Independent legal and medical experts have mixed opinions about Issue 2, the Nov. 7 ballot proposal aimed at reducing prices on prescription drugs for about 4 million Ohioans.
Several experts contacted by The Dispatch who are not affiliated with either the proponents or opponents said Issue 2 could result in some savings on prescription drugs but faces signifcant or even insurmountable hurdles.
Others label it as unworkable and say it has the potential to backfire and cause prices to rise and trigger shortages of critical drugs.
Gerard Anderson, a professor at Johns Hopkins University’s Bloomberg School of Public Health, said comparing prices for tens of thousands of drugs would be tedious, but the proposal “could be the first step toward seeing lower drug prices.
“One negotiation with drug companies rather than 100 different ones,” Anderson said. “It makes no sense for different government programs to pay very different prices for exactly the same drugs.”
Jay Mirtallo, a professor of clinical pharmacy and director of the master’s program in Health Systems Pharmacy at Ohio State University, said consumer access to new and more costly drugs probably would become limited, and pharmaceutical companies could raise prices elsewhere to make up for losses.
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“I’m worried this could cause more problems than it solves,” Mirtallo said.
The split among experts mirrors the starkly contrasting positions staked out by Ohioans for Lower Drug Prices, a proponent of Issue 2, and Ohioans Against the Deceptive Rx Ballot Issue, an opponent.
The issue is funded largely by the AIDS Healthcare Foundation of Los Angeles, while the opposition is funded by the Pharmaceutical Research and Manufacturers of America (PhRMA), the trade association representing drugmakers.
Both sides hired public-relations firms and consultants, with PhRMA paying three former Ohio Medicaid directors and a former state budget director to write reports or be on retainer.
The Dispatch opted to seek comment from people not paid by either side, including experts who analyzed California’s Proposition 61, which mirrors Issue 2. Proposition 61 was defeated last year, 53 percent to 47 percent. PhRMA contributed nearly $110 million to defeat the proposition while the AIDS Healthcare Foundation spent about $19 million in support of it.
Ohio’s Issue 2, known as the Drug Price Relief Act, is an initiated statute. If approved by voters, it would require Medicaid — the state-run program for low-income and disabled people — and state retirement systems, state employees, prisons and other state programs to pay no more for prescription drugs than is paid by the U.S. Department of Veterans Affairs, which receives a discount of at least 24 percent.
It is estimated that the requirement would affect about 4 million Ohioans, including 164,000 children, and proponents say it would save taxpayers between $164 million and $536 million annually. Opponents vigorously dispute the savings estimates.
Opponents contend that the proposal can’t work, mostly because some drug prices paid by the VA are kept secret by contract. They also note that the state already receives nearly the same discount on drugs — 23.1 percent — for programs such as Medicaid, which serves about 3 million people. They also say that if the proposal is implemented, it could trigger higher prices and limited availability of critical drugs.
PhRMA had given $15.8 million to the opposition campaign as of the June 30 deadline for filing a campaign-finance report, while the AIDS Foundation contributed nearly all of the $3.6 million the Issue 2 proponents reported receiving.
The ballot issue also includes a provision requiring taxpayers to foot the legal bills if the program passes but is subsequently overturned in court. Proponents would have to pay just $10,000 in legal fees.
“If the Ohio ballot provision passes, there will almost certainly be a lawsuit. The pharmaceutical industry hasn’t been shy about challenging unfavorable laws in court, most recently Maryland’s law restricting generic-drug price increases,” said Rachel Sachs, a law professor at Washington University in St. Louis.
Would Issue 2 work?
Sachs said several legal obstacles probably would prevent the state from achieving the intended savings.
“I’m skeptical that any state can impose a requirement like this without a change in federal law,” she said.
For starters, Sachs said, prices paid by the VA are not public, and nothing in Ohio’s initiative requires pharmaceutical companies to disclose those prices. And if the VA prices were known, Ohio would have no legal ability to demand the same prices.
Anderson, of Johns Hopkins, said published lists of VA drug prices are available, but he acknowledged that additional discounts on some drugs negotiated with manufacturers might not be included. The VA confirmed the availability of a list of some prices.
Could Issue 2 save money?
Federal law limits how much drug companies can charge the VA, giving it the lowest prescription-drug costs. If Ohio were to pay the same discounted price, some people believe it could save money, but experts contacted by The Dispach said no one really knows how much.
Dr. Aaron S. Kesselheim, an associate professor of medicine at Harvard Medical School, said in an analysis of the 2016 California issue that it could have saved an estimated $100 million to $125 million annually, much of that on costly HIV and hepatitis C drugs.
However, Kesselheim said the issue is flawed in it could be thwarted by price hikes by drug manufacturers in response to the proposal.
“In an era of tenuous public finances and constrained health-care resources, any meaningful budgetary respite could contribute to the fiscal health and future sustainability of socially valuable public insurance programs,” he said.
The California legislative analyst’s office also examined Proposition 61, concluding that it “could generate annual state savings. However, the amount of any savings is highly uncertain.”
The fiscal impact “could range from relatively little effect to significant annual savings. For example, if the measure lowered total state prescription-drug spending by even a few percent, it would result in state savings in the high tens of millions of dollars annually,” the analysis said.
Officials with the Ohio Department of Medicaid say they can’t project the potential effect of the ballot issue because they don’t have access to the VA’s bottom-line prices. Medicaid’s 23.1 percent discount is required by law. Both VA and Medicaid also negotiate additional discounts on some drugs that are not disclosed.
Last year, Ohio Medicaid spent $3.36 billion on drugs, not including rebates from manufacturers that can significantly reduce costs.
The concerns most commonly raised about Issue 2 are that drug companies could raise prices elsewhere or scale back research and development of new medications.
Geoffrey Joyce, a health-care economist with the Schaeffer Center for Health Policy & Economics at the University of Southern California, acknowledged the potential for state savings but cautioned that capping drug prices would reduce incentives for drug companies to invest.
“You can save money now at expense of innovation down the road, and if you lose out on breakout drugs, that affects future populations,” Joyce said.
Joyce said concerns about the high cost of medicines are overblown. “Drug companies have little time to recoup (their investment in drug development) in eight to 10 years of patent, and then it gets cheap. In the U.S., brand-name drugs are expensive, but generic drugs are cheaper” than in other countries.
Ohio State’s Mirtallo said he’s concerned about the potential for drug companies to raise prices on consumers not covered under the proposal and how the proposal might limit access to new breakthrough drugs. “I don’t think there is a simple fix.”
Experts agree on one thing: Ohio’s ballot proposal, like California’s, was born from growing consumer anger over rising drug prices, and that’s not likely to go away regardless of the outcome of Issue 2.
“One in four Americans report difficulties paying for the drug treatments they need,” said Shawn Bishop, vice president of Controlling Health Care Costs and Advancing Medicare at The Commonwealth Fund.
“People are frustrated with the high and rising prices of drugs and the lack of progress at both the state and federal level to address the issue,” Bishop said. “State and federal policymakers should see this effort as a sign that they have real work to do to lower drug costs in the U.S.”