California November Ballot: Prepare for Drug Price Wars

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By Joyce E. Cutler

May 26 — Californians can expect a summer and fall advertising and messaging tsunami about a November ballot initiative to limit prescription drug prices.

AARP on May 25 joined in support of the California Drug Price Relief Act, which would limit how much the state pays for prescriptions to what the Department of Veterans Affairs pays, Garry South, a long-time political consultant working on the campaign for the AIDS Healthcare Foundation, told Bloomberg BNA.

The drug industry-funded opposition already has raised $68.4 million to fight the measure in California, which is viewed as a beachhead for price limit battles across the country.

“Just like with the catalytic converter, California sets the standards. That’s why pharma is so apoplectic about this. They know it will not just stop in California,” South told Bloomberg BNA May 25.

The fight over what South said is the nation’s only ballot measure restricting prescription drug prices comes as Moody’s in March changed its outlook for the pharmaceutical industry to stable from positive in part due to pricing debates in the U.S.

Saving Money or Restricting Choice?

Proponents of the measure said tying drug prices that the California Public Employees Retirement System, University of California, prisons and jails pay to the VA's payment amount would save the state billions of dollars, because the VA pays an estimated 20 percent to 24 percent less than other government agencies for drugs. The California Nurses Association and Democratic presidential candidate Sen. Bernie Sanders (I-Vt.) have endorsed the measure.

The opponents group, Californians Against the Misleading Rx Measure, is sponsored by Pharmaceutical Research and Manufacturers of America with major funding from Merck & Co. Inc., Pfizer Inc., Johnson & Johnson and other companies.

The opponents point to a Legislative Analyst's Office report to argue the measure would actually cost the state more, force patients to seek approval before obtaining certain prescriptions and cover just 4 million of 38 million people in California. That LAO report noted the state spent more than $4 billion on prescription drugs in 2014-15.

The starting point to lower prices is government purchasers, South said.

“It is not clear to us legally that you could have a ballot measure that applies to private plans and tells private plans they can’t pay more than the DVA price. We can, however, tell the state of California what to do. That’s what this is directed at,” he said.

“And by the way, our theory is, and one of the reasons pharma is going to come after this with such a vengeance, they know that if the price point the state of California pays is linked to that of DVA, then the private plans are also going to demand the same deal. That’s why the drug industry looks at this as an existential threat.”

AHF is the largest global AIDS organization, provides medical care and services to more than 492,000 individuals in 36 countries worldwide.

Game On

The Los Angeles-based nonprofit last fall submitted 542,879 signatures to the California Secretary of State’s office following six months of canvassing (13 PLIR 1592, 11/6/15).

San Francisco Chronicle readers were greeted May 25 with a stick-on ad on the front page from that criticized the cost of hepatitis C drug Harvoni, sold by Foster City, Calif.-based Gilead Sciences Inc. Gilead contributed $4 million to the Californians Against the Misleading Rx Measure.

“Gilead has always been an advocate for patient access to therapies in the areas in which we work,” the company said in a statement e-mailed May 24 to Bloomberg BNA. “We believe this ballot initiative will do the opposite of what it is intended to do and reduce or delay patient access to much needed medications, putting people’s health at risk.”

Varied Opposition

The opposition includes Vietnam Veterans of America, California state council; California Taxpayer Protection Committee; California Medical Association; Southern California Pipe Trades District Council No. 16; California Chamber of Commerce; and California Manufacturers & Technology Association.

“While California’s physicians are profoundly concerned about the affordability of prescription drugs, we evaluated this measure and have concluded it is deeply flawed and unworkable,” CMA President Dr. Steven Larson said in a May 17 statement. “We believe the measure would likely increase—not lower—state prescription drug costs. Of greatest concern to doctors is that the measure would result in a new bureaucratic prior approval process that could interfere with patient access to the medicines they need.”

The California Life Sciences Association, whose members include many of the same companies contributing to the opposition campaign, in a May 25 statement said it opposed the measure as “poorly-written,” comments also shared by drugmaker Amgen and PhRMA.

Dollars Flowing In

AHF has contributed $4.3 million for the campaign, the filings said.

J&J, Merck and Pfizer each contributed about $5.8 million, the most recent filings with the California Secretary of State office said. Sanofi-Aventis U.S. LLC added about $4.3 million as did AbbVie Inc., AstraZeneca Pharmaceuticals and Amgen Inc.

In addition, Novo Nordisk Inc., Eli Lilly & Co., Bristol-Myers Squibb Co., Biogen Corp. and Allergan USA Inc. each contributed $2.88 million. Bayer Corp., Boehringer Ingelheim Pharmaceuticals Inc., Celgene Corp. and Otsuka America Inc. donated $1.1 million to the no campaign.

“Campaigning in California is very expensive,” with 10 markets including Los Angeles, San Francisco, San Diego and Sacramento, Kathy Fairbanks, a spokeswoman for the opposition to the ballot initiative, said.

Primary First, November Campaign Next

The advertising onslaught won’t begin until after the June 7 presidential primary, Fairbanks said. Eight statewide measures are on the November ballot, including marijuana legalization and an initiative to repeal plastic bag bans, along with presidential, senatorial, statewide and local offices and measures.

“In any year when it wasn’t a crowded ballot and there wasn’t a lot going on, California is expensive,” Fairbanks said. “It becomes more expensive to educate voters and capture their attention. And also California is a big state.”

Proponents have less money and will rely more on creativity, South said. The measure is polling well, South said.

To contact the reporter on this story: Joyce Cutler in San Francisco at

To contact the editor responsible for this story: Brian Broderick at

For More Information

More information about the ballot initiative is at The legislative analyst's report is at