Drug companies pony up for November ballot

The big drug makers behind Proposition 78 are waging the best campaign money
can buy, hyping their statewide drug-discount program, and disparaging a
competing measure sponsored by consumer and labor groups.

The Pharmaceutical Research and Manufacturers of America have amassed a war
chest of $80 million–more than $2 for every California resident–and are
using it to blanket the airwaves across the state, from Eureka to Palm
Desert, in what is shaping up as the most expensive, lopsided initiative
campaign in state history. In terms of hard cash, the pharmaceutical
companies have out-raised the Yes on 79 campaign by nearly 800,000-to-1.

"This is David and Goliath," said Anthony Wright, the executive director of
Health Access California who is running the rival Proposition 79 campaign.
But despite the inordinate sums spent by the drug industry, a recent survey
shows that David may just have a fighting chance.

A Field Poll conducted in late August showed that while the consumer
sponsored drug-discount plan trailed the industry-backed alternative, only
13 percent of likely voters were aware that "major pharmaceutical companies"
were supporting Proposition 78.

More ominous for the drug makers is that 44 percent of those surveyed said
that knowing the pharmaceutical industry was behind Proposition 78 made them
less likely to support it.

The two initiatives mainly differ in terms of the enforcement mechanism and
the scope of those eligible. Proposition 78 creates a prescription program
for the uninsured, so long as they make no more than $29,000 a year, with
the income cutoff rising to $58,000 for a family of four.

The income caps under Proposition 79 rise to $38,000 a year, and $77,000 for
families of four, with coverage also extended to people whose families spend
at least 5 percent of their income on medical bills.

The industry-backed Proposition 78 is a voluntary program, while the
consumer- supported Proposition 79 allows the state to deny Medi-Cal
contracts to companies that do not comply, potentially costing drug makers
millions of dollars in lost market share. If both measures pass, the one
with more votes is enacted.

In their quest for the most votes, the drug companies have spent more than
$4.8 million, as of the latest filings, at three of the leading Los Angeles
TV networks, KABC, KNBC and KCBS–almost a month and a half before the polls
even open. But the on-air campaign has hardly been limited to major media
markets, with ads blanketing the airwaves in smaller cities like
Bakersfield, and the drug companies spending nearly $50,000 in ads at a
single station, KIEM, in Eureka, that reaches a mere 67,000 TV households.

"PhRMA is absolutely carpet bombing," said Darry Sragow, a Democratic
political consultant who is unaffiliated with the campaign.

According to the Yes on 78/No on 79 spokeswoman Denise Davis, the ad
campaign is part of an "extensive education effort."

"It is a big state, a crowded ballot and it takes a lot of education for the
voters," adds Davis, who says that Proposition 79 "won’t help poor people"
and that Proposition 78 is the "only workable drug discount plan."

The early spending by the drug industry has resulted in a nine-point lead
over the labor-backed initiative, according the most recent poll by the
Public Policy Institute of California, though both initiatives fall short of
the 50 percent needed for passage.

Beyond television, the drug companies have spent hundreds of thousands on
consultants, including inking former San Francisco mayor and Assembly
Speaker Willie Brown to a $350,000 contract.

Brown’s consulting deal alone represents more than double the total amount
raised by the promoters of Proposition 79, whose campaign, as of the latest
filing deadline, was $50,000 in debt.

In contrast, the pharmaceutical industry has spent $49 million and has $31
million left in the bank.

"We know we will be outspent and we will be outspent exponentially," said
Wright. "But we do think that if voters get the simple fact that one is a
voluntary measure sponsored by drug companies and one would be a mandatory
program sponsored by consumer groups, that will be enough."

To gain public attention on a shoestring budget, the Yes on 79 team recently
launched an online ad contest and has leafleted movie-goers of The Constant
Gardener, a film, they say, is about the evils of big drug makers. The AIDS
Healthcare Foundation recently produced an ad on behalf of the campaign, and
bought television time, albeit very little.

But as the pharmaceutical companies prepare unload millions more into
television advertisements, Republican strategist Dan Schnur warns that, "you
do reach a point of diminishing returns."

"At a certain point, you reach the political equivalent of making the rubble
bounce," says Schnur.

But even if the pharmaceutical companies are now getting less bang for their
buck, labor will have to make a serious investment to tell its side of the
story. Current estimates are that a weeklong statewide television ad buy
will cost more than $4 million in the weeks leading up to the special
election.

"No decision has been made as far as monetary contributions from the
Alliance to the 79 campaign," Sarah Leonard, spokeswoman for the Alliance
for a Better California, the union-coalition aligned against Gov. Arnold
Schwarzenegger.

So far, the Yes on 79 campaign has received nearly all non-monetary
contributions from the Alliance and other union groups. The lone monetary
contribution the campaign received, as of the latest reporting period, was
from a Bay Area psychiatrist Robert F. Harris, who donated $100.

"We believe we will have the resources to get our message out," says Wright,
pausing as if wishing would make it true. "At the end of the day, voters
won’t believe self-interested advertisements by the drug companies."