Tak­ing the ini­tia­tive in health­care: Will Cal­i­for­nia vot­ers cap drug prices?

Modern Healthcare - - NEWS - By Maria Castel­lucci

Public anger at per­ceived price­goug­ing by drug­mak­ers has fu­eled calls for law­mak­ers to take ac­tion. State leg­is­la­tors in Cal­i­for­nia tried, push­ing two bills aimed at shed­ding more light on pre­scrip­tion drug pric­ing. Both of those ef­forts died be­fore the end of the ses­sion.

In Cal­i­for­nia and many other states, how­ever, leg­is­la­tors aren’t the only ones with the power to make law.

The Los Angeles-based AIDS Health­care Foun­da­tion cir­cu­lated pe­ti­tions to get an ini­tia­tive on the Nov. 8 bal­lot that would cap what state agen­cies pay for drugs at the price ne­go­ti­ated by the U.S. Vet­er­ans Af­fairs Depart­ment. And polls sug­gest the pro­posal, Propo­si­tion 61, has a strong chance of win­ning.

It has won the sup­port of Hil­lary Clin­ton’s pop­ulist pri­mary chal­lenger, Sen. Bernie San­ders of Ver­mont.

Op­po­nents are spend­ing more than $100 mil­lion to de­feat it, with most of that money com­ing from the phar­ma­ceu­ti­cal in­dus­try.

The AIDS Health­care Foun­da­tion backed a sim­i­lar Ohio ini­tia­tive, but the drug in­dus­try’s largest trade group, the Phar­ma­ceu­ti­cal Re­search and Man­u­fac­tur­ers of Amer­ica, won a le­gal chal­lenge to keep it off the bal­lot.

The VA’s dis­counts are be­lieved to range from 24% to 40%, but health­care providers and even some pa­tient ad­vo­cates ar­gue that the mea­sure, the Cal­i­for­nia Drug Price Re­lief Act, wouldn’t do much to rein in costs. Its op­po­nents in­clude the Cal­i­for­nia Med­i­cal As­so­ci­a­tion, Cal­i­for­nia As­so­ci­a­tion of Ru­ral Health Clin­ics, Cal­i­for­nia As­so­ci­a­tion of Neu­ro­log­i­cal Sur­geons and sev­eral vet­er­ans groups. All of them say the pro­posal could just as well lead to higher prices and less ac­cess to needed med­i­ca­tions for vet­er­ans and con­sumers.

Even ad­vo­cacy groups for HIV and hep­ati­tis C pa­tients have ex­pressed con­cern that the mea­sure would pro­voke drug­mak­ers to raise prices.

The state of Cal­i­for­nia spent nearly $3.8 bil­lion on pre­scrip­tion drugs in its 2014-15 bud­get year. The Yes on Prop 61 cam­paign claims the mea­sure could save the state “bil­lions of dol­lars.” But the state’s non­par­ti­san Leg­isla­tive An­a­lyst’s Of­fice was un­able to de­ter­mine the fis­cal im­pact be­cause the VA doesn’t dis­close prices and it’s hard to pre­dict how phar­ma­ceu­ti­cal com­pa­nies would re­spond.

Still, the cause ap­pears to have struck a chord with vot­ers. Op­po­nents, backed by the phar­ma­ceu­ti­cal in­dus­try, have out­raised sup­port­ers 6-to-1. But an Au­gust poll showed voter sup­port for the ini­tia­tive at about 70% for ev­ery re­gion, eth­nic group and age group of Cal­i­for­nia. Its sup­port­ers in­clude AARP and the Cal­i­for­nia Nurses As­so­ci­a­tion.

Physi­cians who have spo­ken out

against the mea­sure say they’re wor­ried drug­mak­ers will re­tal­i­ate by rais­ing prices on non­govern­ment pur­chasers. Dr. Steven Lar­son, im­me­di­ate past pres­i­dent of the Cal­i­for­nia Med­i­cal As­so­ci­a­tion, called Prop 61 “deeply flawed and un­work­able.”

If drug man­u­fac­tur­ers do raise prices, Lar­son said, it’s likely that pay­ers will stop cov­er­ing cer­tain high-cost drugs and force physi­cians to spend more time seek­ing prior ap­proval for med­i­ca­tions. Lar­son, an in­fec­tious dis-

ease physi­cian, treats HIV pa­tients, many of whom strug­gle to pay for their ex­pen­sive treat­ments.

Roger Salazar, a spokesman for the Yes on Prop 61 cam­paign, said physi­cians’ op­po­si­tion is rooted in their “fi­nan­cials ties” to the drug in­dus­try.

Salazar also sought to counter op­po­si­tion from groups rep­re­sent­ing vet­er­ans who say the mea­sure is likely to un­der­mine their dis­counts.

The law would ap­ply to most state agen­cies that ul­ti­mately pay for a drug re­gard­less of whether they’re the di­rect pur­chaser. That in­cludes Cal­i­for­nia’s Medi-Cal fee-for-ser­vice out- pa­tient drug pro­gram and its AIDS Drug As­sis­tance Pro­gram. But it ex­cludes Medi-Cal man­aged-care plans, which cover about 75% of the state’s Med­i­caid pop­u­la­tion.

Oddly, crit­ics have ques­tioned the ex­clu­sion of man­aged-care plans, not­ing that the not-for-profit AIDS Health­care Foun­da­tion, the ini­tia­tive’s pri­mary spon­sor, op­er­ates one of those ex­cluded plans. The law would af­fect drugs pur­chased for about 4.4 mil­lion peo­ple, or 12% of Cal­i­for­nia’s pop­u­la­tion, said Kathy Fair­banks, a spokes­woman for the No on Prop 61 cam­paign.

Kather­ine Hemp­stead, a se­nior ad­viser at the Robert Wood John­son Foun­da­tion, said it’s un­clear how the mea­sure, if passed, would af­fect prices. The pre­scrip­tion drug sup­ply chain is complicated, so it would be hard to parse the im­pact of the new reg­u­la­tions.

And even though pa­tients are up­set about high drug prices, Hemp­stead said, they want to see some­thing that af­fects their pock­et­books im­me­di­ately. “What peo­ple care about in the end is what the price is,” she said. “They don’t want to go down some rab­bit hole about what your price struc­ture is.”

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