Prop 61: The California Drug Price Relief Act


Sep 19, 2016 (San Diego) by now there are stories well known of  drug companies raising the cost of medicines. Whether it is the Epipe, or Insilin, the costs have gone though the roof. By now you are likely seeping the adds on TV. So what is proposing 61? It is an attempt to bring drug costs index control. The mechanism is to match the cost the state of California pays for medicines to what the Veereans Administrion pays for them. You can read the full document here.

You ca find this early in the declarations. It states:

(h) If California is able to pay the same prices for prescription drugs as the amounts paid by the United States Department ofVeterans Affairs, it would result in significant savings to California and its taxpayers. This Act is necessary and appropriate to address these public concerns.

It will simply place the state with federal players, cutting the cost of drugs to the public, and the state. Why did the initiative writers use the VA? They are the lowest benchmark. Nor can the state analyst state how this will affect the state fiscally, since it will depend on how the companies respond

Ballotpedia is quoting the state analys with a series of scenarios:

Scenario #1: Drug Manufacturers Offer Lowest VA Prices to the State. If manufacturers choose to offer the lowest VA prescription drug prices to the state, this measure may achieve state savings to the extent that the lowest price paid by the VA is lower than that paid by state entities. However, these savings could be at least partially offset if manufacturers respond by raising the prices of other drugs paid for by the state but not purchased by the VA.
Scenario #2: Drug Manufacturers Decline to Offer Lowest VA Prices to the State. The measure places no obligations on drug manufacturers to offer prescription drugs to the state at the lowest VA price. Therefore, drug manufacturers may decline to offer the state some or all of the drugs purchased by the VA at the lowest price paid by the VA. This manufacturer response could result in various state responses, each of which generates further uncertainty around the fiscal effects of the measure. These state responses could include:
State Programs Could Modify Formularies. Most state departments and programs have discretion over which drugs they make available to their beneficiaries. Should manufacturers decline to extend VA pricing on some or all drugs to these state entities, the entities may change which drugs they make available, offering only (1) those drugs that the VA does not purchase and (2) drugs that manufacturers will offer at the lowest VA price.

DHCS May Have to Disregard Measure’s Price Ceiling. DHCS, as administrator of California’s Medi-Cal program, is required by federal Medicaid law to offer most Food and Drug Administration (FDA)-approved prescription drugs to beneficiaries. Failing to offer an FDA-approved drug would likely result in the loss of federal financial participation in the pharmacy portion of the Medi-Cal program. Should manufacturers decline to extend VA pricing to Medi-Cal, DHCS may have to disregard the measure and pay higher prices than the measure allows in order to comply with federal Medicaid law. Furthermore, the measure could endanger the supplemental rebates that DHCS collects from drug manufacturers because these rebates derive from voluntary state agreements with manufacturers that, were the negotiated prices higher than the VA’s, could contravene the measure’s provisions about allowable agreements. In such circumstances, the measure could raise DHCS spending on prescription drugs.
Scenario #3: Drug Manufacturers Raise VA Drug Prices Given Their New Pricing Benchmark Role. To continue to be able to offer prescription drugs to state entities and minimize reductions in their revenues, drug manufacturers may elect to raise VA drug prices. The fiscal effect of the measure would vary under this scenario depending on the extent to which manufacturers raise VA prices and tie state prices to the higher VA prices. When VA drug prices were previously extended to Medicaid nationally, drug manufacturers responded by raising VA drug prices before the U.S. Congress subsequently removed the linkage between VA and Medicaid pricing.

Who supports the measure includes Senator Bernie Sanders of Vermont. He endorsed the measure during his tour of Califonnia during the primary. He urged his supporters to vote for it. During his National City rally, for example, he pointed to how high drug costs have gotten. He urged California voters to vote for it.

Other Federal officials include Representatives Kansen Chu, David Chiu and Mike Honda, all democrats. As well as former U.S. Secretary of Labor Robert Reich.

Significantly it is also endorsed by VoteVets. The full list is at Ballotpedia.

Supporters state that:

Supporters make the following arguments in support of Proposition 61:[2]
The proposition would fight price-gouging from drug companies.

The proposition would provide better access to live-saving drugs.

The proposition would save taxpayers billions of dollars in healthcare costs.

The opponents include the state Republican and Libertarian parties, as well as some City Democratic parties. The list includes the who’s who of tje pharmaceutical industry. Specific to San Diego it is also opposed by the County medical Society, and many veteran organizations, as well as the California Chamber and the East County Chamber of Commerce.

They argue that:

The proposition would hurt veterans by increasing prescription drug prices for them.

The proposition would reduce patient access to medicines.

The proposition would increase bureaucracy, red tape, lawsuits, and taxpayer costs.

The proposition would increase state prescription drug costs.

The proponent wrote special provisions for his own organization regarding the proposition.

As of September the no on 61 had a 9:1 advantage in funding. It is backed by a few of the largest pharmaceutical companies in the country.

Ballot measure endorsements Support: $9,537,638.37
Opposition: $86,602,171.84

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