The pharmaceutical industry won big on Tuesday after California voters rejected a ballot referendum that would have capped drug prices for certain state programs.
California voters reject Proposition 61, which would have forced drug companies to offer products for state healthcare programs at the same price paid by the U.S. Department of Veterans Affairs, which negotiates with drug makers for lower prices.
The rejection comes after an expensive campaign by pharmaceutical giants worried about other states taking up similar measures.
The measure wouldn’t have affected private insurance plans, but rather state programs such as Medi-Cal, California’s Medicaid program.
The defeat is a welcome relief to the pharmaceutical industry, which shelled out more than $100 million to kill it.
Pharmaceutical companies have drawn public ire after steeply raising prices for several products. Price hikes for generic drugs such as EpiPens have sparked congressional hearings and investigations.
It also has prompted some states to pursue measures to target drug companies, including measures to force them to disclose costs for research and development. The industry commonly defends high prices by pointing to steep research and development costs.
While major drug giants such as Merck and Johnson & Johnson helped bankroll a campaign against the measure, the main supporter of the yes campaign was the nonprofit AIDS Healthcare Foundation.
About $10 million was spent on the campaign supporting the measure, most of which coming from the healthcare foundation. The foundation offers HMO managed care plans in the state, which are exempt from the ballot measure.
The no campaign reached out to get support from veterans’ groups. It pointed to statements from the VA that the measure could lead to drug companies not offering drugs at discounted prices any more.
The California Medical Association, which represents more than 40,000 doctors in the state, also came out against the measure, saying it could interfere with patient access to the medicines they need.
The concern is the measure would have invalidated existing drug discount agreements for Medi-Cal and could delay access while new contracts are negotiated.
