Ohio’s Opportunity to Take Control of Medicine Prices

By Peter Maybarduk, Director of Public Citizen’s Access to Medicines and Knowledge Economy Group

The pharmaceutical industry has spent $60 million in Ohio this year trying to persuade thoughtful, reasonable people to ignore Issue 2.

People in Ohio, and all of us across the country, risk missing a historic opportunity to take control of our health.

Issue 2 will increase the power of Ohio state programs to negotiate and otherwise secure lower medicine prices. It accomplishes this by linking state prices to those negotiated by the federal Veterans Administration (VA). The VA’s price, which is at least a 24% discount off the average price paid to drug companies for non-federal programs, is publicly available information. That will be the new price ceiling for Ohio’s public programs.

Ohio potentially could achieve even greater discounts that the VA negotiates case-by-case. Drug corporations prefer to keep these prices confidential. But federal law, it would seem, already permits the VA to disclose otherwise confidential pricing information to state agencies administering Medicaid.1 A recent federal court decision said that even state legislators could properly access price information otherwise held confidential by Medicaid. Maybe there are ways to lift the secrecy from prices after all.

Much opposition to Issue 2 amounts to a thinly-veiled threat. The drug manufacturers who oppose Issue 2 imply that if we act to reduce their power, they may raise prices on the VA in retaliation. This is, effectively, the pharmaceutical industry holding veterans’ healthcare hostage and attempting to pit veterans’ interests against everyone else’s.

That is cruel. And it is a false choice. Fortunately, corporations are largely prohibited by statute from jacking up prices on the VA overnight. As a country, we have wisely limited their ability to retaliate.

People are suffering. One in five Americans reports not filling a needed prescription due to its cost. Drug prices are a leading driver of personal bankruptcy. The manufacturers, after helping hook millions of Americans on opioids through illegal marketing, now spike the prices of addiction and rescue treatments, like naloxone products, threatening rationing even among law enforcement and emergency care. Meanwhile the pharmaceutical industry enjoys profit margins among the highest of any industry, supported by government-granted monopolies in the form of patents and other exclusivities. Their prices are unrelated to costs. Taxpayers fund tens of billions of dollars of federal biomedical research; then we give our research and the resulting inventions away to the drug corporations. We give them tax credits. In our largest program for prescription drugs, Medicare Part D, we do not even reserve to the public the right to negotiate prices with the monopolists.

The idea that a free market disciplines medicine prices today is an utter fiction. Drug companies simply charge us the maximum that we as a society, with no choice and no competitive alternatives, will pay to care for our sick and our loved ones.

We can do better. Policy shops and literature are filled with good ideas to make medicine affordable. The problem is not technical. It is political. Pharma has two lobbyists for every member of Congress. They have far more money to fight and mislead than the public can reasonably spend in turn. That is because we have given them our money.

We have to be more imaginative. We can foresee challenges under Issue 2. But Ohio and allies around the country can deal with them, in part through the legislature’s ability to craft implementation. If Ohioans say no, Ohio will have no new power to improve on the status quo. And though access to medicine advocates nationwide will work to create new opportunities – such as Sherrod Brown’s excellent Stop Price Gouging Act in the U.S. Congress – it is hard to say when Ohio or any of us will next have an opportunity comparable to Issue 2 to improve the people’s negotiating position.

Healthcare, perhaps especially medicine, is opaque and complex by lobbyists’ design. We change this by taking power back, and then working together to make ever better reforms. Issue 2 is not the end point. It is an opportunity to begin.

See more of Public Citizen’s view on Issue 2 on our recent Facebook Live.