Merck & Co., Pfizer and Others Join Forces to Fight California Drug Price Control Ballot Initiative

May 31, 2016
By Alex Keown, BioSpace.com Breaking News Staff

SACRAMENTO, Calif. – Pharmaceutical giants Merck , Pfizer and Johnson & Johnson , are joining forces, but not to combat some dread disease or public health crisis, but are combining their influence and resources in an effort to defeat a ballot initiative that would cap the amount California state agencies pay for prescription drugs.

The ballot measure, which will be placed before voters in November, would tie the amount of money state agencies pay for medication to the same amount that the U.S. Department of Veterans Affairs pays. Called the “Drug Price Relief Act Initiative, the measure is a voter-led initiative that would apply to “any program where the state is the ultimate payer for a drug, even if the state does not purchase the drug directly,” according to the language of the ballot initiative. Last year, the state of California spent approximately $5.2 billion on prescription drugs, Bloomberg reported, citing the state Legislative Analyst’s Office.

So far the drug companies fighting the measure have raised about $68 million to sway public opinion, with the big three pharma companies spending about $6 million each, Bloomberg said. Other pharma companies throwing resources behind the fight include Bristol-Myers Squibb and Purdue Pharmaceuticals.

The Department of Veterans’ Affairs was selected as a pricing benchmark because that agency falls under the authority of certain California laws that govern drug price negotiations. Proponents of the ballot initiative have pointed to a 2005 Congressional Budget Office report that shows the federal agency pays approximately 42 percent of market prices for prescription drugs, while the California Medicaid program pays about 51 percent, according to a report on ballotpedia. Supporters of the initiative, including the Los Angeles-based AIDS Healthcare Foundation, suggest the measure would control drug prices in the state, while some opponents have suggested it would only force the pharmaceutical companies to increase prices in order to cover the loss the measures would likely force.

“Our primary purpose here is to strengthen the hand of government in negotiating prices, and make clear the public ire over the cost of drugs and the lack of transparency, and that profit is an issue that has to be dealt with,” Michael Weinstein, president of the AIDS Healthcare Foundation said, according to ballotpedia.

The measure has also been supported by Democratic presidential candidate Sen. Bernie Sanders. In a statement, Sanders excoriated the pharmaceutical companies that are opposed to the measure, saying their “greed has no end.”

In an October 2015 interview with the Sacramento Bee, Kathy Fairbanks, a spokesperson for Pharmaceutical Research and Manufacturers of America (PhRMA) said the initiative, if passed, would likely have adverse ramifications for the state.

“It will increase the prices of prescription drugs sold to veterans and many California consumers and will reduce the number of drug choices available to Californians all while costing taxpayers millions more in state bureaucracy and lawsuits because it will be virtually impossible to implement,” Fairbanks said.

The California fight is likely to spill over into the national presidential election as several companies have appeared before Congress this year to talk about the high prices of prescription drugs, including Valeant Pharmaceuticals , Gilead Sciences and the disgraced former head of Turing Pharmaceuticals, Martin Shkreli, who might be the one who sparked the attention of candidates this year after increasing the price of a 65-year-old drug he acquired by 5,000 percent. After news broke about the price increase of the toxoplasmosis drug Daraprim’s price hike, former U.S. Secretary of State Hillary Clinton, also a Democratic presidential candidate, tweeted about possible prescription drug price-cap legislation if she is elected president. Clinton has proposed to cap monthly out-of-pocket costs for prescription drugs at $250.