Capitol Alert

Drug price backers overstate savings of Proposition 61

The Nov. 8 campaign pitching itself as the answer to rising drug prices in California has released an ad featuring an Iraq war veteran designed to counter opponents’ charges that Proposition 61 would lead to higher prices for former military service members.

The ad features Steve Dunwoody, California director of the VoteVets Action Fund, speaking into the camera on behalf of the proposal.

Text

I’m an Iraq War veteran, and it breaks my heart to see how the big drug companies are trying to convince my fellow vets that Prop. 61, the Drug Price Relief Act, will be bad for us. The truth is, the lower prices vets pay are protected by federal law, and our co-pays are capped at a low level. Don’t listen to the drug companies’ lies. Prop. 61 will lead to lower drug prices for everyone, including vets, and save the state a billion dollars a year. Vote Yes on Prop. 61.

Analysis

Prescription drug makers are putting in more than $100 million to defeat Proposition 61, which would prevent California state government from spending more for medications than the lowest price paid by the Department of Veterans Affairs.

Because the measure, funded by Los Angeles-based AIDS Healthcare Foundation, does not require drug companies to reduce charges on their own, the state would have to negotiate for the lower price.

It’s true veterans covered through Veterans Affairs pay lower prices for drugs. Federal law mandates a 24 percent discount. It’s also true VA recipients have fixed co-pays, while some qualify for free health care. Not all veterans receive their care through the VA.

Proponents derive their $1 billion in savings figure by using the $4 billion the state spends each year on drugs and applying the 24 percent discount.

But the state’s nonpartisan Legislative Analyst states that it’s unclear how much the measure would save for anybody, including veterans.

The state could save money if it is currently paying more for a drug than the publicly available price paid by the VA. But the VA in some instances negotiates a lower price than what appears in the public database and keeps the price confidential, the analyst wrote.

If the VA is allowed to continue to do that, the state would be unable to assess in all cases “whether state agencies are paying less than, or equal to, the lowest price paid by the VA for the same drug,” the analyst said. That would curtail the state’s ability to carry out the measure.

Here’s the bottom line: While the measure could generate annual state savings, the amount is “highly uncertain,” the analyst said, and depends on how the initiative is implemented as well as how the drugmakers respond.

We also note that the campaign paid $50,000 in consulting fees to Dunwoody’s group, VoteVets Action Fund Inc., according to state filings.

PoliGRAPH is The Bee’s political fact checker, rating campaign advertisements and candidate claims as True, Iffy or False.

Christopher Cadelago: 916-326-5538, @ccadelago

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