High stakes in ballot battle over rising prescription drug costs

Trudy Lieberman is a veteran health care journalist and regular blogger for HealthNewsReview.org. She tweets as @Trudy_Lieberman.

prop 61 ballot initiativeBig PhRMA is worried. It has poured an unprecedented amount of cash into defeating a ballot initiative that would take a baby step toward controlling sky-high prices of prescription drugs, for which Americans have spent seven percent more this year than they did in 2015. It was the largest increase in 24 years.

Drug makers and their trade association, the Pharmaceutical Research and Manufacturers of America (PhRMA), have so far contributed nearly $109 million to defeat Prop 61 in California.  That sum makes it the most expensive campaign for or against a single ballot initiative in the state’s history, according to the measure’s sponsor, “Yes on Prop 61.” (Bloomberg confirms the claim.) The group is spearheaded by Michael Weinstein, who runs the AIDS Healthcare Foundation, the largest global AIDS organization. The foundation operates pharmacies in 38 states and managed care clinics for HIV/AIDS patients in California and Florida.  The “Yes” group has raised a bit more than $14 million in support of the measure, much of it coming from Weinstein’s foundation.

Capping costs at prices paid by the VA

Prop 61 would require the state to pay no more for prescription drugs than the U.S. Department of Veterans Affairs spends for the same medications.  The VA negotiates prices with pharmaceutical companies, and federal law requires that the department get a discount of at least 24 percent.  The idea is for the state to use its purchasing power to lower the tab for drugs it purchases through such programs as CalPERS, the state employees’ retirement fund, Medi-Cal, the state’s version of Medicaid, the state prison system, and an AIDS drug assistance program.  Proponents argue that over time the measure could save the state billions.  The state legislative office says its fiscal impact is “unknown.” It could have little effect or generate significant annual savings depending on how it is implemented and how drugmakers respond.

But the fight is about lot more than savings for the state. The stakes are huge for Big PhRMA. If the initiative passes in California, it could crack open a serious national discussion of price controls, words verboten in the health policy vocabulary.  And what’s worse is it could spur other states to follow and eventually lead to legislation requiring the federal government to negotiate prices with drug companies as other countries do. “It’s a fairly straightforward expansion of price controls,” is how Stephen Ubl, PhRMA’s president described it last summer in an interview with the New York Times.

That’s not PhRMA’s major talking point. Instead it has trotted out the usual arguments it makes when the threat of price controls gets too close to the bottom line. These include: government interference with prices could lead to shortages of medicine and higher prices, especially veterans in this case; the measure provides no guidance on how it should be implemented; and it wouldn’t apply to most Californians anyway who would see their prices rise.

Predictions vs. threats: Helping consumers sort through the claims

“There’s nothing in Prop 61 that would have the effect of raising drug prices,” says Roger Salazar, the spokesman for Yes on Prop 61. “The claims PhRMA is making are not predictions. They’re threats.”  When Los Angeles Times business columnist David Lazarus asked Kathy Fairbanks, the spokeswoman for the “No on 61” campaign, if she thought high drug prices were a problem for patients, she said no, that’s not how she would put it. “It’s an issue; how about that?” she said, adding that healthcare and healthcare costs are top of mind for a lot of people, but “Proposition 61 isn’t the answer.”

With so much on the line for the healthcare system and widespread consumer angst about high drug prices, this was an opportunity for journalists to really cut through claims and show where the weight of the evidence lies. None of the reports that I saw seized the opportunity with both hands. As the battle raged over the summer and into the fall, many of the accounts relied heavily on official statements from both camps and noted the sums of money being spent to influence voters. But none that I saw consulted the kinds of national drug pricing experts — for example, Dr. Peter Bach at Memorial Sloan Kettering or Dr. Steven Schondelmeyer at the University of Minnesota — who could provide a broader view of the situation. It also might have helped had reporters checked on how other countries conduct price negotiations with providers and what effect that has had. A panel of international journalists has been set up to help reporters do just that. What could the U.S. learn?

