Greed destroys society.
Opinion: Drug companies spend $109 million to block vote to lower drug prices
By Harriett Blair Rowan
Published: Nov 6, 2016
Big Pharma breaks record for campaign spending in California’s Prop 61 fight
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BERKELEY, Calif. (MarketWatch) -- Big pharmaceutical companies have poured more than $100 million into defeating a state referendum in California that seeks to control soaring drug prices by limiting how much state agencies pay for the prescription drugs they buy on behalf of patients.
In a classic “stop hitting yourself” move, the pharmaceutical companies are running TV ads and sending endless mailers saying they are concerned that the measure could backfire by forcing the companies to raise drug prices for veterans and other patients in order to preserve their bottom line.
Their real concern is the possibility that this proposition could start a domino effect; lowering the prices that state agencies around the country are willing to pay for drugs. The pharmaceutical companies are spending big to defend their profits, and dressing it up as a defense of veterans. But for pharmaceutical companies and their shareholders, profit always comes before patients, or veterans.
Proposition 61, which is on the ballot in California on Tuesday, is the most expensive ballot measure in the state this year, and the “No on Prop 61” campaign has broken the record for spending by one side in a campaign. The proposition would prohibit state agencies from paying more than the price paid by the federal Department of Veterans Affairs, which uses its buying power to negotiate lower prices with the companies.
Supporters say the proposition could help combat skyrocketing drug prices. The drug companies say it will backfire, but quietly avoid the fact that it’s up to them whether it does so or not.
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John Lechleiter, the CEO of Eli Lilly & Co. LLY, +0.53% , told investors last month that “we’re fighting that tooth and nail.” Lilly has contributed more than $4.5 million to fight Prop 61. An industry publication said if Prop 61 were to pass it would lead more state governments and even private health plans to demand the discounts, saying it would be “a pricing disaster for the entire U.S. drug industry.”
The AIDS Healthcare Foundation, an international nonprofit and the largest provider of HIV/AIDS medical care in the U.S., is the sponsor of Prop 61, also known as the California Drug Price Relief Act. The “Yes on Prop 61” campaign has raised almost $15 million, more than 99% of that funding coming from the AIDS Healthcare Foundation. But they are being outspent 7-to-1 by the opposition.
The opposition campaign is officially listed as “No on Prop 61 -- Californians Against the Deceptive Rx Proposition, a coalition of veterans, doctors, patient advocates, seniors, taxpayers, and members of Pharmaceutical Research and Manufacturers of America with major funding by Merck & Co., Inc., Pfizer, Inc. and other companies.” The campaign has raised $109 million, exclusively from the pharmaceutical industry, not a dollar coming from veterans, doctors, patient advocates, seniors, or taxpayers.
The “No” campaign has also collected endorsements from medical associations, labor unions, community groups, and many veterans’ organizations. Some of the endorsements, like that of two prominent LGBT groups in San Francisco, have been criticized after it was revealed they each received $5,000 from the “No” campaign.
Advertisements funded by “No on Prop 61” are running during almost every commercial break on television in the days leading up to the election. The ads feature a concerned veteran warning Californians that passage of Proposition 61 could actually increase prescription costs, but supporters of Prop 61 see the ads as a threat more than a good-hearted warning.
“This is not a prediction; it’s a pure threat,” said Garry South, the lead strategist for the “Yes on Prop 61” campaign. “If they have to sell drugs to the state of California at a lower price, they’re going to try to make up for it and keep their obscene profits high by trying to screw everyone else in California.”
Vermont Sen. Bernie Sanders, who brought discussions of drug prices to the national stage during his presidential campaign, has become the face of the “Yes” campaign. Sanders endorsed the proposition and is featured prominently in “Yes on Prop 61” messaging, saying the proposition would be “a real blow against this greedy [pharmaceutical] industry.”
Prop 61 is a record-breaking race in a record-breaking year for ballot-measure spending. Campaigns supporting or opposing the 17 propositions on California’s ballot have spent almost half a billion dollars so far this year.
Who’s funding the opposition to Prop 61?
Merck & Co. Inc . $9.4 million
Pfizer Inc. $9.4 million
Johnson & Johnson $9.3 million
Amgen Inc. $7.6 million
Abbvie Inc. $6.9 million
Sanofi-Aventis US LLC $6.7 million
Astra Zeneca Pharma LP $6.1 million
Allergan USA Inc. $5.8 million
Novartis Pharmaceuticals Corp. $4.7 million
Glaxosmithkline $4.5 million
And 23 more drug companies and the pharma trade group, for a grand total of $109 million
Pharmaceutical giants Merck MRK, +0.67% and Pfizer PFE, +0.37% are the two largest contributors to the “No” campaign, spending $9.4 million each, followed closely by Johnson & Johnson JNJ, +0.07% , which has kicked in $9.3 million. Thirty-three pharmaceutical companies have funded the “No” campaign, along with the industry group, the Pharmaceutical Research and Manufacturers of America (PhRMA).
While more than 99% of the “Yes” campaign’s funding has come from the AIDS Healthcare Foundation, they also had over 500 contributions from individuals of $100 or less, and the California Nurses Association PAC gave $55,929. Endorsements for the “Yes” campaign include former U.S. Secretary of Labor Robert Reich, The American Association of Retired Persons (AARP), many local Democratic Party chapters, and labor unions.
Kathy Fairbanks, a spokesperson for the “No on Prop 61” campaign said that, despite the intention of supporters, “Prop 61 isn’t going to work. It’s going to backfire, and harm patients in California, and veterans, and families.”
Fairbanks, and opponents of Prop 61 point to a report from California’s Legislative Analyst’s Office about the “highly uncertain” fiscal impact. But the same LAO report also states that the fiscal impact on the state “could range from relatively little effect to significant annual savings,” and that “potential drug manufacturer responses limit potential savings,” clarifying that the real predictor of drug prices if Prop 61 passes will be the response from the pharmaceutical industry.
Harriet Blair Rowan is a freelance investigative reporter with a focus on money in politics. She previously worked at the Center for Media and Democracy.
