Dive Brief:
- The "California Drug Price Relief Act" is a referendum slated to be featured on the 2016 California ballot. If passed, it would force pharma companies to give large discounts to state agencies and could provide major tax relief for CA residents.
- J&J, AbbVie, Amgen, Eli Lilly and BMS have all contributed enormous sums to a fund dedicated to defeating the act. J&J contributed nearly $5.9 million to date, while AbbVie and Amgen each contributed more than $4 million to the fund. All told, pharma companies have dedicated $23 million.
- The pharma industry appears concerned the referendum may spark similar efforts in other states. Historically, this isn't so far-fetched. In 1978, Proposition 13 was passed in CA to freeze property taxes. Other states subsequently picked it up as a legislative issue.
Dive Insight:
Drug prices have increased recently, most notably due to a high price tag for the Gilead's new oral hepatitis C drugs. This referendum would require state agencies to negotiate prices that were either lower or matching the prices paid by the U.S. Department of Veterans Affairs. The VA has enormous leverage in negotiating prices due to its size and scope. If passed, the referendum would benefit agencies and departments serving HIV patients, retirees, inmates and low-income patients.
Biopharma companies, on the other hand, argue they must be allowed to price drugs at a level that generates enough revenue to pay for new innovations. It's still early in the election process, with voting a year away, but this situation will merit close watching as high drug prices continue to dominate national headlines.