There were a few bright spots like Tracy Seipel’s piece for the Bay Area News Group. She provided some good historical context and delved into the measure’s uncertain impacts on drug pricing. Christine Mai-Duc produced a quick primer that clearly laid out who the players were and what possible effects the proposal might or might not have. And yesterday the Sacramento Bee’s political fact checker PoliGRAPH that rates campaign advertisements called one of the No group ad’s “misleading.”  “There is no truth to the suggestion the measure increases the cost of a veteran’s copay. VA recipients have fixed copays while some qualify for free healthcare altogether.” It also challenged claims made by proponents over the savings estimates accruing from the measure, and noted that a veterans group supporting the measure (see the TV ad embedded below) had received $50,000 in consulting fees from the Yes group.

Lazarus’s piece for the LA Times stood out, in my view, for doing the best job of providing context. Perhaps because it was a column, he may have had more latitude to put the measure in the larger context of Sovaldi, the hepatitis C drug that costs $1,000 a pill, and $600 EpiPens that used to cost $100 a few years ago. He concluded that the measure “wouldn’t force pharmaceutical companies out of business. It would simply provide a mechanism for state programs to pay something closer to fair prices for medication. The fact that the drug industry is willing to spend as much as $100 million to keep that from happening tells you all you need to know.”

Newspaper editorials that read like PhRMA talking points

By contrast, the editorials and op-eds that I read about the measure almost all sided with PhRMA. In fact after reading several (like this and this and this), I concluded they must have been written from drug industry talking points dropped off at the newspaper offices.  One from the Bakersfield Californian urged a “no” vote arguing Californians “could and likely would suffer” if Prop 61 passes. “The only real way to fight Big PhRMA is for Californians to elect politicians who have the guts and willingness to stand up to those greedy drug manufacturers,” the paper wrote. Did it mean the same pols who get money today from PhRMA and stand to get more if they don’t cross the drug makers? Politico reported this week the drug lobby is gearing up “to spend hundreds of millions on ads pushing back against politicians from both parties who have attacked its members over pricing.”  That might shut up the next would-be legislator who considers criticizing the industry over its price gouging.

The story thread of Prop 61 is “follow the money,” and a critical look at financial filings at the secretary of state’s office leads to further questions. How much were some of TV’s biggest drug advertisers chipping in for the fight – more than $9 million for Johnson & Johnson, for example. Or why did Pfizer and Merck give the same amount, $9.4 million? A coincidence? A look at drug company contributions to patient advocacy groups also illuminates. As Health News Review has reported many times (see here and here), PhRMA has reaped big dividends from having patient advocacy organizations shill for it in the legislative and regulatory arenas.

Conflicted professional and patient groups: Are they voting “no” for the money? 

Groups opposing Prop 61 include the Lupus Foundation of Southern California, the California Hepatitis C Task Force, and the Ovarian Cancer Coalition of Greater California and its national affiliate the Ovarian Cancer National Alliance. The Coalition and the Alliance received $295,000 from Amgen, AstraZeneca, Genentech, GlaxoSmithKline, and Novartis in recent years, according to the “Yes” Group, which said it looked at drug company disclosures.  And then there’s the California Medical Association and its foundation, which received $754,000 from Pfizer, Genentech, and AstraZeneca over the last eight years. Most of the money came from Pfizer. The doctors group opposes Prop 61. Connecting dots between such organizations, the money they receive, and the drugs the companies sell might help the public evaluate the claims being made.

Ballot initiatives by their very nature are muddy. Voting yes sometimes means no, and voting no sometimes means yes. It all depends on the wording of the proposal’s language, and frustrated, confused voters sometimes simply check all yeses or all nos just to be done with the chore. There are 17 ballot propositions in the state this year, and the outcome of Prop 61 is far from certain. One certainty, though, is this: sky-is-the-limit drug prices won’t vanish. The high stakes game of drug pricing deserves some high-quality journalism.

Addendum: 11/10/16

Proposition 61 was defeated by a 54-46 margin. Coverage:

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