Foes of Ohio drug-pricing initiative see many side effects for state

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Posted: Sep 05, 2017 8:08 PM

An Ohio ballot initiative that aims to cut prescription drug costs for millions has drawn opposition from health officials, business groups and community organizations, all of whom find the measure’s promises hard to swallow.

The Ohio Drug Price Relief Act, which will appear on the Nov. 7 ballot, would mandate that the state government pay no more for prescription drugs than the federal Department of Veterans Affairs. Typically, the VA gets discounts of about 24 percent.

Supporters of the initiative, which was spearheaded by the California-based AIDS Heathcare Foundation, say it will benefit four million Ohioans, save about $400 million annually and help get drug companies to mend their ways.

But opponents view the measure as ludicrous, unworkable and simplistic, and they say the promised cost savings are illusionary. If passed, the initiative would actually raise drug costs for the majority of Ohio residents, they say.

“The other side has a very easy issue to demagogue, and they do it all the time,” Dale Butland, spokesman for Ohioans Against the Deceptive Rx Ballot Issue, told Watchdog.org.

Three quarters of state-purchased drugs in Ohio go to the Medicaid program, which already gets a discount of 23.1 percent, Butland said. Ohio negotiates further discounts through private agreements as well, he said.

“Ohio is already paying very close, if not the same, as the VA …” Butland said. “The alleged savings that the ‘yes’ campaign talks about is simply not there.”

And though the initiative says the state would have to spend no more than the lowest drug price paid by the VA, it’s not possible to know the lowest price because the VA also negotiates voluntary discounts with drug manufacturers that are not disclosed, according to Butland.

Because the initiative does not apply to those with private health care, Ohioans insured through their employers could see their drug prices go up, he said. If drug manufacturers are told they have to sell their products to certain buyers at a lower rate, they could opt to recoup any losses by raising the costs for those not covered by the initiative, Butland said.

The campaign opposing the drug price initiative sees its role as educating voters about the proposal’s details. A similar proposal in California lost by a 53-to-47-percent margin last November, but it started out with an 80 percent approval rating, he said.

“By election day, a lot of Democratic voters thought this really wasn’t a good idea,” Butland said.

The opponents have endorsements from 70 statewide organizations in Ohio, including medical associations, business and labor groups, and community organizations. Several former Ohio Medicaid directors have joined the opposition as well, saying that uncertainties about how market forces would play out make it a risky deal for taxpayers.

But Dennis Willard, spokesman for Ohio Taxpayers for Lower Drug Prices, sees the current drug pricing market as dysfunctional, with drug companies having the ability to raise prices at will. The idea that Ohio already receives drug discounts of more than 20 percent is both inaccurate and illogical, Willard said.

“Drug companies would not be spending tens of millions if this had no impact on their bottom line and their price gouging,” he told Watchdog.org.

Any drug discount is actually split between the federal and state governments, with the feds getting the vast majority of it, according to Willard.

“The discount is tied to Obamacare, and we do not know the future of Obamacare at this point,” he said, adding that the discount does not apply to all Medicaid recipients.

One statewide medical organization supporting the measure is the Ohio Academy of Family Physicians, which sees the high cost of drug treatments as a crucial issue for patients and one state and federal lawmakers have not solved.

“This initiated statute is far from perfect, simplistic and flawed in many respects, and may not be the best approach for addressing high drug costs,” the academy said in a statement. “But, because of the inaction of state and federal lawmakers, it is all we have. By supporting this issue, we hope to send a message to legislators — the exorbitant cost of medications and the negative impact those costs have on patients must be addressed.”

But the Ohio Pharmacists Association rejects such notions, arguing that the measure contains no requirement that pharmacies would be able to purchase prescription drugs at the VA rate. So if the measure passes, pharmacies serving Medicaid patients could end up having to pay the going commercial rate from their suppliers while receiving a smaller reimbursement from the state government, according to Antonio Ciaccia, director of government and public affairs for the association.

Under such a scenario, pharmacies that have 40 to 50 percent of their business with Medicaid could not afford such a squeeze and would have to go out of business, Ciaccia said, adding that Medicaid is already underfunding pharmacies.

“This will just exacerbate the current landscape,” he said.