SACRAMENTO – Controversial activist Michael Weinstein, president of the AIDS Healthcare Foundation (AHF), is the author of November’s Prop 61 which AHF is also bankrolling. Weinstein and AHF have been accused of overcharging governments for prescription drugs, bullying local governments and other nonprofits, and engaging in political activities unrelated to the organization’s mission.
AHF is a wealthy Los Angeles-based organization that operates pharmacies and HMOs in California and around the world. In 2015, AHF generated more than $1 billion in total revenues, including more than $800 million from prescription drug sales. See a summary of AHF’s 2015 financial report here.
When he wrote Prop 61, Weinstein specifically exempted his HMO from Prop 61.
This is the third installment of periodic press releases to highlight some significant questions and issues regarding Weinstein and AHF.
Issue #3: AHF is suing California so it can continue to charge a markup for prescription drugs. That may be good for AHF’s revenues, but it’s bad for the state and taxpayers.
AHF sued the California Department of Health Care Services to prevent implementation of AB X4-5, a 2009 state law that lowered the drug reimbursement rate for AHF and other 340B Medi-Cal providers so the state would pay only the actual acquisition cost of the drug plus a $7.25 dispensing fee.
AHF sued so that it could continue to charge and keep a large markup above its acquisition costs, plus a dispensing fee paid to its pharmacies.
In a court filing, AHF described the difference between the price it pays for a drug from a manufacturer or wholesaler and the amount the State reimburses AHF as “the spread.” The law would have eliminated AHF’s “spread.” AHF said the loss of the “spread” cost AHF $558,000 over two years:
- “… over the last two years through August 31, 2012, Section 14105.46 has caused AHF’s revenue for prescription drugs to decrease by at least $558,000.”
In other words, a law passed seven years ago, that would have saved the state millions on prescription drugs, has been tied up in court at significant legal expense to the state and taxpayers, so that AHF could protect its “spread” and enhance its bottom line.
According to budget figures provided by the California Department of Health Services (page 65), the AHF lawsuit, which is still pending before the Ninth Circuit Court of Appeal, is costing the state $10 million per year in higher drug costs.
“AHF simply cannot be believed when it says Prop 61 is intended to save the state money,” said Kathy Fairbanks, No on 61 spokesperson.
BACKGROUND ON PROP 61
Prop. 61 is a deceptive, deeply-flawed measure that would be bad for patients, harmful for veterans and expensive for taxpayers. It will increase prescription drug costs, jeopardize patient access to medicines and result in more bureaucracy, red tape and lawsuits. It also would take away a special prescription drug benefit promised to our veterans. Nearly 150 organizations oppose Prop. 61.