California voters will weigh in this November on a high-stakes intended to help control the cost of prescription drugs 鈥� the latest attempt to limit soaring prices that have prompted public criticism nationwide.
The proposition would require the state to drive a harder bargain with drug companies so it doesn鈥檛 pay more for medications than the U.S. Department of Veterans Affairs.
The initiative would affect about 5 million people whose health care is covered by the state, proponents said. They include retired state workers, inmates and some low-income residents in the Medi-Cal insurance program.
Across the nation, prices have spawned state legislative proposals as well as federal hearings and task forces. Dozens of bills have been proposed to address the high cost of specialty drugs, according to the National Conference of State Legislatures.
Political leaders in Virginia and New Jersey have introduced legislation that would require manufacturers to report production costs of some high-priced drugs. A bill in New Mexico would create a task force on pharmaceutical pricing, while a proposed law in Washington state would cap consumers鈥� out-of-pocket spending on prescription medications.
Even presidential candidates have offered proposals to make expensive prescription drugs more accessible.
Among the catalysts for public outrage are the sky-high price of treatments for diseases such as and the unapologetic markups for specialty drugs by former pharmaceutical executive .
鈥淚t鈥檚 a universal issue,鈥� said Geoffrey Joyce, a professor and director at the USC Schaeffer Center for Health Policy & Economics. 鈥淗ow do we control these prices and at the same time not dampen incentives to innovate?鈥�
Limiting prices could bolster state budgets in the short-term but might diminish the drug companies鈥� incentive to create future drugs, he said.
According to AARP, the retail price for 98 specialty drugs widely used to treat chronic conditions rose dramatically between 2005 and 2013. As indicated in the graph, the annual retail price of therapy per drug increased from $18,240 in 2005 to $53,384 in 2013.
The California ballot measure is sponsored by the , a Los Angeles-based organization that provides HIV and AIDS care around the world. 鈥淓verybody is angry about drug prices,鈥� said Michael Weinstein, president of the group, which has proposed a similar initiative in Ohio. 鈥淲hen is enough enough?鈥�
(PhRMA), the chief opponent of the measure, says it is misleading and would 鈥渘egatively impact millions鈥� of Californians by causing drug prices to rise.
Kathy Fairbanks, spokeswoman for the opponents, said price controls for one segment of the population would only shift the cost to others. 鈥淚t鈥檚 not going to help veterans, families, kids,鈥� she said.
by the Kaiser Family Foundation showed that 77 percent of Americans believe making medications affordable to people with chronic conditions is a top health care priority for politicians. And 72 percent said drug costs are . (Kaiser Health News is an editorially independent program of the foundation.)
The California initiative is being closely watched, as states cope with high-cost specialty drugs and drug manufacturers fear a potential precedent in a bellwether state.
The pharmaceutical industry is already outspending advocates of the initiative by a large margin. With the election more than nine months away, several companies have contributed a total of nearly $39 million to defeat the proposition. Pfizer and Johnson & Johnson, among the biggest contributors, have donated almost $6 million each.
By contrast, proponents have raised only about $4 million, according to the Secretary of State鈥檚 office, which announced in December that the initiative had qualified for the ballot.
Though support for the proposition has been led by the AIDS Healthcare Foundation up to this point, Weinstein said he plans to reach out to other groups. 鈥淲e have the people on our side and the political mood could not be better,鈥� he said. 鈥淭his is the beginning of real reform in drug pricing.鈥�
Similarly, Fairbanks said the opposition campaign plans to contact veterans, patient advocates and businesses. 鈥淲e expect to have a broad coalition in the near future,鈥� she said.
The measure would exclude the vast majority of Medi-Cal beneficiaries, who are in managed care plans that negotiate their own prices. It also would not affect people on Medicare, with employer-sponsored coverage, or who those purchase private plans on the open market or through Covered California, the state鈥檚 insurance exchange.
Whatley at her apartment in Sylmar, Calif., on Friday, January 22, 2016. Whatley, an unemployed teacher, says it鈥檚 a good idea for drug prices to be regulated. (Heidi de Marco/KHN)
The state Legislative Analyst鈥檚 Office has not yet been able to conduct a fiscal analysis of the measure because some of the price data is not publicly available and it鈥檚 impossible to know how drug manufacturers would respond to caps, said Amber Didier, an analyst in the nonpartisan state office.
The lack of public information on prices could make enforcement of the initiative impossible, Fairbanks argued.
For people covered by state programs, the costs of specialty drugs largely fall to taxpayers rather than individual consumers. But some Medi-Cal recipients still support curbing prices.
Chaz Whatley, 31, said medication she takes for bipolar disorder costs about $550 a month and Medi-Cal covers all but $1. Whatley, an unemployed teacher in Los Angeles, worries that if her drugs become more expensive, Medi-Cal won鈥檛 pay and her doctor may have to prescribe something less effective.
鈥淚t鈥檚 a great idea to regulate the prices in some sort of way,鈥� she said. 鈥淥therwise, it鈥檚 just making the pharmaceutical companies really rich.鈥�
Consumers in the private market already have some new protections from high out-of-pocket drug costs.
Beginning this year, most people with plans through Covered California, the state insurance exchange, won鈥檛 have to pay a month per prescription. The exchange is the first in the nation to set caps on co-pays. And Gov. Jerry Brown signed late last year with similar effect for other privately insured residents who take expensive drugs for cancer, epilepsy and other diseases. That law takes effect in 2017.
San Diego resident Maggie Crine said she hopes there will be more such relief for patients in the future. She takes care of her mother, who has private insurance and pays over $200 a month for medications to treat chronic lung disease and high blood pressure. 鈥淲e struggle to pay,鈥� she said. 鈥淲here is the money going?鈥�
Attempts by California state legislators to impose more transparency on pharmaceutical companies haven鈥檛 gotten much traction. Assembly member David Chiu (D-San Francisco) withdrew a bill this month that would have required drug manufacturers to publicly report profits and costs of production, marketing and advertising on any drug priced at more than $10,000 annually.
Anthony Wright, executive director of the consumer group Health Access, said he sponsored a ballot measure in 2005 that would have pressured pharmaceutical companies to reduce drug prices for low-income Californians, but it was defeated after the companies spent tens of millions of dollars to oppose it, Wright said.
The , the state鈥檚 principal insurance lobby, supported the Chiu bill but hasn鈥檛 taken a position on the ballot initiative, said spokeswoman Nicole Evans. Nevertheless, Evans acknowledged the intensity of the public backlash against high drug prices.
It started as a 鈥渓ow roar,鈥� she said. 鈥淣ow it鈥檚 just deafening.鈥�
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