Q: If Issue 2 passes and the state saves the estimated $400 million, how do the citizens save?
Supporters of Issue 2 argue that a savings to the state is a savings to all taxpayers.
It would be up to the administration in creation of the next state budget how much of those savings would be passed on to taxpayers and how.
Supporters say that money could be used elsewhere in the budget — for schools or combating the opioid epidemic — or a tax break could be given.
Q: What about drugs the VA doesn’t buy? Would prices on those drugs increase under Issue 2?
The VA and state programs like Medicaid have very different clientele with different prescription needs. While the VA serves mostly men and an older adult population, Medicaid serves many Ohio women and children.
A state fiscal analysis of the issue cites these differences as one reason savings from Issue 2 may be limited.
“In many cases there will be no VA equivalent purchase price for drugs that are purchased by the state. In those cases, there would be no potential savings,” the report by the Ohio Office of Budget Management.
There is nothing in the wording of Issue 2 that controls the price of drugs not purchased by the VA, so prices could go up or down on those drugs as the manufacturers choose.
Voters guide: Your best local resource for Election 2017
Find information on races and candidates you care about, by using your location or browsing information on dozens of races and hundreds of candidates.
Q: If Issue 2 passes, what can the state do to prevent drug companies from raising drug prices for those on private insurance?
There is nothing in Issue 2 that prevents drug manufacturers from changing the price, up or down, on drugs in the larger market. The law would only limit what the state of Ohio pays for drugs it purchases.
Opponents of Issue 2 point to this as a potential problem if Issue 2 passes. Drug manufacturers could raise prices for those not covered by a state-funded program or even for the VA, they said.
“Even if the state were to initially benefit from some drug expenditure savings by receiving VA prices, drug manufacturers could and likely would seek to recover lost revenues,” the Ohio Office of Budget Managment report says.
Q: Who is backing for and against? Who funds those PACs?
Their campaign is almost entirely funded by the AIDS Healthcare Foundation, a California non-profit that bills itself as the largest provider of HIV/AIDS medical care in the U.S. It serves AIDS patients around the globe, including through several pharmacy and clinic locations in Ohio. It’s founder and president is Michael Weinstein who is seen by some as a controversial figure, but who is also credited with saving the AIDS Taskforce of Greater Cleveland from collapse.
Endorsements of the Yes campaign have come mostly from individuals including politicians, doctors, veterans and concerned citizens. They also have the endorsement of National Nurses United.
The campaign is entirely funded major drug manufacturers through the Pharmaceutical Research and Manufacturers of America, or PhRMA, a drug industry trade group. PhRMA spokeswoman Priscilla VanderVeer said all the money the group has donated to the campaign came from member companies, of which there are 37 listed on PhRMA’s website. They include some of the largest pharmaceutical companies in the market — Johnson & Johnson, Pfizer, Merck, Gilead and more.
The No campaign is endorsed by more than 70 organizations representing doctors, nurses, veterans, pharmacists, business, labor and retirees. The largest groups include the Ohio State Medical Association, Ohio Hospital Association, Ohio Pharmacists Association, AMVETS of Ohio, the Ohio Chamber of Commerce, and the Ohio Manufacturers’ Association.
Q: Seems like the primary issue boils down to whether or not prescription drugs for Veterans are always lower than what the state of Ohio pays and if so, why would paying lower costs be a bad thing?
A: It is essentially impossible to know whether the VA price is always lower than what state programs currently pay because neither the VA's final price, nor the state's is public information. The VA also utilizes a very different pricing system than Medicaid and other state-funded health plans. See the next question for more on this.
But several former Ohio Medicaid directors who analyzed the available data said it doesn’t give the entire picture of what the VA ultimately pays after rebates and discounts.
“When we talk about what the VA pays, there’s really four different types of pricing and rebates, four layers,” said Maureen Corcoran, Medicaid director under Gov. Ted Strickland. “All of that is not public information.”
It’s harder to know what Medicaid and all the various state health plans are currently paying because they each negotiate independently with drug companies and those negotiations are confidential. Each of the five managed care plans that administer Medicaid in Ohio — CareSource and Molina for example — operate independently and consider their negotiations proprietary.
It’s also worth noting that the VA, because its patient population is older, doesn’t purchase as many different types of drugs as programs like Medicaid. If the VA does not purchase a drug — like a medicine used on infants for example — Issue 2’s rules would not apply to that drug.
Q: If Issue 2 passes, I understand that Ohio will get the same prices as the Dept. of Veterans Affairs negotiates. Is there actual negotiating done between Veterans Affairs and pharmaceutical companies?
A: The VA purchases drugs directly and dispenses them through its clinics.
