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Big pharma fights California, Ohio voter initiatives

Voter initiatives in California and Ohio to control the price of prescription medications could be on the November 2016 ballot, and the efforts to curb rising drug costs have the industry pushing back.

Prescription drugs
Steve Cole | E+ | Getty Images

The California and Ohio initiatives tie the cost that state programs pay for drugs to that paid by the U.S. Department of Veterans Affairs. Proponents of the California proposal are collecting signatures to get it onto the ballot and put it to a vote next year.

"In the aggregate, we know that the V.A. price is, generally speaking, 20 percent below the average government price," said Michael Weinstein, president of the Los Angeles-based AIDS Healthcare Foundation and the sponsor of the so-called California Drug Price Relief Initiative. "We want California and Ohio to get that price."

The question of soaring drug costs is likely to be a major topic of debate in Tuesday's Democratic presidential debate. Hillary Rodham Clinton and Sen. Bernie Sanders, Independent from Vermont, have weighed in on health-care issues — and both of the candidates have been critical of Turing Pharmaceuticals CEO Martin Shkreli, who recently announced a 5,500 percent increase in the cost of a drug used to treat a parasitic infection that's common in AIDS and HIV patients. The former U.S. secretary of state, who called the CEO's move "price gouging," has proposed a $250 monthly cap on out-of-pocket prescription drug costs; the senator from Vermont has offered a federal prescription drug affordability bill.

The industry is pushing back against the drives in California and Ohio with claims that capping prices would reduce innovation among pharma companies.

Passage of the drug-price initiative "would have disastrous effects on the accessibility and affordability and quality of health care in California," said Sara Radcliffe, president and CEO of the California Life Sciences Association, which represents more than 750 biotechnology, pharmaceutical, medical device and other related companies and organizations. "By pegging the price of drugs to that price that is paid by the Veterans Affairs, it will limit the resources that are available for innovation by our member companies. And that will ultimately come back to harm the patients."

Radcliffe said the drug and biotech companies have a difficult road ahead of them when they try to bring innovative drugs to the market. She said it typically involves 12 to 15 years of research effort, and in the end "only one out of five medicines are making back their costs."

Drug companies — including Johnson & Johnson, Bristol-Myers Squibb, Pfizer and Purdue Pharma, among others — have so far donated a combined $10 million to fight the California initiative, according to the latest campaign finance information from the California secretary of state. J&J and the others declined to comment for this report and directed inquiries to an industry-backed group known as the Pharmaceutical Research and Manufacturers of America.

"While this ballot measure may look simple, the changes being proposed will have adverse consequences for Californians," said Kathy Fairbanks, the spokesperson for the California coalition to defeat the drug-price measure. "If it goes forward we will be preparing a campaign to educate voters in California about its negative consequences. We expect a broad coalition of groups, representing millions of Californians, to strongly oppose this ballot measure and help us defeat it if qualifies for November 2016."

In California, the drug-price initiative would prohibit state agencies from paying more for a prescription drug than the lowest price paid for the same drug by the V.A. It would apply to any program where the state is the ultimate payer for a drug (such as state prison health care), even if the state does not purchase the drug directly (such as in the state pension fund's health-care plans, AIDS assistance programs, or the California Medicaid program known as Medi-Cal). However, it exempts certain purchases of prescription drugs funded through Medi-Cal.

According to Weinstein, the proponents have collected just over 500,000 signatures — exceeding the requisite 366,880 needed to get the drug-price initiative on the statewide ballot. The proponents have until Nov. 2 to collect the required signatures.

In Ohio, meanwhile, the measure is still in the signature-gathering phase, and further steps would be required before it would be eligible for the ballot, including going before the state Legislature. The Ohio petition language is similar to the California measure's text, including one paragraph that states: "The pharmaceutical industry's practice of charging inflated drug prices has resulted in pharmaceutical profits exceeding those of even the oil and investment banking industries."

AARP, which has 38 million members nationwide, hasn't taken a formal position on the state initiatives, but the group's director of health services research, Leigh Purvis, said: "We fully understand the rationale for what California has been trying to do. But our real concern is that things at this point are reaching a tipping point where people are having to choose between like basic necessities like paying for their electricity or paying for the drugs that they need to stay healthy."