Voters turn attention to drug costs

A handful of prescription medication. (Photo: vepar5, Shutterstock)

Californians face one of the highest-stakes ballots ever on Nov. 8, including fierce and expensive campaigns involving sex, guns, and drugs.

Especially drugs.

Pharmaceutical companies are the front runners in the spending sweepstakes, having spent $70 million already to defeat Proposition 61, The Drug Price Relief Act.  That proposal would limit the prices state agencies pay for drugs to the prices paid by the federal Veterans Administration.

Toting it all up, only 12 percent of Californians would be covered by Proposition 61, according to its opponents.

The VA is allowed to bargain with drug companies to get the lowest price possible, frequently with big discounts.

That is a practice the companies, which spend huge sums to develop drugs and get them ready for the market, would not like to see replicated in California. A pharmaceutical industry newsletter described it as a “pricing disaster” that could resonate nationally.

“It’s a naked attempt by drug companies to squash it here in California, so that this sort of thing doesn’t spread,” says Garry South, a veteran campaign strategist and spokesman for Proposition 61’s supporters.

But the president of the California Medical Association, which serves some 41,000 members, denounced Proposition 61 as “flawed and unworkable,” while a key spokeswoman for the opposition said the measure was “deliberately misleading.”

If Proposition 61 passes, it would affect Medi-Cal enrollees in its fee-for-service component.  Managed-care organizations under Medi-Cal — the state-federal health program for the poor, children and disabled that serves nearly 7 million people — already negotiate prices with drug companies, paying for drugs out of their premiums.

Backers of Proposition 61 say it will indirectly lower prices under the managed-care Medi-Cal piece as well as directly for the fee-for-service component because, in either case, lower drug prices would ultimately save taxpayer dollars.

But toting it all up, only 12 percent of Californians would be covered by Proposition 61, with 88 percent left out, according to Proposition 61’s opponents.

“They’re promoting it as something that will affect all Californians, and it won’t,” says Kathy Fairbanks, the spokeswoman for the opponents.

Even so, say proponents, it still means lower drug prices for an impressive five million people, and it doesn’t even take into account public pressure and the ripple effect of lowered prices of state-purchased drugs that could ultimately affect everyone.

“They’re taking on an electorate that is really pissed off at drug prices going sky-high.” — Garry South

“Does anyone actually believe that the drug companies are opposed to lowering drug prices out of concern that the lower prices only cover 12 percent of the population?” he asked.

It may be an old story by the time November rolls around, but the Proposition 61 battle could be affected by a big increase in the price of the EpiPen, a lifesaving injection device for people with severe allergies.

In 2007, the cost of a two-pack of the devices was a bit less than $100.  Now it’s increased six-fold, to $608.61. The price hike has sparked anger nationally, uniting politicians and consumers.  There’s a chance California voters might remember, and their memories may be thoughtfully helped along by South.

The vote here could have national repercussions, which is a key concern of the drug industry.

California is often a trendsetter, and the pharmaceutical industry fears that a victory for Proposition 61 in the Golden State could prompt other states to seek mechanisms by which they, too, could lower drug prices paid by their state agencies.

That could cost drug companies hefty profits.  In fact, a similar initiative aimed at a 2017 ballot was launched in Ohio, but is tied up in litigation during its signature-gathering phase.  U.S. Sen. Bernie Sanders of Vermont, the unsuccessful candidate for the Democratic presidential nomination, has endorsed Proposition 61, referring bluntly to “greedy” drug companies.

The pharmaceutical industry publication, Pharma Exec, described Proposition 61 as a potential “pricing disaster for the entire U.S. drug industry.” Pharma Exec noted in a Dec. 16, 2015, issue that “this state (California) is now poised to serve as ‘ground zero’ in a massive battle that ultimately may determine whether or not Rx price controls will be implemented any time soon in America.”

Proposition 61 “would result in a new bureaucratic prior approval process that could interfere with patient access to the medicines they need.” — CMA President Steven Larson

The anti-Proposition 61 forces have an enormous money advantage, having spent $70 million so far, with the possibility of hitting $100 million by the time it’s all over.  The pro-61 side has roughly $10 million, with the bulk of the money coming from the AIDS Healthcare Foundation, based in Los Angeles.  The foundation has put up slightly more than $9.3 million so far, with the California Nurses Association another $50,000.

South professes to be undeterred by his side’s whopping monetary disadvantage.

“When you take on the drug companies, you’re taking on the biggest lobbying forces in America,” he said in a telephone interview with Capitol Weekly.  “They spend more than anyone.’

But, South adds, “They’re taking on an electorate that is really pissed off at drug prices going sky-high.”

The anti-Proposition 61 forces are point to a list of 130 major organizations, ranging from unions to medical associations, that oppose the initiative.

CMA President Steven Larson said its members are “… profoundly concerned about the affordability of prescription drugs,” but argued that Proposition 61 “is deeply flawed and unworkable” because it “would result in a new bureaucratic prior approval process that could interfere with patient access to the medicines they need.”

It may sound good, but Proposition 61 won’t work the way its proponents claim it will, adds Fairbanks.

A major challenge facing both sides is breaking through the clutter.

Proposition 61, in fact, could actually restrict access to drugs, she said. For example, that restriction could occur if drug companies and CalPERS, one of the Proposition 61-covered organizations, were not able to come to an agreement on some drug prices.

Furthermore, the nonpartisan Legislative Analyst Office has some doubts about Proposition 61. A May 10 report to the Legislature said in part: “The measure could endanger the supplemental rebates that (the State Department of Health Care Services) DHCS collects from drug manufacturers … In such circumstances, the measure could raise DHCS spending on prescription drugs.”

With 17 propositions on the Nov. 8 ballot plus myriad local, state and national candidates and measures, a major challenge facing both sides is breaking through the clutter.

There are measures requiring background checks for ammunition purchases and large-capacity ammunition magazines (Proposition 63), a tobacco tax increase of $2 a pack in an effort to deter smoking (Proposition 56), an extension of taxes to finance schools and other programs (Proposition 55), a marijuana legalization initiative (Proposition 64), and two measures dealing with the death penalty (Propositions 62 and 66) and of course the proposition that has many folks sniggering — Prop. 60, the much-publicized condoms-in-porn-movies measure.  And those are just a few of the propositions.

In hopes of getting their arguments heeded, the warring sides have already piled up $185 million in bills, with more to come.

Sex, drugs and guns.  What more could a voter ask?


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