The agency reaps lower than average prices in two ways. First, drug makers must offer the VA a mandatory discount of at least 24 percent off the non-federal average manufacturer price. Then the VA uses its buying power to get supplemental discounts by limiting which drugs it offers on its formulary. Drug companies give lower prices in order to be included. But the lower prices come at the expense of fewer drug options for patients, according to the conservative Heritage Foundation.
The state of Ohio does not directly purchase drugs in most cases — with a few exceptions for things like vaccines purchased by the health department. Instead, individuals with Medicaid or state employees and retirees purchase their drugs from a pharmacy, which then gets reimbursed by their state health plan. How much the state reimburses a pharmacy depends on the contract that particular plan has negotiated with drug makers and pharmacies through its pharmacy benefit manager.
Medicaid cannot restrict its drug offerings in the same way the VA can. Federal law requires that Medicaid recipients have access to any drug approved by the FDA. It does however have a preferred drug list, and access to that list gives Medicaid leverage to negotiate additional discounts. In some cases those discounts may already be pretty close to what the VA pays, in others it could be more.
Issue 2 would not change the amount the pharmacy pays for the drug, but would restrict the amount a state-funded health plan could reimburse the pharmacy. This is why the Ohio Pharmacists Association is against the measure. They fear they will have to take a loss on many prescriptions filled for Medicaid patients. Something they say is already happening, and forcing community pharmacies to close.
If Issue 2 passes, state-funded programs would likely pay less in reimbursements than what they pay now. But the former Medicaid directors stress that in order to hit that cap and still be able to pay pharmacy dispensing fees and fees to pharmacy benefit managers, health plans like the ones for retirees may have to shift some of their costs to their members in the form of higher co-pays.
Q: If the opposition claims it is impossible to know VA prices, how can they say that people are already paying close to those prices in the first place?
A: This claim is based on the fact that federal law dictates a mandatory discount for both the VA and Medicaid.
The VA, as stated above, receives a 24 percent mandatory discount and then gets additional discounts off of that. Medicaid must receive a 23.1 percent mandatory discount and then negotiates additional discounts off of that.
So it’s unknown what the ultimate lowest price is that either ends up paying, but we know the initial discounts are pretty close.
Q: Which advertisement is correct on Issue 2? Both say they will lower drug costs. I want to lower drug costs so should I vote yes or no?
A: The answer to this question really depends on where in the supply chain you are looking at the "cost" of drugs.
Issue 2, if passed, would only lower what Medicaid and other state-run health plans pay for drugs — and therefore would reduce the amount of tax dollars spent on prescription drugs.
It would not directly impact how much drug manufacturers charge for the drug from the outset. It wouldn’t change how much pharmacies pay to stock the drug, or how much customers on various health plans spend out-of-pocket.
And it wouldn’t have any direct impact for the majority of Ohioans who are on private or employer insurance or on Medicare, which is a federal program.
That being said, the two sides each say there would be collateral consequences that could cause drug prices for everyone to go up or down.
Voting no, according to the No campaign, will not lower drug prices. It would simply maintain the current system and status quo on drug pricing. But they say that a Yes vote could actually increase drug prices for some people. This could happen in a few ways. Drug companies could simply increase the list price of drugs as they have been doing, because Issue 2 doesn’t stop them from charging whatever they want. And if the average price goes up, so too does the VA price. Drug companies could also stop giving out the additional discounts they currently give to the VA and Medicaid. And for some health plans, like the state retirement programs, the pressure to get state costs down to the VA level could result in cost shifting in which the state charges the retirees a larger share of their prescription costs.
According to the Yes campaign, those increases are all just scare tactics being used by the pharmaceutical companies funding the other side. They say that voting yes for Issue 2 will cause not only the state programs to pay lower prices for drugs, but will lead to others like Medicare and private insurance plans to demand those same low prices, eventually bringing down costs across the market.
Q: Campaign ads have said Weinstein is a pharmaceutical company CEO. Is that true?
A: Michael Weinstein is the president and founder of the AIDS Healthcare Foundation, which is a non-profit global AIDS organization, not a pharmaceutical company. It was founded as a hospice for AIDS patients, but shifted to running testing facilities, clinics and pharmacies, plus doing case management for HIV positive individuals. They operate several clinics and pharmacies in Ohio as well as managed care Medicaid plans for AIDS patients in California and Florida.
AHF is a $1.3 billion operation that does make about 80 percent of its revenue from selling drugs through its pharmacies. But as a non-profit, that revenue is used to continue offering services. Weinstein’s salary is modest when compared to other directors of large non-profits. He was paid $403,093 in 2015 according to tax filings.