Editorials

Drug pricing is too complex to fix with Prop. 61

A pharmacist holds a package of EpiPens, made by the pharmaceutical company Mylan. CEO Heather Bresch will testify before the House Oversight and Government Reform Committee in the coming days after Mylan jacked up the price for the lifesaving drug by more than 500 percent since 2007.
A pharmacist holds a package of EpiPens, made by the pharmaceutical company Mylan. CEO Heather Bresch will testify before the House Oversight and Government Reform Committee in the coming days after Mylan jacked up the price for the lifesaving drug by more than 500 percent since 2007. The Associated Press

It would serve Big Pharma right if Californians passed Proposition 61, capping drug prices by prohibiting state agencies from paying any more for prescription medication than the rock-bottom prices paid by the U.S. Department of Veterans Affairs.

The industry certainly has given voters every reason to do it – from jacking up the cost for lifesaving EpiPens by a whopping 500 percent to making the most effective treatments for hepatitis C so expensive that they’re out reach for millions of Americans.

Not to mention beating back even the smallest attempts at transparency at the state level. The latest example is Senate Bill 1010, which would have required drugmakers to warn the state before raising the wholesale price of a drug by more than 10 percent. The Legislature, shamelessly caving to Big Pharma’s money and lobbyists, maimed and then killed it.

The unfairness of it all was enough to irk even Gov. Jerry Brown, who on Friday groused about “rapacious corporate behavior” and “unconscionable price increases” as he reluctantly signed Assembly Bill 1386 to allow more businesses and colleges to stock EpiPens.

“I implore you,” Brown told congressional leaders in a letter, “to take quick and decisive steps to rein in this kind of predatory pricing, which inflates the costs of health care and too often prevents patients from getting the medications they need.”

No one likes being extorted. And Big Pharma could use a dose of its own medicine. But Proposition 61 is not the way to do that.

The initiative comes with too many uncertainties and not enough guarantees that things won’t get worse. We’re loath to admit the industry is right when it says this is an all-too-simplistic solution to a complicated issue.

According to the nonpartisan Legislative Analyst’s Office, California spent almost $3.8 billion on prescription drugs in 2014 and 2015. But that’s where the transparency ends.

State agencies, such as the California Department of Public Health, negotiate their own deals and discounts with drug companies to get the lowest price. Sometimes the agencies band together, but, in general, agencies rarely pay the same price for the same drug.

What’s more, most agencies are then bound by confidentiality agreements that prevent them from publicly disclosing what they pay. For sure, the pharmaceutical industry is the only entity benefiting from this system and they’ve worked hard to keep it murky.

The exception to this is the VA, which, thanks to a federal law that ensures an automatic 24 percent discount from drugmakers, pays the lowest price for medication of any public or private entity.

But many of those prices – particularly the ones negotiated on a case-by-case basis – are not made public and could be subject to the same confidentiality agreements that state agencies must follow, making Proposition 61 almost impossible to implement.

Another possibility is that drug companies will just raise their wholesale prices to make up for lost revenue. Such a move would affect not just what veterans pay, but the millions of Californians covered by Medi-Cal’s fee-for-service program, state employees and retirees, prisoners and many others.

Even more troubling, Medi-Cal might have to ignore the initiative altogether and pay whatever the drug companies are asking, just to abide by federal law to provide members with access to crucial medication.

These are all possibilities. The only thing we can predict with any certainty is that if Proposition 61 passes, it will be tied up in court for years to come. Big Pharma has already spent tens of millions of dollars trying to kill it. But that’s about the only upside to Michael Weinstein, the wealthy and notoriously litigious founder of the AIDS Healthcare Foundation, being the author of the initiative.

In short, a vote for this initiative is a protest vote. Real change, as Brown noted, can unfortunately come primarily from Congress and, in lesser ways, from the Legislature. It’s the only cure to this racket.

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