The pharmaceutical industry has spent more than $100 million in a battle to defeat a California ballot measure that could put price caps on its products.
California voters go to the polls Tuesday to vote on Proposition 61, which would prohibit state medical programs from buying any drug that doesn’t have the same price as those obtained by the U.S. Department of Veterans Affairs.
The drug industry has been waging an expensive battle to defeat the measure, as it faces growing pressure from Congress and the public angry over high drug prices.
The VA is able to negotiate with drugmakers to get a lower price for products, which Medicare is forbidden from doing under federal law. The VA gets a discount of 24 percent off the lowest available price for a drug.
If Proposition 61 is approved, California would pay only what the VA would pay for drugs. That would apply to state programs such as MediCal, the state’s Medicaid program, and not private insurers.
Pharmaceutical heavyweights have collectively given $109 million to the campaign fighting the measure from 2015 to Nov. 1, according to state financial records.
The company that has given the most so far is Johnson and Johnson, with about $9 million. Pharma giant Merck gave $5.8 million and Sanofi $4.1 million to the same campaign.
Gilead Sciences, which got into hot water with Congress a few years ago after releasing a pricey hepatitis C cure, contributed $4 million.
The $109 million dwarfs the number generated by groups supporting the measure, which have raised $10 million, according to state data. It has spent about $105 million as of Oct. 22.
The main group funding the measure is the AIDS Healthcare Foundation, a California nonprofit that is bankrolling a similar drug-pricing initiative in Ohio, according to published reports.
The foundation operates a managed care plan under MediCal that would be exempt from the measure’s price caps. The foundation did not return a request for comment.
A poll released Friday by the University of California, Berkeley, and the polling firm the Field Polls found a close race, with support and opposition tied at 47 percent and 3 percent undecided.
The “no” campaign remains confident it can pull out a win and points to support from a myriad of veteran and patient advocacy groups that distrust the law’s effects.
“We are feeling good that voters are doing their homework and recognizing Prop 61’s flaws,” said Kathy Fairbanks, a spokeswoman for the “no” campaign.
The campaign has highlighted support from major newspapers such as the editorial boards for the Sacramento Bee and Los Angeles Times.
The Times said last month that the measure wasn’t the right solution to solve price gouging from pharmaceutical companies.
It noted that the VA doesn’t purchase as many drugs as MediCal, and so that means some drugs the state buys wouldn’t be subjected to the limits from Prop 61. It added that drug companies may find the profits elsewhere, which could hurt consumers.
“If pharmaceutical companies are as profit-hungry as the supporters of Proposition 61 contend — and you’ll hear no argument to the contrary from us — they will seek to recover those lost profits by taking more out of someone else’s hide,” the Times said.
The “no” campaign adds that the measure could have the unintended consequence of pharma companies deciding it isn’t worth it to provide drugs to state programs.
The “yes” campaign points to support from former presidential candidate Sen. Bernie Sanders, I-Vt., who recently attended a rally in favor of the initiative.
The campaign said on its website that nearly 5 million Californians could benefit from the lower co-pays and deductibles from the cap.
It could ultimately force “drug companies to moderate price increases across the board, based on public pressure and the lowered prices of state-purchased drugs.”
The “no” campaign counters that the provision could lead to higher costs for veterans. It points to a memo from the VA that said the measure could lead to drugmakers refusing to give large discounts to the agency.
The VA said a company has already balked at “providing a discount, specifically citing the California ballot measure and the Ohio initiative.”
