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SACRAMENTO — The passage of Proposition 64 in November took plaintiff lawyers by surprise. Now that they’re facing a drug-industry initiative that would cap contingency fees at 20 percent, they’re singing Pete Townsend’s tune: They won’t get fooled again. “We’re building a huge war chest,” said Bruce Brusavich, a former Consumer Attorneys of California president involved in the effort. “We’re at $3 million, and in hard pledges, we’re at $7 million.” The fee-cap measure, backed by the Pharmaceutical Research and Manufacturers of America, hasn’t yet been certified for signature gathering, much less placed on the ballot. But current CAOC President Sharon Arkin has been sounding the alarm at meetings around the state. “CAOC is putting together a War Council to stop this initiative in its tracks,” she wrote to members last month, adding that CAOC lawyers will spend “whatever it takes” to defeat it. It could take a lot. In less than two weeks, PhRMA collected $7.7 million, with checks for $1.3 million each coming from Johnson & Johnson, Pfizer Inc. and GlaxoSmithKline. That will help pay for a high-powered advisory team already assembled by the pharmaceutical industry that includes Sacramento attorney and GOP adviser Thomas Hiltachk of Bell, McAndrews & Hiltachk, and former San Francisco Mayor and Assembly Speaker Willie Brown. “The industry, as you know, has a history of playing to win and making sure it has the resources and the talent necessary,” said Jose Hermocillo, a PhRMA spokesman. PhRMA is preparing two other measures for the special election ballot slated for November, all part of a campaign for the prescription-drug program for low-income Californians that it prefers. PhRMA, along with Gov. Arnold Schwarzenegger, supports the approach laid out in SB 19, carried by Sen. Deborah Ortiz, D-Sacramento. Unions want a program that would cover more people and force drug makers to give deeper discounts. To guard against the Ortiz bill’s annihilation, PhRMA has drafted an identical version as a ballot initiative. A third measure, aimed at unions, would prohibit union dues from being used in political campaigns. Advocates on both sides of the drug war say the battle over prescription-drug contracts is behind the fee-cap initiative. “The fee cap measure was filed in the attorney general’s office as a way to induce the parties to work toward a legislative resolution [on pharmaceuticals],” acknowledged Hermocillo. Drug makers “are on the defense, playing offense,” said Richard Holober, executive director of the Consumer Federation of California, a nonprofit consumer advocacy organization. “They’re going after the people who stand up to them.” “The Legislature will reject SB 19,” predicted Jim Farrell, a spokesman for the Alliance for a Better California, a coalition of union members that includes firefighters, nurses and teachers opposed to the PhRMA plan. “I talk to Assembly people all the time, and no one is going to cut a deal with PhRMA.” Added Farrell: “If we can break PhRMA’s back here in California, we can break their back in every state in the country and in Washington, D.C., and it will begin here and now, and they know it.” Whether PhRMA can sell voters on fee caps is an open question. In November, Florida voters approved capping contingency fees at 30 percent of the first $250,000 recovered, although trial lawyers succeeded in passing two initiatives of their own, one giving patients more rights to review patient records of “adverse medical incidents,” and a second measure barring doctors from practicing in the state of Florida if they have three malpractice judgments against them. Voters in Oregon and Wyoming nixed fee caps, partly due to the hard work of opponents hitting the streets. “You’ve got to do polling and fund raising and campaigning and have the right message and convey it positively, and have the right spokespeople to explain the real reasons for what is being proposed,” said Carl Carlton, vice president and director of media relations for the Association of Trial Lawyers of America. But taking on PhRMA is bound to be formidable. According to a New York Times report, the group budgeted $48.7 million just for state advocacy in 2004. And it litigated the state of Maine’s prescription drug plan all the way to the U.S. Supreme Court. Maine finally made changes to its prescription drug plan and began implementing it in January — four years after it tried to force mandatory drug discounts. For plaintiff lawyers, the best hope against PhRMA may be to fight fire with fire. “I think right now the ballot is crowded, but everything’s open,” said Ray Boucher, a CAOC lobbyist. “What if you put something on the ballot that limits the amount that a CEO can receive in compensation from a corporation? It’s been discussed, it’s something that’s out there.”

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