By Matt Cortina
If it weren’t for the onslaught of TV commercials, Prop. 61 might be one you hear about for the first time while filling out your ballot. But there’s a reason for all those advertisements—the proponents and opponents of Prop. 61 (mostly opponents) have contributed more to this ballot measure than any other supporters or opponents of a ballot measure this year.
And no wonder the pockets are deep on this ballot measure: it concerns pharmaceutical prices.
First, a bit of background. The state of California spent close to $4 billion last year in prescription drug costs for its Medi-Cal program, which serves senior, children and low-income residents, as well as its state employee pension program, the Public Employees’ Retirement System (CalPERS).
Now because the state and its agencies can negotiate the price of drugs with drug makers, the price that the state’s agencies pay for the drugs in their programs can vary greatly. But Prop. 61 would prohibit the state from paying any more for prescription drugs than the U.S. Department of Veterans Affairs pays for the same drug.
So what affect would this have on drug prices, and what affect would it have on drug availability for those in VA, Medi-Cal and CalPERS programs? Lastly, would it affect drug prices and availability for California residents outside of those programs?
The short answer is that, claims from proponents and opponents aside, it’s not clear what affect Prop. 61 will have. In fact, it’s not even clear that the state of California even pays more for prescription drugs than the VA—however, proponents of Prop. 61 say the VA pays on average 20-25 percent less for prescription drugs than other government agencies.
So what do we know? The California State Legislative Analyst’s Office, which studies and publishes reports on the state’s budget, looked at Prop. 61 last year and found several possible scenarios if the measure passes.
First, everything could go as planned, and the state could be offered VA prices for drugs, resulting in some yet-to-be-determined amount of savings. However, drug companies could offset this cost by raising the price of drugs not purchased by the VA, but used in certain Medi-Cal and CalPERS programs.
Second, since drug manufacturers wouldn’t be required to sell their drugs at the VA prices, the state would have to change which drugs would be available in order to meet the proposition’s purchasing requirements. However, doing so might result in the state forgoing its duty by Medicaid law to provide FDA-approved prescription drugs, thus possibly incurring a loss of federal funding.
And third, the drug manufacturers may elect to raise VA drug prices, a move that does have precedent.
So, given the unknowns, we’re left with the rhetoric on either side of the issue. Proponents claim Prop. 61 is a tool to fight price-gouging from pharmaceutical companies.
“Drug companies are planning to spend $100 million to fight this measure because they know it would cause downward pressure on all drug prices—and cut into their excessive profits,” proponents argued in the official Voter’s Guide.
Proponents also claim it will provide better access to life-saving drugs and save taxpayers billions of dollars in healthcare costs.
Meanwhile, opponents of Prop. 61 claim it would hurt veterans by causing their prices to increase, reduce patient access to medicines, increase bureaucracy and more. Opponents also claim that Prop. 61 only applies to 12 percent of Californians—what they claim as an “arbitrary” grouping—and even excludes many Medi-Cal and CalPERS enrollees.
Be sure to look at the contributions in the box below this article, but let the more than $120 million speak for itself as to the importance of this ballot issue.
For Prop. 61
U.S. Senator Bernie Sanders, Robert Reich, AIDS Healthcare Foundation, California Nurses Association, Rev. Al Sharpton
Contributions for Prop. 61
Yes on Prop. 61 (AIDS Healthcare Foundation, California Nurses Association PAC): $16,780,171.92
Against Prop. 61
California Republican Party, dozens of veterans and health care organizations, the California Medical Association, and several major pharmaceutical companies including Johnson & Johnson, Bristol-Myers Squibb Company and Novartis.
Contributions against Prop. 61
Total from supporters: $108,989,074.10
Merck & Co, Inc.: $9,420,395
Pfizer, Inc.: $9,420,395
Johnson & Johnson: $9,301,646
Amgen, Inc.: $7,670,768