California’s drug price initiative: Will voters ‘send a signal to Washington’?

This year, Mary O’Connor and her father made voting a family affair.

O’Connor’s father is a Vietnam veteran, so she was especially interested in his views on Proposition 61, a California ballot measure that would peg the state’s payments for prescription drugs to prices paid by the Department of Veterans Affairs. It’s widely believed the federal program for military personnel gets some of the deepest discounts in the country.

“We researched it a lot,” said O’Connor, a 24-year-old from Sacramento. Both decided to vote yes because drug prices are “ridiculous” and need to be reined in, she said. “We have seen that things cannot remain the way they are.”

The measure faces strong opposition from the pharmaceutical industry, which has poured at least $109 million into defeating it. In addition, some state policy experts and consumer advocates say the measure may not save taxpayers or patients any money, and could even do more harm than good. Many veterans’ groups have voiced opposition as well, saying the initiative will raise VA drug spending, but proponents have support from some veterans as well.

But these warnings haven’t swayed — or reached — voters who want lawmakers to just do something to lower drug prices.

Former Democratic presidential candidate Bernie Sanders has taken up their cause, suggesting passage of Proposition 61 is important to the nation as a whole.

“Send a signal to Washington,” Sanders wrote in a recent Los Angeles Times op-ed. “The whole nation’s prescription drug policies need an overhaul.”

If it passes in the most populous state, the measure could influence national policymaking. Ohio voters will consider a similar measure in 2017 and more may follow in other states. U.S. senators are looking for ways to alleviate “sticker shock” for patients, in light of the uproar over the EpiPen and other dramatic drug price increases.

Many state legislatures considered drug price transparency policies this year and could examine other measures next year. A recent statewide poll on Prop 61, released Nov. 4, showed 47% were both for and against, with 6% undecided or not voting. Previous polling showed a higher rate of supporters and more who were not sure.

But many policy experts say the measure won’t address voters’ frustrations and could tie up state agencies in litigation.

A former deputy director of California’s Medi-Cal program, Stan Rosenstein said Proposition 61 is “going to be difficult to implement, if not impossible.” One problem he noted is that private contracts between the VA and pharmaceutical companies may leave California’s state agencies in the dark about the lowest price the federal program pays for some drugs.

Prop 61 creates rules for state prescription drug contracting based on VA pricing, said Rosenstein, now a health care consultant in the Sacramento area. But it can’t “require drug manufacturers to provide this price.”

If the drugmaker does not agree to give a VA price, it’s possible the state and drugmakers would not be able to reach a contract.

In that scenario, Medi-Cal still would have to cover medically necessary drugs, but it may not get the discounts it now gets from manufacturers, Rosenstein said. The result: Costs could actually go up for some medications provided by Medi-Cal, California’s Medicaid program.

Officials at CalPERS, a state agency included in the proposal that manages health care benefits for 1.4 million public employees and retirees, said Prop 61 could increase administrative costs and cut patients off from certain drugs.

The initiative was sponsored by the AIDS Healthcare Foundation and its controversial president, Michael Weinstein, but other HIV/AIDS groups don’t support the measure because of its lack of clarity and concerns it could endanger patients’ access to medicine.

“We are completely aligned about the need to do something about drug prices,” said Anne Donnelly, director of health care policy for Project Inform, a San Francisco-based HIV/AIDS and hepatitis C advocacy group. But because Prop 61 doesn’t do anything about the actual price of a drug, she said, drug companies could raise prices somewhere else.

“I keep equating it to that whack-a-mole game where you push the price down in one system, and it pops up in another,” Donnelly said. Creating a state policy for a national problem may not be the best solution, she added.

Supporters of Proposition 61 said claims about prices going up elsewhere are empty threats. There are federal limits on prices the VA pays for certain drugs, they said, and other health insurers could ask for the same discounts.

Ken Miller, associate director of the Rose Institute of State and Local Government at Claremont McKenna College in Southern California, said if the proposition passes, it’s likely to be challenged in court, as more than half of propositions have been since the early 1970s.

“It’s complex enough, and the opponents are highly motivated,” said Miller, referring to the well-funded pharmaceutical industry.

Potential lawsuits and other “what if” arguments from opponents didn’t deter Sacramento-based O’Connor from voting yes by mail on Prop 61. Any unintended consequences could be difficult to resolve, but she said she thinks they could be overcome.

“Maybe I’m voting a little too naïve and being a little too idealistic,” O’Connor said. “But what the measure stands for is really important.”

This story was originally published by Kaiser Health News.