Ohio’s drug price ballot issue: What’s really going on?

An initiative aimed at controlling drug prices that’s headed to Ohio’s November ballot has already caused much heated debate.

As both supporters and opponents of the Ohio Drug Price Relief Act — Issue 2 on the November ballot — air TV ads and make claims about the initiative’s impact, it can be difficult for voters to understand what’s really going on.

What does the ballot issue say?

Issue 2 would require that the state, including the Ohio Department of Medicaid, pay the same or lower prices for prescription drugs as the U.S. Department of Veterans Affairs — which currently negotiates discounts of at least 24 percent.

MORE: Issue 2 pits emotion versus complex drug pricing system

It would forbid any state agency or state-funded program — Medicaid, state prisons, the Ohio HIV Drug Assistance Program for example — from entering into a purchase agreement with drug manufacturers unless the net cost of the drug is the same or less than the VA pays.

It also gives the sponsors of the ballot initiative the right to intervene at taxpayer expense in any legal challenges filed against the initiative after the election.

Who are the supporters?

Ohio Taxpayers for Lower Drug Prices says the goal of the initiative is to stop price-gouging at the hands of the drug industry.

The sponsor of the initiative is 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 locations in Ohio.

AHF funded the collection of signatures to get the measure on the ballot and has contributed almost all of the campaign's funding.

RELATED: Consumers kept in the dark over drug pricing

The foundation pushed a similar, but not identical, measure in California last year. Proposition 61 failed after the pharmaceutical industry spent more than $100 million to defeat it. That measure would have exempted Medicaid managed care plans from its drug price regulations, whereas the Ohio initiative would not.

Proponents of Issue 2 have estimated it will save the state as much as $400 million a year.

“That money in our budget would help us do two things. First it would help us fund tax relief, which we didn’t get in this past budget and maybe give more money to schools and local governments,” said Matt Borges, former GOP state party chair and a spokesman for the ballot issue campaign. “And also, it creates a ripple through the marketplace — that the drug companies have identified themselves — that would eventually bring prices down for everyone across Ohio and across the United States.”

The petitioners -- including AHF CEO Michael Weinstein -- would be given the right to intervene in any legal challenge to the law if passed, with taxpayers picking up their legal fees. This means if there was a lawsuit against the state for not properly implementing the law, tax payers would be paying for the lawyers on both sides.

Weinstein has brought suit against the state of Ohio numerous times, including a current lawsuit over AIDS grant money denied to AHF earlier this year.

Who is opposed?

The opposition campaign, Ohioans Against the Deceptive Rx Ballot Issue, lists more than 80 organizations that are partnering to defeat the measure. They include veterans groups, mental health agencies, the Ohio State Medical Association, Ohio Pharmacists Association and the Ohio Chamber of Commerce.

All of the funding for the opposition campaign comes from major drug manufacturers through the Pharmaceutical Research and Manufacturers of America, or PhRMA, a drug industry trade group.

PhRMA has donated more than $15 million to the No campaign.

The opposition message is that the ballot issue will raise rather than lower drug prices, including for veterans, while reducing patient access to needed medicines. They also say the measure would be nearly impossible to implement and will lead to lawsuits and bureaucratic red tape.

The group also argues that this initiative leaves out the seven million Ohioans, 64 percent of the state, who get private insurance and, according to the group, could see their prices go up.

RELATED: More than $20M in ads to hit Ohio airwaves on Issue 2

“It’s unworkable because we literally cannot find out what those lowest (VA) prices are. But even if we could, and we were able to do it, there’s no guarantee that the pharmaceutical companies are going to give (Medicaid) those lower prices. It doesn’t force them to sell it at that lower price,” said John McCarthy, former Ohio Medicaid director under Gov. John Kasich, who has conducted an analysis of Issue 2 for the opposition.

The ballot initiative would wreak havoc on the existing negotiation procedures that multiple state agencies engage in, causing them to spend more to overhaul their processes and possibly forego existing rebates, an analysis Vorys Health Care Advisors did for the opponent coalition says.

The report also says agencies could end up having to restrict the selection of drugs they offer on their formularies due to the proposed negotiation changes.

What’s the impact? 

The Ohio Department of Medicaid, the largest state purchaser of prescription drugs, has not conducted a financial analysis of the initiative and has taken no position.

The state’s budget office, in a legally required review of the ballot issue, said it could not conduct a complete analysis of possible savings because there are too many unknowns, including what the lowest VA price is on many drugs.

The state's report concluded, however, that Issue 2 is unlikely to result in any savings for Ohio's Medicaid program, which is already getting hefty discounts and makes up the majority of the state's $2.8 billion in prescription drug spending.

MORE: Your questions answered about Issue 2

RELATED: High cost of prescriptions puts some drugs out of reach

The measure would impact prices not just for those on Medicaid, but those who get health care through other state agencies, including developmental disability centers, prisons, state employees, and state veterans’ homes.

The statute would not directly impact the majority of Ohioans who get their health insurance through private purchase, from their employer or from Medicare, which is a federal program.

But both sides say there would be collateral impact for all Ohioans.

The Yes campaign argues that passing Issue 2 -- capping the amount Medicaid and other state agencies will pay for drugs -- would put intense pressure on the drug companies to give the same deal to Medicare and private insurers, thereby lower prices for everyone.

RELATED: With small pharmacies disappearing, Medicaid reimbursements seen as culprit

The No campaign says the exact opposite would happen. If prices are capped for Medicaid, they argue, the drug companies will simply shift the cost elsewhere, offering fewer discounts to private insurers and raising prices for everyone.

Pharmacists in Ohio are also concerned that the cost could be shifted to them. If Issue 2 passes, there would be no change to the prices a pharmacy pays for drugs, but Medicaid would only be allowed to reimburse the pharmacy at a capped rate. The Ohio Pharmacists Association said this could result in community pharmacies no longer being able to afford to accept Medicaid, something that is already happening as reported by this newspaper.


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