The reason that it might
lower drug prices is that if the measure passes, they are not sure how drug manufacturers would respond. This prop feels like a game of chess.
Let's take a step back. The intent is to lower costs for the state (and tax-payers), which could pay varying prices for the same drug. These drugs go to patients under care of the state, like people on Medi-Cal or those in Veteran Affairs (VA). Drug prices vary because, in the drug industry, a contract is negotiated to determine the price. And sometimes, that contract remains confidential and the price hidden. So for example, Medi-Cal might negotiate a contract with Example Pharma Co. and for the same drug, the VA might negotiate a separate price (because of factors such as quantity bought, competition, etc). In fact, the VA often has the lowest prices. But because some contracts are confidential, no one is sure. You can read more why the VA typically gets the lowest price here
And oh yeah, the state might pay for these drugs at yet another
price by, for example, reimbursing pharmacies if the customer (like you) is part of state programs. They pay what the Example Pharma Co. negotiated with the pharmacy
TL;DR. the state doesn't want to pay different prices for the same thing, and wants the lowest price. But, they can't control the drug manufacturers, just their state agencies, so Prop 61 would forbid state agencies from paying more than what the VA pays, no matter how it's paid. They're essentially trying to force drug manufacturers to lower their prices for all state agencies.
Prop 61 would forbid the state from buying a drug that's priced higher than what the Veteran Affairs (VA) pays. Here's what would happen if Prop 61 passes.
State Agency: Hey Drug Company, I want Drug Z for $2 because the VA is paying $2 for it.
Drug Company: No.
State Agency: Shit. Really? I can't buy it unless it's $2 or less.
Drug Company: GTFO.
But it's possible the drug manufacturers can't afford to lose California as its customer. In which case, to maintain the same level of profits, drug manufacturers would raise
prices on the VA to allow other agencies to purchase those drugs at VA prices.
State Agency: Hey Drug Company, I want Drug Z for $2... wait, when did it change to $5?
Drug Company: We can't lower prices for everybody, but we also can't lose all you as customers. So you and the VA have to pay $5 for Drug Z.
State Agency: Shit. Really?
Drug Company: AYFKM? What did you expect?
(State Agency: But you have a monopoly on Drug Z.)
(Last line added as editorial, to extend the hypothetical argument further.) Notably, federal law sets a maximum price for the VA to purchase drugs, meaning hypothetical scenario #2 is bounded. (But, the VA does get prices below the max price.) These are the two scenarios the Legislative Analyst's Office lays out.
More likely to happen, is a combination of both scenarios, applied to different drugs. If any of that happens, the state may not save as much money as it hopes. In fact, it might pay more.
In general, Medi-Cal probably doesn't have the same leverage the VA does, for many reasons
, but it may ultimately result in not being able to provide for its 3 million patients.
Passage of the Prop 61 could result in similar laws in other states or nationally.
Definitely not the VA
(who expects to spend $1.5B more
) a year. Consumers Union
and Health Access
, two groups that work to rein in drug prices and have supported previous bills on regulating drug prices, have not taken a stand or have taken a neutral position on Prop 61. Yes on 61
has raised money through Bernie Sanders' Our Revolution
campaign, and Michael Weinstein of The AIDS Healthcare Foundation
(the same Michael proposing Prop 60
). Yes on 61 people say that given the $109 million being spent by Big Pharma is an indication it would work.