It's unclear what Prop. 61 would do to prescription drug prices

Likely the costliest campaign in California this year will be the fight over Proposition 61.

This week, opponents to the measure dumped roughly $22 million dollars into their campaign coffers. This brings the total raised for the 'No on 61' campaign to about $109 million -- that beats a record set in 2008 by four different measures on tribal casinos, which spent a combined $108.3 million according to campaign reports.

Opposition to 61 has the support of pharmaceutical companies, like Pfizer, Amgen Inc., Gilead Sciences and others. (download an Excel of contributors here)

On the side in favor of the prescription drug pricing initiative, you have interest groups like the California Nurses Association and AARP. The campaign has raised around $14.5 million, with nearly all of it coming from the AIDS Healthcare Foundation -- the group that authored Prop. 61. (download an Excel of contributors here)

"Motives do matter," Kathy Fairbanks of the 'No on 61' campaign said.

"If this were really about benefiting patients in California, if this were really about benefiting taxpayers in California -- then why did the AIDS Healthcare Foundation exempt the largest state healthcare program?" Fairbanks said, "Which by the way, also exempts them from having to comply with the initiative."

Fairbanks is talking about Prop. 61's exemption for purchases of prescription drugs under managed care programs that are funded through Medi-Cal.

AHF operates these kinds of programs in California and Florida, which provide care to more than 7,000 individuals, but their campaign says the exemption of the managed care system was not intended to exclude themselves from the cap.

Roger Salazar of the 'Yes on Prop. 61' campaign said Medi-Cal already only negotiates its prices through its fee-for-service system, which then sets the managed care system. He said including both systems would have further complicated the measure.

This ballot measure is billed as a way to cap skyrocketing pharmaceutical drug prices.

Prop. 61 would prohibit state agencies from buying prescription drugs from drug manufacturers at a cost higher than the lowest price paid by the Department of Veterans Affairs.

This covers roughly 12 percent of Californians who the state buys drugs for, including Medi-Cal recipients (minus the 75 percent of recipients who were exempted by AHF), current/retired state employees and prison inmates.

"I think it's a little humorous to hear the pharmaceutical industry say they are opposed to this measure because it doesn't cover enough people," Roger Salazar said. "it's like the gun lobby say they're opposed to gun control because it doesn't cover enough guns."

Salazar said that despite the measure only directly applying to 12 percent of Californians, it's a good starting point for the state to start reigning in on the pharmaceutical industry.

"We believe that by providing a discount for the prescription drugs that the state of California purchases, that will push down drug prices for the private plans for other people and will ultimately drive down the prices for everybody," Salazar said.

Prop. 61 has the support of Vermont Senator Bernie Sanders, who became a symbol for progressive policies in this year's presidential race. "The time is long overdue for the American people to stand up to the greed of the pharmaceutical industry," Sanders says in an television ad running in the state for Prop. 61.

In June, CalPERS (the state agency in charge of pension and health benefits for state employees, retirees and their families) released an analysis of Prop. 61 that found the measure might increase drug prices for the VA -- instead of lowering drug prices for state entities, like itself. The analysis also said 61 could decrease access to certain drugs for CalPERS members.

Proponents of 61 have said CalPERS' findings overstate the risks and ignore the benefits of their measure.

The Legislative Analysts Office found the measure could save the state money, but it's "highly uncertain" how much it would save. It depends on how dug manufacturers react to its passage.

More than two dozen military and veterans organizations oppose the measure because it could reduce the services they have earned.

"Why are you gambling with us?" Vietnam veteran Frederick Romero said. "I mean, this proposition is a hard, difficult, confusing proposition and they couldn't even figure it out at the Capitol. It's just like a gamble and we don't feel that people should be gambling with the benefits that veterans deserve."

Two possible drug manufacturer reactions the LAO points out:

  1. Drug manufacturers raise VA drug prices to minimize their profit losses, which would reduce state savings
  2. Manufacturers could also decline to offer the lowest VA prices to the state, because the proposition does not restrict them from doing so -- it only restricts the actions the state can take.

Copyright 2016 KXTV


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