Big Pharma fears only one thing: a government regulator who will push back on drug prices and protect consumers. Its fears could be realized in a year if an initiative intended to lower drug prices is approved by voters, which is why the drug companies have already filled a campaign war chest with nearly $40 million.
On Thursday, Secretary of State Alex Padilla announced that the California Drug Price Relief Act became eligible for the November 2016 ballot. The initiative, sponsored by the AIDS Healthcare Foundation, would require government health programs to only contract with drugmakers at prices that are the same as or lower than those paid by the U.S. Department of Veterans Affairs, which typically gets deep discounts on medications from drug manufacturers.
Unlike other countries that have regulations to keep control of drug prices, the U.S. has been reluctant to push for more power over prices. In fact, Medicare, which is the largest buyer of pharmaceuticals, is prohibited by Congress to negotiate the price of drugs. Without the authority, Big Pharma can profit off sick people as much as it wants, usually at seniors or taxpayers' expense.
Because of this lack of government pushback, pharmaceutical companies have profited handsomely, showing large profit margins in the past few years.
The threat has prompted Big Pharma to gear up for a costly, and, no doubt, misleading, campaign to stop the initiative. According to the Sacramento Bee, the pharmaceutical industry has reported raising almost $38 million from nearly 30 drug makers since September, with Johnson & Johnson and Pfizer, Inc. giving about $6 million apiece, as compared to the proponents' $69,000 on hand as of Sept. 30 and $125,000 since.
It will be interesting to see if the California Medical Association, the California Hospital Association, health insurers and others support the proposal. All of them have notoriously objected to any type of restraints on billing, or charges or rate review of their products. Doctors, hospitals, health insurers and others spent $110 million in 2014 to oppose measures that would have regulated health insurance insurance rates, require drug testing for doctors and ease caps on medical malpractice awards.
But all of these groups have railed against increasing drug prices. Now, will they put their money behind their outrage?