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. 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.
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