The 2017 Ohio ballot box is set to become a battleground for the war on drug prices this Tuesday, Nov. 7.
Voters will be asked to consider the passage of Issue 2, an issue whose official ballot language will require the state of Ohio “to not pay more for prescription drugs than the price paid by the United States Department of Veterans Affairs.”
Currently, the VA is given a mandatory discount of 24% on medication purchases. For comparison, the state of Ohio has its own discount of 23.1%, a less than 1% difference.
Between the VA and Ohio, what does this issue mean to residents of Bowling Green who will be walking into the ballot box?
The answer is the fairly straightforward.
The biggest thing to keep in mind for this issue is who all it covers. The official language of the issue mentions only one entity covered by the cost reduction: the state of Ohio.
What this means is any purchase of medication by Ohio, not an Ohioan, will be subject to the mandatory discount. This classification only includes state agencies including the Ohio Department of Medicaid. It will not include Ohioans on private insurance.
The bottom line is about two-thirds of Ohioans will are directly unaffected by the issue.
Dale Butland, communications director for Ohioans Against the Deceptive Rx Ballot Issue (the No campaign), mentioned cost shifting.
“There is no way of telling how much individual cost will go up,” he said during a phone interview. “What you can say is that if you tell a company, whether that company makes drugs, TVs or automobile, that they have to sell their product at a lower price, what happens to prices to everyone else? That’s the cost shifting.”
It is an economic principle dealing with an entity selling a product to person A at a higher price because person B bought it at a lower price.
“There is no such thing as a free lunch,” he said, “everybody pays.”
Dennis Willard, a spokesperson for the Yes On Issue 2 campaign (the Yes campaign), views things a little differently.
“If Ohio passes this,” he posits, “what are the other 7 or 8 million people going to do?”
His answer: they will demand the same discount. That is to say, private insurers will look to put pressure on the drug companies to give them the same price.
So will prices go up or down? It will all depend on the reactions from both the people and the drug companies.
If not the people, will the state save money? That is another point of contention between the two campaigns.
$400 million dollars saved by the state is an often quoted number for proponents of the issue. This number comes from a pro-Yes campaign funded report by Maxwell Mehlman, director of the Law-Medicine Center at Case Western Reserve University School of Law. Patrick Murray, of the MetroHealth Center for Health Care Research and Policy, revised that estimate to somewhere between $164 million and $536 million.
Butland pointed to the official OBM (Ohio Budget and Management) fiscal analysis of Issue 2, saying the saving will be, more realistically, lower.
The document rates savings for Medicaid, the largest of the affected programs, as unlikely. It cites the 23.1% discount that Ohio already receives from drug companies and rebate money going back to a federal level.
The amount of savings is determined by the thesis of Issue 2, how much the VA pays for medication.
24% and 23.1% discounts are just the tip of the savings the VA and the state gets. Each builds on their discounts by negotiating private contracts to lower the price even more. Those contracts, as stated in the OBM statement, “negotiated by the VA are considered confidential per the terms of the agreements with drug manufacturers.”
This confidentiality means the final price is a lot harder, and in some cases could be impossible, to find. In turn, savings estimates are just that, estimates.
At the end of the savings debate is what happens to any money saved. The No campaign wages the saving would be put back into the state for administrative costs tied to the bill. The Yes campaign has a more favorable view of the state using the saved money to boost social programs and local government funds.
The last, and largest, point of contention between the Yes and No campaigns is the second half of the issue’s text. The full second paragraph of the issue is dedicated to upholding the issue should it become law.
Unprecedented in other issues is the text establishing the petitioner’s “direct and personal stake in defending the law”, and requirement of the state to “pay petitioners’ reasonable attorney fees and other expenses”.
“What is reasonable for a California attorney may not be reasonable for the Ohio state taxpayer,” said Butland.
The petitioners, specifically Tracy Jones for the Yes campaign have gone on record, according to Dennis during the phone interview, stating “…if the state defends the law when the drug companies inevitably sue, we have no need for our own representation. The point is moot.”
The state of Ohio, however, would still have its court-related costs to pay should the measure end up in a court.
The two campaigns have raised over $75 million dollars on this issue. The opposition campaign raising over 3 times as much as the support. Both campaigns have backers tied to the pharmaceutical industry.
Be careful as you go into the ballot box on Tuesday, Nov. 7. Issue 2 is only two paragraphs long, but it is a complicated two paragraphs with effects shrouded in uncertainty.
