We were trying to learn more about this fall’s Proposition 79, “Prescription Drug Discounts. State-Negotiated Rebates,” when we came across a section in the legislative analyst’s summary that should guarantee a “no” vote from any sensible Californian:

Profiteering From Drug Sales. Existing state law does not limit the prices or profits that can be earned on the sale of prescription drugs in California. This measure changes state law to make it a civil violation for drug makers and certain other specified parties to engage in profiteering from the sale of prescription drugs. The definition of profiteering includes demanding “an unconscionable price” for a drug or demanding “prices or terms that lead to any unjust and unreasonable profit.” Profiteering on drugs would be subject to prosecution by the Attorney General or through a lawsuit filed by any person acting in the interests of itself, its members, or the general public. Violators could be penalized in the amount of $100,000 or triple the amount of damages, whichever was greater, plus legal costs.

Markets, apparently, can not be trusted to set prices or determine what an appropriate return on a multi-year R&D investment is.

This clause, slipped in at the very end of the initiative, has nothing to do with its stated goal — the creation of a state-run volume purchase plan for prescription drugs that would benefit the poor and elderly. But it does promise enormous benefits to plaintiff’s lawyers, who won’t even have to find a class member in order to initiate a suit — any citizen of California, whether harmed by “unreasonable profit” or not, will do!

A similar free-for-all in California’s Unfair Business Competition law was closed off by the electorate with 2004’s Prop 64. Prior to that, plaintiffs’ firms could use any random citizen to file a suit; now, only persons who have suffered some physical harm or property damage have standing to bring such a claim.

It sounds like plaintiffs’ attorneys hope to open a profitable new front using Prop 79. Those are the “unjust profits” that Californians should say “no” to in November.
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Note: competing Proposition 78 does not have this provision.

Technorati Tags: California initiatives, lawyers, proposition 79, initiatives

This entry was posted on Monday, September 19th, 2005 at 10:25 am by A Senior Administration Official and is filed under 2005 Initiatives, California Schemin'. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.