drugs (Folmar, San Jose Mercury News, 7/22). If the companies do not provide the discounts, they could be cut from Medi-Cal, which purchases about $4 billion in medications for low-income individuals and the elderly each year, the AP/Los Angeles Daily News reports (Thompson, AP/Los Angeles Daily News, 7/23). The plan could provide discounts for as many as five million people (San Jose Mercury News, 7/22).

Legislation
State Assembly Speaker Fabian Nuñez (D) and State Senate President Pro Tempore Don Perata (D) have introduced legislation (AB 2911 and SB 1702) that would require drug companies to provide discounts to families of four with annual incomes up to $66,000 annually (Nicholas, Los Angeles Times, 7/22). The bills also would require companies to establish discount programs within three years, rather than five (Benson, Sacramento Bee, 7/22). Schwarzenegger's aides say the governor will not sign the bills as they are written but would approve the legislation if amendments were included to change the eligibility requirements (Los Angeles Times, 7/22). California Democratic gubernatorial candidate Phil Angelides said Schwarzenegger's plan does not go far enough (Chorneau, San Francisco Chronicle, 7/23). Angelides said the proposal basically amounts to "crossing your fingers and waiting five years for the drug companies to lower their prices" (AP/Los Angeles Daily News, 7/23). Angelides also noted that the governor has vetoed several bills that sought to reduce prescription drug and other health costs (San Jose Mercury News, 7/22).

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