NOT SO FAST: California Prop 61: “The California Drug Price Relief Act”

2016-08-19-1471649552-5287149-drugs

photo credit: Huffington Post

SUMMARY: In my words: In most cases where the State of California negotiations the cost of prescription drugs, Prop 61 mandates that the state pay no more than the US Department of Veterans Affairs – and the VA negotiates one of the best deals around.

THE ISSUE: Anyone with a serious disease, including but not limited to cancer, is probably all too familiar with extraordinary, and rising, drug prices. Anyone who pays attention to the news has heard about the “gouging” of those who need Epi pens (Mylan) or Daraprim (Valeant), with over-the-top increases for life-saving and life-sustaining medications. (more here) As someone who is still alive and writing thanks to the pharmaceutical industry, this is sickening. To price medications out of the reach of those who needs them most is heartbreaking. And while I appreciate that we live in a society that thrives on capitalism, I think medications need to be looked at through a different, public-good lens. Frankly, I understand the drive to legislate change. I just don’t think Prop 61 helps us.

WHO DOES THIS IMPACT? This proposition will primarily affect those citizens who receive their prescriptions through a state program, such as certain MediCal benefits, those treated in the state’s AIDS Drug Assistance Program, and prisoners. Yet California already gets a significant discount when our major state programs purchase drugs. Generally, the VA pays 42% of market value, whereas California pays about 51%. Would more be better? Yes! when the state coffers are full, we all benefit. But don’t all take the risk…

THE INDUSTRY: Among the most significant spenders on Prop 61 are the pharmaceutical companies. It stands to reason, for many of us, that Pharma is against 61 because it will cut into their profits, and that what’s bad for this industry is good for the little guy. Rational for a “yes” vote? Not exactly….

Sure, Pharma doesn’t want to miss out on any profits.

Sure, they want you to pay as much as they can fetch for their products.

Sure, they give their best prices to large buyers (like the VA), and we as state citizens should leverage our size to demand the best prices.

THE PROBLEM: This mandate prevents the state from buying drugs above VA prices. If it passes, one of three things happen:

  • Pharmaceutical companies respect the will of the people and offers the same or better pricing to the state as is currently received by the VA.
  • Pharmaceutical companies agree to negotiations with California at VA rates – and hikes those rates so that they don’t lose money.
  • Pharmaceutical companies will refuse to lower prices and California will be prohibited from purchasing drugs – patients will have to go without.

Option 1 is obviously ideal – and would be a significant step in lowering drug prices. Still, it won’t pertain to most of us since we do not utilize these California programs.

Option 2 will probably have little fiscal impact on the state, and on plan participants, but could potentially have a significantly negative effect on the VA.

Option 3 will probably have no fiscal impact on California, but here’s the real danger! – It could have a devastating, theoretically fatal, impact on patients.

MY RESPONSE: I will be voting NO on Prop 61.

your-vote-your-voice1

photo credit: danielhite.wordpress.com

Prop 61 will appear on your ballot as: State Prescription Drug Purchases. Pricing Standards. Initiative Statute.

And please, whatever and whoever you vote for…        Own this one! VOTE!

P.S. I’m aware that Bernie Sanders is promoting YES on 61. I like Bernie. I’m VOTING NO.

P.P.S. The full text of Prop 61 can be found here. Scroll down to page 154 of the document, which begins on page 118.

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3 Comments (+add yours?)

  1. Jack Whelan
    Nov 04, 2016 @ 16:25:40

    Lori Marx-Rubiner dear friend, thanks for your helpful insight. Here’s more. First, it is the Federal Acquisition Regulations (FAR) that prevent pharmaceutical and biotech firms offering the lowest (negotiated) drug prices to the Fed Gov because if they sell any drug at any price to any other customer at a lower price, they must offer that lower price to the Gov. This would eliminate any bundled prices to retail and drug distribution companies and disallow price offsets and other special patient assistance programs. For example, patients that have earned Medicare, can’t receive any special discount or other direct incentives from drug companies. I think if we fix many of these foolish regulations you’ll see better pricing options for patients.

    Concerning the VA negotiated price, many of the cancer drugs you want are not available on the VA formulary. If the bureaucrats in State of CA and the Fed Gov would allow BioPharma companies to sell their products tax free, (like the defense contractor are allowed to sell weapons tax.free). this would eliminate the very heavy burden U.S. patients pay compared to our friends in Canada and Europe where tax rates are typically half of the U.S. rate. Bernie buys his drugs in Canada because of the tax burden he and like-minded politicians refuse to understand basic economics. Bernie wants to dramatically raise the corporate tax rate which in turn would dramatically raise drug prices.

    Reply

    • Lori
      Nov 04, 2016 @ 16:35:36

      Thank you, Jack! While I kept my argument focused on California voters, you are completely on point! These are issues that MUST be addressed at the federal level! We need to hit this, regulation by regulation, with an understanding of today’s reality. I need pharma to continue their work in R&D. I need their drugs on the market. And I understand that they need to turn a profit. BUT – we can’t go on like this, and they need customers! Thanks, always, for your extraordinary work!!

      Reply

  2. Susan
    Nov 12, 2016 @ 10:00:23

    Lori, thank you for explaining this in a way which helped me choose how to vote plus helping explains to friends in CA. Great comments from Jack too for the federal level. 💜💙😃

    Reply

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