I was watching television the other night and was surprised to see a commercial extolling the evils of California Proposition 61 being broadcast to me in a state far removed from California. At the time, I had no idea what California Proposition 61 covered except that it had something to do with prescription drug prices and some moneyed company or organization(s) feared its passage enough to broadcast its evils nationally. As of October 16, the top ten anti-Proposition 61 donors (all prescription drug companies) forked over a whooping $54 million to help stop this initiative. My curiosity and natural suspicions were naturally aroused. This commercial has convinced me to take a BB’s Healthcare Brigade closer look at the proposition to determine what it means to ALL Americans.
The California Proposition 61 Approach to Lowing Drug Costs
If California Proposition 61–State Prescription Drug Purchases Pricing Standards Initiative Statute (or The California Drug Price Relief Act) passes, the state of California will be prohibited from buying any prescription drug from a drug manufacturer above the lowest price paid for the drug by the United States Department of Veterans Affairs (VA). In other words, the state of California (as a payer in our healthcare system), is saying “why should we pay more for prescription drugs than the VA does?”
California pays prescription drug costs for its state employees, retirees, Medicaid beneficiaries (the proposition exempts managed care Medicaid beneficiaries), correctional inmates, college students, and other smaller groups. The proposition will be on the November 8, 2016, ballot, in California. I will not be describing the details of the proposition nor will I discuss the relative merits of the individual parts and exclusions.
Californians are good at creating direct vote propositions that they hope will remedy perceived wrongs. They do not let government inaction stop them from addressing important issues. California Proposition 61 is their response to the frustrations and inequities associated with unaffordable (and often hugely outrageous) prescription drug prices.
Our federal government is very selective in who it thinks should get the lowest priced prescription drugs—yes to Americans getting their drugs from the Department of Veterans Affairs (VA), the Department of Defense (DoD), the Public Health Service, and state Medicaid programs and no to Americans getting their drugs through Medicare and all private health plans. The uninsured pay the highest prescription drugs of all Americans.
In the United States, the lowest drug prices are only available to persons belonging to the right group. For the lucky Americans who fall in the YES group above, prices are kept low through a combination of federal price ceilings and negotiated pricing agreements using formularies. The VA and DoD are even allowed to combine for increased negotiating power to extract even lower prices below the federal price ceiling. Medicare is not allowed by federal government legislation to negotiate for lower prescription drug prices on behalf of its beneficiaries. It is estimated that the VA and DoD pay drug prices that are roughly half as much as those paid by retail pharmacies, and that Medicaid pays about one-third less than Medicare Part D plans. (see Drug Price Control: How Some Government Programs Do It for details) In California Proposition 61, California is not asking to include its customer base for combined negotiating power with the VA, but rather to simply ride its coattails to lower prescription drug prices.
The Bottom Line For ALL Americans
As worded, I do not know if California Proposition 61 is a workable initiative. I do not know if riding the coattails of the Department of Veterans Affairs (VA) is the best approach to getting the lowest prescription drugs for Californians. This initiative comes out of the frustrations and inequities associated with unaffordable (and often hugely outrageous) prescription drug prices Americans must pay. I applaud Californians for addressing this healthcare affordability issue we all face but lack champions (or funds) to put into actionable measures.
The veterans in the United States enjoy much lower drug prices than the vast majority of Americans and they naturally want to keep this benefit. While California Proposition 61 does not demand that this favorable government treatment be taken away, many veterans groups feel that riding the VA coattails to lower prescription drug prices will diminish or even take away their special treatment. While this may be a valid concern, they should not blame Californians are asking for equitable treatment for its citizens when it comes to getting the lowest prescription drugs other Americans receive. Veterans, along with all Americans across the country, should be asking why our government is selective in deciding who should and should not be receiving the lowest prescription drug prices. Even at the low VA prices, Americans are still paying much more than people in other industrial countries. Why?
Are drug manufacturers so powerful in the United States that the VA (and other government agencies) must sign confidentiality clauses in order to get the lowest negotiated prices? This aligns the interest of the veterans with the for-profit drug companies rather than with their fellow Americans? Secret contracts are contrary to democratic transparency and breeds corruption. Perhaps secrecy is needed to stop other Americans from demanding equitability. The Medicare beneficiaries might become jealous that the retired veterans are getting their cholesterol, high blood pressure, and diabetes medications at much lower prices than they are.
As I have said before, “We Americans are all interconnected and when we subdivide into smaller groups and protect our individual turfs, we diminish the whole”. Many of our fellow Americans cannot afford to pay the high prices associated with many prescription drugs and must do without. This is wrong and we should unite to champion the individual American. Let’s get together and fight for Affordable Health Care and Beyond for ALL Americans.
How Our Government Delivers Lower Drug Prices to Select Americans–Is it fair that some Americans are allowed to enjoy lower drug prices and others are not?
Lower Drug Prices for ALL Americans? This blog post looks at how the idea behind California Proposition 61 can spread across to the rest of the country.