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Prop 61: Prescription Drug Prices

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Prop 61 was defeated by a vote of 46.2% yes to 53.8% no. This means state agencies will continue to negotiate drug prices on their own

 

What would Prop 61 do? 

Prop 61 would attempt to lower the cost of prescription drugs. Here are its key provisions:

  • The state of California would pay no more than what the U.S. Veteran Administration pays for prescription drugs. The VA pays about 20-24% less than other government agencies.
  • The discount would apply even if the state government is not the direct buyer, but ultimately provides the funding for drug purchases.

(Note: The discount would only apply to drugs the state government buys. It would not affect prescription drugs paid for by private insurance or individuals.)

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Who is for Prop 61 and what are their arguments?

The main supporter of Prop 61 is the AIDS Healthcare Foundation and its President, Michael Weinstein, who got Prop 61 on the ballot.  Other supporters are AARP of California, the California Nurses Association, the Urban League and Bernie Sanders.

They say:

  • The discount offered to the VA should be enjoyed by the state and its taxpayers who would save millions in lower drug costs.
  • Prop 61 empowers the state of California as the healthcare provider for millions of Californians to get the best deal.
  • Big pharmaceutical companies are notorious for putting profits before patients. Example: Daraprim from Turing Pharmaceuticals. Daraprim is an anti-infection drug used by AIDS patients. The price rose from $14 to $750 per tablet overnight. What good are effective drugs if they are priced too high for patients to afford them?
  • Prop 61 would bring greater transparency to drug pricing.

Who is against Prop 61 and what are their arguments?

The big drug companies are fighting Prop 61. Other opponents include veterans groups, the California Medical Association, and other doctor’s organizations.

They say Prop 61 is flawed because:

  • It does not apply to 88% of Californians. People with private insurance or on Medicare would see no savings.
  • Prop 61 could end discounts given to the Veterans Administration. This would increase the cost of drugs for vets.
  • The state already has agreements to get discounted drugs. Prop 61 could undo these agreements and prices would go up.
  • If agreements for discounted drugs are undone, people who need prescriptions would have to wade through more bureaucracy to get approvals, causing delays and disruptions in their medicine deliveries. 

Is there an objective voice in this debate?

Yes, the Legislative Analyst’s Office. It takes a look at each proposition and sizes it up for fiscal impact.  It says:

  • It is really hard to estimate the savings because the office couldn’t get drug price information from the VA.  Without that information they couldn’t compare it to what the state pays, or how much could be saved. 
  • How much taxpayers save depends on how drug companies react. If Prop 61 passes, drug companies could raise prices on the drugs they sell to the VA.  That would mean higher prices for the state as well, undoing any savings.
  • There are a lot of drugs that drug companies sell to the state, but don’t sell to the VA. Companies could raise the price of these non-VA drugs to make up their losses.
  • The state may end up paying the same or higher prices for drugs despite Prop 61. Why? Because Medi-Cal (a state program) is required to offer drugs approved by the FDA no matter what the cost.

What kind of money is involved in this battle?

 

To sum up:

A “yes” vote would require the state to buy drugs at the same discounted prices as the Veterans Administration enjoys.

A “no” vote means things stay the same.

 

Click here for a cheat sheet on all the California ballot propositions.

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