This is a perfect example of a proposition which really needs delving into in order to understand the consequences of its passage. Proposition 61 has great intentions: Reducing the costs of prescription drugs for patients under the care of state agencies like Medi-Cal, the Public Employees’ Retirement System, UC & CSU students, state inmates and state hospital patients. Currently, the VA enjoys special price negotiating privileges because of federal law bars the Veterans Affairs (VA) from paying more than about 76% of a drug’s average wholesale price. Because of this, the VA frequently has the lowest prices while each state agency negotiates its own price.
Prop 61 would forbid the state from buying a drug that’s priced higher than what the VA pays.
Opponents say that the major problem with this law is that it assumes that the drug companies wouldn’t try to recoup any lost revenues here somewhere else. The likely outcome, they say, would be that drug prices would rise in the open market in order to compensate. And, in a strangely written law, the drug companies are not required to disclose the actual average wholesale price of their drugs. So, they could even raise the price of the VA’s drugs, saying that the current price was below the 76% threshold, without the ability of checking whether they are honest about the average wholesale price. This would cause the cost of drugs veterans pay to rise.
The potential savings or loss in the passage of this proposition is completely unknown, because there is no way of knowing how the drug companies would react.
A YES vote on Prop 61 means state agencies would generally be prohibited from paying more for any prescription drug than the lowest price paid by the U.S. Department of Veterans Affairs for the same drug.
A NO vote leaves current negotiating policies in place.
For more information, please check out the state’s Legislative Analyst’s Office:
www.lao.ca.gov/BallotAnalysis/Proposition?number=61&year=2016
Dan O’Brien
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