San Francisco Chronicle: Chronicle recommends: No on Proposition 61

San Francisco Chronicle   ·  Link to Article

It’s very tempting to support Proposition 61, which would prohibit state agencies from paying more for prescription drugs than prices negotiated by the U.S. Department of Veterans Affairs, which uses its volume-buying leverage to get discounts.

The public outrage against the pharmaceutical industry is well founded. Mylan’s unconscionable 500 percent price gouging on the lifesaving allergy treatment EpiPens and Turing Pharmaceutical’s unconscionable 5,000 percent increase on the antiparasitic used by patients with HIV or on chemotherapy underscored the cost of shielding an industry from any real semblance of competition and transparency.

Neither the Republican-controlled Congress in Washington nor the Democratic-controlled Legislature in Sacramento has proved willing to stand up to an industry that is determined to bat down any proposal that might threaten its fat profits.

So now voters will get their chance to rein in pharmaceutical prices with Prop. 61.

Under the measure, the maximum price of prescription drugs paid by state agencies — except managed care plans working within Medi-Cal — would be linked to the deeply discounted prices paid by the federal VA.

Why the VA? One, the federal agency serving almost 9 million veterans has shown it has the negotiating leverage to get deep discounts for its drugs. Second, because it actually can negotiate. In an outrageous gift to the industry, Congress actually made it a law that Medicare, the largest single payer for prescription drugs with its 40 million beneficiaries, is prohibited from using its buying power to negotiate for lower prices systemwide.

The pharmaceutical industry, which is on track to spend $100 million against Prop. 61, warned against these potential side effects if it passes:

  • Drug prices for veterans could go up. (This assumes that the industry would raise them to compensate for the lower profits in California — as it did when Congress in 1990 capped Medicaid prices to the lowest paid by other public purchasers, including the VA. That provision was repealed within two years.)
  • Research and development on new drugs could be reduced. (This assumes the industry would cut back on R&D — instead of marketing or other costs — to offset lower profits.)
  • Fewer drug choices for public-sector workers. (The measure cannot force the industry to sell medicines to California agencies at VA prices. So this assumes the industry would not be willing to offer certain drugs at discounts provided to veterans.)
  • Higher Medi-Cal spending. (This assumes the state may in some circumstances be getting a better deal than the VA on certain drugs. The argument is that Medi-Cal’s leverage is limited, even under Prop. 61, because it is required by federal law to offer “medically necessarily drugs” for enrollees.)

Ask yourselves: Does anyone truly believe the pharmaceutical industry would be spending $100 million to defeat a measure that would bring it more revenue. The industry’s arguments of “unintended consequences” sound more like threats than fact. After all, if VA prices go up or drugs become unavailable in California because of Prop. 61, it would be because of drug manufacturers’ actions.

However, we must oppose Prop. 61, despite our disgust with the industry-bankrolled disingenuous advertising blitz.

It is important to note that an array of consumer and health-advocate organizations that have no love for the pharmaceutical industry are opposed to Prop. 61. A link between Medi-Cal and the VA is not necessarily a good corollary; their respective patient bases have different demographics and medical needs. Also, the fear of reduced access to certain drugs is legitimate: It would rely to some extent on the good faith of an industry whose greedy practices were the inspiration for this initiative.

Garry South, a top-shelf California political strategist and chief spokesman for Prop. 61, noted that the industry effectively killed two state bills last session that would have brought even modest transparency to drug pricing.

“This is the only game in town,” South said. “Right now they (drug manufacturers) need a 2-by-4 over the head — and this is all we got.”

However, it’s worth waiting for the right solution, which is going to require a thorough public shaming of all our so-called representatives who are too addicted to the industry’s campaign donations and junkets to look out for the public interest.

A better approach would be legislation that blows up this notion that drug prices are somehow a trade secret. Governments at all levels should be able to find out what one another is paying for pharmaceuticals — and have the authority to negotiate the best deal for patients and taxpayers. The now-standard confidentiality agreements on the spending of public money for drugs should be banned. Period.

If our elected officials won’t demand such transparency and negotiation, then Californians should be ready with another initiative.

Other countries are paying significantly less for medicines through aggressive negotiation (example: Norway) or regulation (example: Canada).

Perhaps the ideal outcome for Prop. 61 would be a one-vote loss, which would send a message to the industry and the politicians who cater to it that the status quo is not acceptable. This measure contains too much risk, with too many lives dependent on access to life-sustaining drugs. We cannot support its passage.