Drug Companies Spend Millions to Fight Price Cap Laws

The pharmaceutical industry is preparing to spend tens of millions of dollars to convince California voters to reject what would be the strictest state law in the nation to cap drug prices.

California voters will consider a ballot initiative during the presidential election next year that would force drug makers to sell drugs to state programs at the lowest price, which is now given to the Department of Veterans Affairs. Advocates in Ohio turned in enough signatures last week to get a similar measure on the ballot in 2016.

The industry is already waging a lobbying war against the California measure, as pharmaceutical giants have devoted nearly $38 million so far to the effort. the industry is waiting to see how things develop in Ohio before ramping up activity there.

Under federal law, manufacturers must offer the VA a discount of 24 percent to the average manufacturer price, plus rebates if the price gets past inflation. The ballot initiatives would impose those same rules, but would only affect drugs reimbursed by certain state health programs and not private insurers.

Both efforts developed at a time when Americans are more concerned about high prices for brand name and generic drugs. Presidential candidates in both parties have condemned high prices and Congress is considering some measures to address prices.

But not fast enough for Ohio and California.

“These ballot initiatives are necessary and appropriate to address public concern about runaway drug pricing,” according to Michael Weinstein, president of the nonprofit AIDS Healthcare Foundation, which is coordinating both measures.

In an effort to fight back, the drug industry had raised nearly $38 million, according to California state financial disclosure records as of Dec. 14. Johnson & Johnson and Pfizer were the highest donors, as each provided $5.7 million.

Pharma companies AstraZeneca, Amgen and AbbVie donated $4.15 million each. Novartis and Eli Lilly both donated nearly $3 million each, according to the state records.

The Pharmaceutical Research and Manufacturers of America, the industry’s leading trade group, also opposes the measure.

Campaign spokeswoman Kathy Fairbanks told the Washington Examiner that the measure is “misleading and flawed.” The campaign noted that companies could react by deciding it is cost prohibitive to provide certain drugs in California, restricting access for patients.

The measure could chill medical innovation, the campaign said in a common defense from the industry. It also questioned how the measure would be implemented, and said many VA prices are confidential.

But advocates counter that people are suffering now because they can’t get access to the pricey medications. Tracy Jones, executive director of the AIDS Taskforce of Greater Cleveland, said her nonprofit has worked with patients who have trouble affording pricey but effective hepatitis C drugs.

“Because of the expense of the drug you have to meet stiff requirements to get access,” said Jones, whose group is a proponent of the initiative.

Ohio and California aren’t the only states to consider taking action on drug prices, but their effort goes the furthest.

About 11 state legislatures considered bills in 2015 to force drug makers and insurers to be more transparent about drug costs. But none of the bills became law, according to data as of Dec. 2 from the National Conference of State Legislatures.

In Ohio, a petition for the drug prices measures with more than 170,000 signatures, twice the required amount needed, was turned in last week. The petition will now be vetted, but Jones expects it to be on the ballot for November 2016.

PhRMA is monitoring the Ohio vetting process, and hasn’t created a coordinated campaign yet, said spokeswoman Jenny Camper.

Jones isn’t deterred if the industry dumps millions to fight the Ohio measure.

“This is a battleground, but Ohio has always been a battleground,” she said.

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