SACRAMENTO — Gov. Arnold Schwarzenegger's carefully crafted deal with pharmaceutical companies to lower the cost of prescription drugs for 5 million Californians fell apart Wednesday night when it was rejected by a legislative panel.
Democrats on the Senate Health Committee discarded the proposal even though it had the backing of some significant advocates, including AARP and state Sen. Deborah Ortiz of Sacramento, the Democratic chairwoman of the panel.
But critics said the plan would have relied on drug companies to voluntarily discount prices for low-income people without penalizing firms that refused.
The defeat was the most significant legislative setback for the governor so far this year. It occurred as Schwarzenegger's attempts to use the threat of a special election to influence the Democrat-controlled Legislature are also faltering.
"The governor put a lot of chits on this plan, and it didn't get out of this first committee," said Anthony Wright, executive director of Health Access California, an Oakland-based advocacy group that favors a competing, stronger drug proposal.
The complex political jockeying involved in the prescription drug fight makes it less likely that Sacramento will reach an agreement on a plan this year, even though Democrats and the governor are committed to the same basic concept of getting the pharmaceutical industry to offer discounts for lower-income Californians.
Under Schwarzenegger's plan, drug companies promised to offer discounts of 40% or more for people earning up to three times the federal poverty level, or $58,050 for a family of four. The measure had the strong backing of the pharmaceutical industry, which is preparing a parallel initiative to be placed on the ballot if Schwarzenegger calls a special election later this year.
But many Democrats in the Legislature prefer a rival proposal that would cover families with even higher incomes and would have punished drug firms that did not participate. That measure is pending in the Assembly and in a ballot measure written by Health Access, but it would have to overcome a possible gubernatorial veto and guaranteed legal challenges from the industry before it could take effect.
Despite the support of Senate Republicans and Ortiz, Schwarzenegger's proposal, SB 19, failed when all the other Democrats on the committee voted against it.
