Could Issue 2 on the Ohio ballot help lower drug prices?
On Nov. 7, Ohioans will head to the polls. Although each county has specific elections and issues to decide, there are some statewide initiatives. Among these is Issue 2, aka the Drug Price Relief Act. Let's break it down.
What is issue 2?
Issue 2 relates to state purchases of prescription drugs. It proposes that the state cannot pay more for prescription drugs than the U.S. Department of Veteran Affairs pays for the same products. The VA receives a 24 percent discount on most purchases, and proponents of Issue 2 say Ohio should receive the same benefits.Issue 2 also establishes that those who proposed the statute -- called petitioners -- have a “direct and personal stake in defending the law.” This means that if Issue 2 becomes law and is later challenged in court, the state of Ohio is required to pay the petitioners’ legal fees. Petitioners may have to pay the state up to $10,000.[AdSense-A]
When does it apply?
Issue 2 only covers instances where the state is purchasing the prescriptions or agencies are purchasing on the state’s behalf. This includes the Ohio Department of Medicaid, but federal programs like Medicare would not be affected. . Supporters say Issue 2 could save Ohio taxpayers $164 million to $536 million annually.
Points of contention:
Critics maintain that Issue 2 could be difficult to apply. In order to maintain similar prices, all Ohio agencies that purchase prescriptions would have to know what the VA is paying for each drug in question. This could be difficult, as these transactions usually aren’t public record. There are also questions about whether Issue 2 would even do anything to lower drug prices. In Ohio, prescriptions under Medicaid already receive a 23.1 percent discount, which is comparable to the VA’s 24 percent. It’s unclear how the state would compel drug companies to lower their prices. Ohio spends over $1.5 billion on prescription drugs annually, so it’s possible that if the state refuses to pay more for prescriptions, the drug companies will have no choice but to comply.
What about private insurance companies?
As stated above, Issue 2 only applies to state purchases. So although Ohio’s 3.7 million Medicaid recipients could potentially benefit, the 7 million residents on private insurance could stand to lose. Opponents say it’s possible that if pharmaceutical companies are forced to sell their products to the state at lower prices, private insurance recipients could see an increase in their drug prices. Over 64 percent of Ohio residents are currently on private insurance plans.
Who are the key players?
The main proponent of Issue 2 is Ohio Taxpayers for Lower Drug Prices. However, that’s not the group funding the “Yes” effort. Most of the money comes from a California-based nonprofit called the AIDS Healthcare Foundation. The AIDS Healthcare Foundation funded a similar initiative in California last year, but it did not pass. Issue 2’s primary opposition is Ohioans Against the Deceptive Rx Ballot Issue. The group is funded by Pharmaceutical Research and Manufacturers of America (PhRMA), a drug industry trade group. A number of healthcare-related groups have endorsed the “No” effort, including the Ohio State Medical Association, Ohio Hospital Association and Ohio Pharmacists Association. John McCarthy, former director of the Ohio Department of Medicaid, also wrote a report on the statute’s possible negative consequences.