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Drug makers donate millions to fight California discount initiative

From: Stat Pharmalot

The idea of being forced to offer discounts on drug prices to California state health programs upsets the pharmaceutical industry. In fact, some drug makers – including Pfizer and Johnson & Johnson – are so opposed to the idea that they have donated more than $10 million to fight a state ballot initiative that would impose price caps.

At issue is the California Drug Price Relief Act, which would revise state law to require state health programs, such as Medi-Cal, to pay no more for prescription medicines than the prices negotiated by the US Department of Veterans Affairs. Currently, the VA gets a 24 percent discount off average manufacturer prices.

The initiative comes at a time of growing national unrest over the cost of prescription medicines. Over the past few years, drugs for such hard-to-treat illnesses as cancer and hepatitis C have caused a firestorm, especially among public and private payers that worry about overextended budgets.

At the same time, the pharmaceutical industry has been criticized for taking continual price hikes, while some drug makers have been lambasted for buying medicines and quickly jacking up the prices to unforeseen heights – sometimes, by hundreds or even thousands of percentage points.

One advocacy group in California, the AIDS Healthcare Foundation, responded by launching the initiative and claims it will soon have more than 500,000 signatures, which exceeds the number needed to secure a place on the ballot for a November 2016 vote. The Los Angeles-based non-profit, which has raised about $1.25 million for the effort, runs various HIV clinics and regularly agitates against drug prices.

If California can “pay the same prices for prescription drugs as the amounts paid by the Department of Veterans Affairs, it would result in significant savings to taxpayers,” said AHF president Michael Weinstein in a statement earlier this year when the initiative was launched. “These ballot initiatives are necessary and appropriate to address public concern about runaway drug pricing.”

But the Pharmaceutical Research and Manufacturers of America is fighting back. The trade group recently created a fund that has attracted contributions from nine drug makers, according to a document filed late last week with state officials.

Among the donors – Johnson & Johnson gave $5.7 million; Bristol-Myers Squibb coughed up nearly $2.9 million and Purdue Pharma provided $1.1 million. Other contributors include Daiichi Sankyo, Pfizer, Eisai, Sunovion Pharmaceuticals and The Medicines Co., which gave amounts ranging from $10,000 to $160,000.

A spokeswoman for the PhRMA initiative wrote us that the “ballot measure may look simple, [but] the changes proposed will have adverse consequences for Californians. If it goes forward, we’ll be preparing a campaign to educate voters in California about its negative consequences.” She declined further comment.

To what extent the initiative would provide savings is unclear. The California Legislative Analyst’s Office, a state agency that provides fiscal and policy advice to the legislature, was unable to make comparisons in the mandated time allowed for an analysis to be conducted. One analyst told us that a key reason this could not be done is because some state programs obtain manufacturer discounts that are confidential.

Meanwhile, a similar initiative is under way in Ohio, although a spokeswoman for the industry trade group told us that, to date, similar push back has not begun.

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