With all eyes focused on the impending presidential election, many may be overlooking a perhaps more important impending vote: the vote on Proposition 61 in California. As we have previously written, the measure would require drug makers to provide large discounts to state agencies that serve HIV patients, retirees, inmates, and low-income people.
With the pharmaceutical industry continuing to come under fire for how it prices its medications, pharmaceutical prices are truly under the microscope this election cycle. Hillary Clinton has pledged to crack down on what she has referred to as “outrageous drug costs.” Vermont Senator Bernie Sanders has also called for support for Proposition 61. Sanders has used his “formidable base of support” to target Big Pharma – including allowing billboards across Los Angeles to tout his endorsement, and starring in a TV advertisement for the measure.
Industry Concern
Many experts in the field are concerned that the ballot proposition is misguided and will not help patients in the way proponents think. As we previously cited to, a preliminary report done by the Legislative Analyst’s Office found that it is “highly” uncertain how much money California would save with the proposition passed, if it saved any money at all. The uncertainty is driven by two thoughts: (1) the lowest prices paid by the VA are not known and there is no guarantee that they will be revealed to the public – or to state officials and (2) it is unclear how companies would react if the measure became law, i.e., raising prices on the VA.
Pushing drug prices too low also creates problems – antibiotics that have been on the market for decades, therefore, they are no longer profitable enough for companies that own them to justify high research and development costs.
Opponents to the ballot initiative argue that it will not work as intended because drug makers would not be required to offer the drugs at the VA price – they could decline to offer California agencies some treatments, or even (as noted above) raise the VA’s current drug prices. The law would apply only to the Medi-Cal enrollees who are part of its “fee-for-service” program, which is roughly 25% of enrollees.
John Lechleiter, chief executive officer of Eli Lilly & Co., noted on the company’s quarterly financial call that “we’re fighting that tooth and nail,” against the California ballot proposition. Merck & Co. CEO Ken Frazier also spoke to his “serious concerns,” going so far as to say on his own earnings call that the law would “negatively impact millions of patients.”
The concern raised by many in the industry has led to an outpouring of money opposing the proposition – according to Ballotpedia, Proposition 61 has become the most expensive ballot measure battle in 2016. Opposition has raised over $100 million for its campaign, compared to $14 million by supporters.
The No on Prop 61 Coalition highlights the fact that “Nearly 200 groups including veterans, doctors, patients, taxpayers, seniors and aids/HIV groups are opposed, along with every daily newspaper in the state.” The biggest backer of the proposition, Aids Healthcare Foundation, however, did not respond to requests for comment from Bloomberg. Kathy Fairbanks, spokeswoman for the No on Prop 61 Coalition, questioned AIDS Healthcare Foundation’s motive for excluding Medi-Cal’s larger managed care program system and has essentially exempted itself from the pricing provisions of its own initiative.
What Do the Polls Say?
An early September survey found that about two-thirds of participants would vote yes on the measure, with 23 percent voting no and 12 percent having no answer. A survey done in late September found that half of those polled were inclined to vote yes, 16 percent leaning toward no, and 34 percent undecided.