Drug Companies Donate $10 Million to Oppose California Initiative

It hasn’t qualified for the ballot. And the measure’s implications are so complicated that even the experts at the Legislative Analyst’s Office had a hard time gauging its fiscal effects.

But the proposed “California Drug Price Relief Act” already has the attention of the drug industry, with major companies in recent days donating more than $10 million to their trade group’s California ballot initiative committee. Pharmaceutical Research and Manufacturers of America reported the donations Friday.

The measure, pushed by the Los Angeles-based AIDS Healthcare Foundation, would impose price controls on drug purchases funded, directly or indirectly, by the state. Supporters have until Nov. 2 to turn in 365,880 valid voter signatures to qualify for the November 2016 ballot.

“Signature gathering is going extremely well,” Brad Hertz, the campaign’s assistant treasurer, said in an e-mail Monday.

Under the proposal, what the state pays for drug purchases would be have to be the same or less than the rates paid by the U.S. Department of Veterans Affairs. Yet it’s unclear how much money would be involved.

Today, the state directly (i.e. prison healthcare) and indirectly (Medi-Cal and CalPERS managed-care plans, for example) pays for billions of dollars worth of drugs, with the prices reflecting a range of different rebates and discounts. The last studies on the issue date from a decade ago.

The subject matter is so complex that, in its initial review of the proposal, the Legislative Analyst’s Office said it needed more time to study the possible impacts.

Kathy Fairbanks, a spokeswoman for PhRMA, said critics of the proposal want to be ready.

“While this ballot measure may look simple, the changes being proposed will have adverse consequences for Californians,” Fairbanks said in a statement. “If it goes forward we will be preparing a campaign to educate voters in California about its negative consequences.”

Among the latest industry donors to the PhRMA committee are Johnson & Johnson, Inc., which donated $5.8 million, Bristol-Myers Squibb Company , which gave $2.9 million, and Purdue Pharma, L.P., which donated $1.1 million.

Proponents have raised more than $1.25 million and, through June, had reported spending $412,000 on signature gatherers and other expenses.

The AIDS foundation also is the sponsor of a possible November 2016 ballot measure that would require adult film actors to wear condoms. Supporters recently turned in almost 540,000 signatures, which are awaiting verification.