Prop 61: Californians appear to say no to lowering drug costs

Drug makers are poised to win a major fight in California as voters reject a closely watched effort to drive down prescription prices.

With the vast majority of the vote counted on Wednesday morning, Proposition 61 was losing with nearly 54 percent of voters opposing it. The measure would have capped the amount some state health plans pay for prescription drugs by barring them from paying higher than the discounted price drug makers offer the federal Department of Veterans Affairs. The change would have directly affected about 1 in 6 Californians.

Vermont Senator Bernie Sanders had pushed hard for the measure, telling voters they could send a signal to “greedy” drug companies that they would no longer tolerate “price gouging.”

But the drug industry, led by Merck, Pfizer, and Johnson & Johnson, poured at least $109 million into opposing the measure, which both sides saw as having the potential to set a precedent that could ripple across the nation and cost the drug industry billions. The drug industry’s effort to preempt that was believed to be the most expensive investment in a single ballot measure in the state’s history.

The war chest accomplished its goal, but experts predicted that Tuesday’s apparent defeat of the California ballot measure is likely to only bring the drug industry temporary relief.

“The fact that the proposition got on the ballot and got talked about a lot and got a lot of votes is a warning shot across the bow of the drug industry that something is coming,” said Dr. Adams Dudley, director of the Center for Healthcare Value at the University of California, San Francisco. “This issue is not going to go away.”

In a weeks-long ad blitz, the industry-funded opposition sought to emphasize the negative consequences the measure could bring, raising the specter of higher drug prices for veterans (which the “Yes” campaign countered would only result if drug companies decide to roll back those special discounts in future negotiations with the VA). The “No” campaign also warned of reduced access to drugs for California patients (which the “Yes” campaign said would only come to be if drug companies refuse to do business in the state.)

The “No” side also won the allegiance of nearly all the state’s major newspaper editorial boards, the California Medical Association, and a surprising number of patient groups, who generally expressed uncertainty about whether the measure would achieve its goals without causing harm.

In the end, a majority of California voters also seemed unconvinced. Their likely decision would buck the tide in an election cycle characterized by public anger at the drug industry, which ranged in focus from “pharma bro” Martin Shkreli to Mylan’s aggressive price hikes of the EpiPen. A Gallup poll conducted over the summer found that drug makers have a worse reputation than lawyers and oil companies, and are just barely less hated than the federal government.

Rachel Sachs, a law professor who studies health policy at Washington University in St. Louis, cautioned against interpreting the ballot measure’s failure as a public repudiation of anything other the specific initiative.

“It’s tough to say that a ‘No’ vote means that there is no more problem, or that consumers aren’t still angry at the pharmaceutical industry,” Sachs said. “It just means that at this time this is not the way to move forward on drug pricing.”

Experts said new political battlegrounds over high drug prices are primed to open up in other states or perhaps even in Washington, D.C. A ballot initiative very similar to California’s Prop 61 that’s backed by the same group is expected to make the 2017 ballot in Ohio. And in California specifically, the battle over drug pricing could move back to the state legislature, where a drug pricing transparency bill died over the summer but could gain traction in a new form with Prop 61’s defeat.

Prop 61 was devised by Michael Weinstein, a longtime AIDS activist who runs the AIDS Healthcare Foundation, a medical services provider. His group, which has a long resume of picking fights with drug companies and other powerful industries, contributed almost the entirety of the $16 million raised by the “Yes” campaign. (A national nurse’s group also contributed $55,000.) Several dozen organizations endorsed the cause, but their numbers were fewer than many were expecting with anger at the drug industry at a fever pitch.

The vote followed a hard-fought and sometimes nasty battle to win over Californians. As polling showed the race tightening in the final days before the election, the “Yes” campaign rolled out digital “Wanted” ads painting pharmaceutical companies as criminals.

Throughout the race, the “Yes” campaign tried to put the focus squarely on the drug companies’ opposition to the ballot measure. It also brought out Sanders for a string of stump speeches and held rallies across the state.

The “No” side blitzed Californians’ airwaves, spending what one consumer group estimated at $48 million on TV ads through Oct. 27. They appear to have worked.