Supporters of a California ballot measure, which is designed to lower drug prices, lost a state court bid on Monday to alter the wording of a key analysis that may affect the outcome of the closely watched battle. And the decision comes amid intensifying jockeying over a measure that is seen as a litmus test for public discontent over prescription drug costs.

At issue is a report by a California state office that assessed the California Drug Price Relief Act, which would require the state Medicaid program and other state programs to pay no more for medicines than the prices negotiated by the US Department of Veterans Affairs. Currently, the VA gets a 24 percent discount off average manufacturer prices. The vote is scheduled for Nov. 8.

The measure is extremely controversial. The initiative, which was launched by the AIDS Healthcare Foundation, an activist group that operates clinics and pharmacies in various states, reflects national uproar over the cost of prescription medicines. And the ballot measure is one of several moves at the state level to force drug makers to justify or change their pricing, although an identical measure has so far only been proposed in one other state, Ohio.

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The pharmaceutical industry, which has so far lined up roughly $70 million to fight the effort, argues that the measure will increase costs and reduce access to medicines. And given the complicated process by which the VA obtains medicines, the industry also contends that veterans in California may be hurt if their discounts are eliminated or reduced should the measure become law.

The report by the state Legislative Analyst’s Office did not endorse this view specifically, but did conclude that “the amount of any savings is highly uncertain.” One reason cited is that drug makers may decline to offer certain medicines at federally mandated prices, which would lessen availability. The report also speculated companies may raise the prices charged to the VA in order to compensate.

But supporters of the ballot measure, which is called Proposition 61, argue that a leading industry “scare tactic” is to warn that the measure will hurt veterans because drug makers will raise prices, rather than agree to provide the state with prices offered to the VA. And so, one consumer activist last week filed a petition in California state court to add language concerning VA pricing and federal law to the report.

“What the pharmaceutical industry does not tell voters is that federal law already protects veterans,” wrote lawyers for Aref Aziz, a consumer activist who writes press releases for the Yes on 61 website.

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Aziz argued the state analysis did not mention federal law “restrains” VA drug pricing. “This silence leaves voters with the impression that drug manufacturers would be free to raise drug prices on veterans as high as they want — the sky is the limit. That specter of unrestrained price increases … inadvertently stokes the very fears that Proposition 61’s opponents have raised in this campaign.”

So he asked a state court judge to order the Legislative Analyst’s Office to add a phrase to a key sentence. Rather than simply state that “drug manufacturers might choose to raise VA drug prices,” he wanted to report to say “drug manufacturers might choose to raise VA drug prices, subject to federal price caps on brand-name drugs.”

But California Superior Court Judge Christopher Krueger denied the petition. “The court finds nothing misleading about the Legislative Analyst’s language, much less clear and convincing proof that it is misleading,” he wrote in his two-page decision. “The analysis does inform viewers that the federal government has established discount programs that place upper limits on the prices paid for prescription drugs by selected federal payers, including the VA.

“The court finds this is sufficient to inform voters that although drug manufacturers might choose to raise VA drug prices, there are federally-imposed “upper limits” on their ability to do so. Particularly given the Legislative Analyst’s considerable latitude in preparing the analysis, the court finds that this is not the type of clear case where the failure to specifically state that VA price increases would be ‘subject to federal price caps’ renders the analysis misleading.”

We asked the AIDS Healthcare Foundation for comment and will update you accordingly.

To what extent this decision will sway the voting in November is hard to predict, but the effort underscores the intensity of the clash. And the Legislative Analyst’s Office report is likely to be cited repeatedly in coming months as both sides continue scrambling for endorsements and release polls purporting to demonstrate voter support for their positions.

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