Californians to vote on drug pricesNews added by Benefits Pro on February 1, 2016

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By Jack Craver

Could we just vote to lower drug prices? That’s what Californians are trying to do.

Activists in the Golden State have succeeded in getting a referendum placed on the ballot this November that, if approved, will prohibit any state agency from paying more for a drug than the lowest price paid by the U.S. Department of Veterans Affairs.

The measure is largely driven by the AIDS Healthcare Foundation. The effect of high drug prices on AIDS patients was prominently displayed this fall, when Martin Shkreli, the chief executive of Turing Pharmaceuticals, raised the price of a medication often used by HIV patients from $13.50 a pill to $750 a pill.

“Everybody is angry about drug prices,” Michael Weinstein, president of the group, told Kaiser Health News. “When is enough enough?”

The initiative does not directly affect the rates that private insurers or providers pay for medicine, but considering the influence government payers, including Medicaid and Medicare, wield in medical markets, lowering the amount that public entities pay would have a major impact on the pharmaceutical industry. A recent study found that 62 percent of all health care spending in the country comes from tax dollars.

The pharmaceutical industry is already speaking out against the measure, saying the law will harm the consumers it seeks to help. A coalition of pharmaceutical interests has already raised $39 million in anticipation of the fight, largely from major companies such as Pfizer and Johnson & Johnson.

“It’s not going to help veterans, families, kids,” Kathy Fairbanks, a spokeswoman for Pharmaceutical Researchers and Manufacturers of America, told Kaiser.

From the perspective of drug-makers, the California measure is a serious threat. Not only is it the largest state in the country, whose policies have an outsized impact on their bottom line, but the reform could spark a push to implement similar measures in other states or nationally.

It’s not clear where the insurance industry stands, although the California Association of Health Plans, the principal lobby group, openly supported a measure introduced earlier this year to require drug makers to disclose the costs of their research and development, along with their profits.

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