Ballot Measure to Limit Drug Prices Fails in California

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By Joyce E. Cutler

Nov. 9 — California voters defeated a measure that would have tied what the state pays for prescription drugs to what the Department of Veterans Affairs pays.

The battle was the state’s most expensive initiative campaign. Drugmaker-fueled contributions to sink Proposition 61 exceeded $125 million, indicating just how much the industry feared a California beachhead in a nation where policy follows the winds in blowing east.

Prop. 61, with 99.7 percent of precincts reporting, was failing by 53.8 to 46.2 percent, the California Secretary of State reported. Still to be counted are provisional ballots from polling places and absentee ballots in transit.

“One takeaway is that the specter of rationing (or reduced access) remains a powerful political tool. Ohio may have a similar initiative next year, though this result may take some wind out of those sails,’” Bloomberg Intelligence analyst Brian Rye said in a Nov. 9 e-mail to Bloomberg BNA.

Prop. 61 would have affected drug spending for 4 million of California’s 39 million residents, covering the University of California, the California Public Employees’ Retirement System, public health, jails and prisons and California State University.

Drug purchases in the managed care program funded through the state Medicaid program, Medi-Cal, were exempted under the defeated measure.

Waiting, Reacting

“Voters did their research and recognized Prop 61 was a seriously flawed measure,” Kathy Fairbanks, No on Prop 61 Coalition spokeswoman, said in a statement. “Prop 61 was bad policy that would have harmed millions of patients, veterans, taxpayers and others in California.”

Drugmakers applauded the defeat.

“We are glad that voters recognized the flaws of Prop 61 and understood the devastating consequences it could have on veterans and patients across California,” the trade group Pharmaceutical Research and Manufacturers of America said in a statement. “Conversations about the cost of medicines are important, but Prop 61’s flawed policy was not the answer to the challenges people face accessing their medicines.”

Prop. 61 proponents applauded how well the campaign did despite being outspent 8-to-1.

“This was a tremendous uphill battle from the very start. The drug companies have managed to kill every other attempt to rein in drug prices, and last night they were able to defeat Prop. 61 by accumulating the largest war-chest ever seen against a ballot side in California’s history,” Garry South, lead strategist for Yes on 61, said in a statement.

“Yes on Prop 61/Californians for Lower Drug Prices now challenges legislators to come up with a more comprehensive solution to lower skyrocketing drug prices,” South said.

Expensive Campaign

The top 10 contributors ponied up $69.8 million to defeat the measure. Pharmaceutical giants Merck & Co., Pfizer Inc. and Johnson & Johnson each contributed more than $9.3 million to defeat Prop. 61, filings with the California Secretary of State said.

Proponents, including the AIDS Healthcare Foundation and California Nurses Association, donated $18.5 million to pass Prop. 61, also called the California Drug Price Relief Act.

“Voters wisely rejected a simplistic solution to a complex problem,” Paul Howard, senior fellow at the New York think tank the Manhattan Institute, said in a statement.

“Sacramento legislators and the governor should focus their efforts on exploring new ways of paying for health care that encourage drugmakers, hospitals, and physicians to coordinate and compete on delivering the best possible health outcome for patients at the best possible price,” Howard said.

To contact the reporter on this story: Joyce E. Cutler in San Francisco at jcutler@bna.com

To contact the editor responsible for this story: Brian Broderick at bbroderick@bna.com

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