Prop. 61: Cap prices state pays for prescription medications

CHRONICLE’S VIEW

“We must oppose Prop. 61, despite our disgust with the industry-bankrolled disingenuous advertising blitz. However, it’s worth waiting for the right solution, which is going to require a thorough public shaming of all our so-called representatives who are too addicted to the industry’s campaign donations and junkets to look out for the public interest. A better approach would be legislation that blows up this notion that drug prices are somehow a trade secret . ... If our elected officials won’t demand such transparency and negotiation, then Californians should be ready with another initiative . ... This measure contains too much risk, with too many lives dependent on access to life-sustaining drugs. We cannot support its passage. Vote no on Prop. 61.”

California voters can expect to be hit with tens of millions of dollars in prescription drug industry-funded political advertising warning that passage of Proposition 61 — a measure to cap drug prices — will stifle the industry’s ability to develop new life-saving drugs.

This is a well-worn scare tactic used by drug-industry giants whenever the exorbitant prices of their drugs are challenged. It is a claim that is factually shaky, if not fraudulent.

I can say this because I worked for more than three years as governmentaffairs director for Gilead Sciences, the patent holder of the two hepatitis C drugs whose huge price tags have shaken Medicaid budgets nationwide and put the cost of treatment for many patients out of reach.

I sat in on hundreds of meetings concerning the pricing of Gilead’s drugs. The issue always was: “How much will the market bear?”

That was the same explanation Turing Pharmaceuticals CEO Martin Shkreli gave when asked why he suddenly raised the price of Daraprim, listed as an essential medicine by the World Health Organization, from $13.50 per pill to $750. His answer? Because he could.

Estimates are that the drug companies collectively spend 19 times more on advertising and marketing (think the ubiquitous “Ask your doctor about ...” TV ads) than on basic research to discover and harness the therapeutic powers of “new molecules.”

In fact, the really big drug companies have increasingly become simply drug marketers, not drug inventors.

The examples of big companies finding and buying up drug “inventions” made in universities, research hospitals and small biotech firms are many. Take the breakthrough drugs Harvoni and Sovaldi, produced by Gilead Sciences, my former employer, that cure — don’t just treat — hepatitis C. These drugs, priced at $75,000 to $95,000 for a 12-week regimen, have produced billions of dollars in revenue for Gilead.

But Gilead didn’t invent these drugs. That was done at now-forgotten Pharmasset Inc. In 2011, Gilead bought Pharmasset for $11 billion, a price tag that made Wall Street gasp. The rest is history: These drugs are now Gilead’s cash cows, and their real cost is not in R&D but in the astronomical price Gilead paid to buy a biotech firm.

But if there were a lid on the prices it could charge, then Gilead would have been more circumspect in what it was willing to pay. And here’s where Prop. 61 comes into play.

Under Prop. 61, the state of California would pay no more for a drug than the price the U.S. Department of Veterans Affairs pays for the same drug. Would Gilead have risked $11 billion if it thought it couldn’t justify that to its shareholders? Probably not.

Prop. 61 would put a damper on the super-inflated prices the drug companies charge for their little pills. It’s about time.

David W. Poole, a former Gilead Sciences executive, is the director of legislative affairs for the AIDS Healthcare Foundation.