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What is the drug price ballot issue?

Issue pits consumer concerns against economics

By ALAN JOHNSON | GateHouse Ohio Media Published: June 19, 2017 4:56 PM

Tracy Jones got involved in the Drug Price Relief Act campaign to lower drug prices because her aunt had to choose between a cheap antibiotic and another drug that cost $126 a month.

Getting by on a $600 a month fixed income, Jones' aunt chose the antibiotic -- and lost sight in one eye as a result.

"People are really struggling," said Jones, who works for the AIDS Healthcare Foundation, the California group sponsoring the ballot issue that will appear on Ohioans' Nov. 7 ballots. "Here's an opportunity for us to do something that could affect the country nationwide, and it starts here in Ohio."

Antonio Ciaccia, head of government affairs for the Ohio Pharmacists Association, is sympathetic to consumer worries about soaring drug prices. But he opposes the Drug Price Relief Act, already the topic of ad campaigns expected to be among the most expensive in Ohio history.

He refers to the "abandonment rate," when a patient has a drug called into the pharmacy but doesn't pick it up because it costs too much.

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"I've seen patients walk away from from the counter because a drug was $200 and the others walk away when the price was $2," Ciaccia said. "It's not that we don't support a solution. Unfortunately, this ballot issue is not a solution."

In a nutshell, that sums up the issue Ohio voters will decide this fall: emotional, personal consumer stories versus the economics of a complex, high-cost drug system.

Proponents say the issue is a simple plan to reduce drug prices for 4 million Ohioans; opponents counter that it is unworkable and, even if approved, would not produce promised savings and might even increase drug costs.

Drug prices, which are rising about 10 percent per year, are a growing concern for many Americans, even those with private insurance.

U.S. Sen. Sherrod Brown, D-Ohio, last week introduced the Stop Price Gouging Act to go after "price gouging by big pharmaceutical corporations." Brown's proposal would require companies to justify drug prices and pay fines if the cost isn't warranted.

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Ohio Attorney General Mike DeWine filed a lawsuit recently in connection with the opioid drug death epidemic against major drug makers, as did the cities of Dayton and Lorain. "The case is about one thing: corporate greed. Defendants put their desire for profits above the health and well-being of the City of Dayton consumers," the Dayton lawsuit says.

President Donald Trump, who criticized high drug prices during his 2016 campaign, is reportedly drafting an executive order requiring federal agencies to use "value-based contracts" for drug purchases.

A recent study by Health Affairs Today pointed out the complexity of drug pricing. The group said that when $100 is spent on a drug at a retail pharmacy, about $58 goes to the drug maker, including $17 for the drug itself and $41 for marketing, research and development, and profit. The remaining $41 or so would go to insurers, pharmacy benefit managers, and pharmacies.

The Ohio Drug Price Relief Act comes in response to many of the consumer concerns. The initiated statute would require the state to pay no more than the lowest cost of drugs purchased by the U.S. Department of Veterans Affairs, a discount of at least 24 percent and potentially up to 40 percent when rebates are included. The California-based AIDS Healthcare Foundation is leading the Ohio ballot issue, as it did a similar proposal in California that was defeated 53 percent to 47 percent last November.

The foundation contributed the vast majority of the $19.9 million spent in favor of the California issue, while the Pharmaceutical Research and Manufacturers of America, a trade association that includes most major drug manufacturers, provided nearly all of the $111 million opposing the proposal. The same trade group is backing the Ohio opposition campaign.

Proponents say the issue is simple and straightforward. Dr. Robert L. Ruff, former neurology director for the Veterans Health Administration and an unpaid volunteer for proponents of the issue, said VA drug prices are public information. While negotiated discounts and rebates are not public information, Ruff said they would not make a significant difference in prices.

The state would have to negotiate lower rates with the drug companies to provide drugs for an estimated 4.15 million Ohioans, including more than 3 million on Medicaid, the program for people with low incomes or disabilities; those in state retirement programs; people in state prisons, mental health and developmental disability facilities; 114,000 state employees; those covered by the Bureau of Workers' Compensation and others.

Matt Borges, former Ohio Republican Party chairman and a supporter of the proposal, said, "Americans know the system is not working" for buying expensive prescription drugs. "We want taxpayers to get relief ... We're asking Ohioans to take their fate into their own hands."

Critics say that if the issue passes, drug companies would retaliate by hiking overall prices to make up the difference in lost charges to Ohio. Borges said that isn't likely to happen unless drug makers "choose to punish Ohioans because they cut into their profits." He accused opponents of using inaccurate "scare tactics" about the drug proposal.

The opposition is embedded in a broad and growing coalition that includes the Ohio Chamber of Commerce, Ohio State Medical Association, Ohio Pharmacists Association, National Alliance on Mental Illness of Ohio, American Legion, Ohio's Affiliated Construction Trades and many others.

Dale Butland, a seasoned Democratic political veteran serving as spokesman for the coalition, said that while "everybody agrees Ohioans need access to affordable prescription drugs, the ballot issue we're going to be voting on in November isn't going to do the job."

Butland said the proposal is "unworkable and unimplementable," as backed up by analysis by three former state Medicaid directors. Further, he said that even if the issue is implemented, it would not affect 64 percent of Ohioans who don't get drugs through state programs. "Their costs would likely go up as the pharmaceutical companies seek to make up their loss."

Butland said about three-fourths of drugs the state now pays for are through Medicaid, which, by law, already gets a 23-percent discount on branded drugs and 13-percent discount on generic drugs. He said the difference would not make a significant impact on drug prices.

Finally, Butland said the drug issue contains a provision in no other recent state ballot issue that would allow sponsors of the issue to intervene at taxpayer expense in any lawsuit filed against the issue should it pass.


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