New Report: Why California’s Prop. 61 Will Not Lower Drug Prices

Prop. 61 is fatally flawed because it ignores federal laws that constrain drug-price negotiations; its passage would hurt veterans, patients, and taxpayers

NEW YORK, NY – On November 8, Californians will vote on Prop. 61, a measure which aims to lower drug prices by restricting prices to that paid by the U.S. Department of Veterans Affairs. A new paper from the Manhattan Institute’s Paul Howard reveals that this proposition would not only fail to lower drug prices, but also hurt veterans, patients, and taxpayers.

Howard finds that Prop. 61 promotions misleadingly inflate the benefits while disregarding key repercussions:

• Higher Medi-Cal drug spending –Prop 61 would force Medi-Cal to abandon discounts it enjoys today, and buy medicines for patients at higher prices than pre-Prop 61.
• Fewer drug choices for public-sector workers / Higher CalPERS spending on some medicines – Prop. 61 cannot force drug manufacturers to offer California the same prices that the VA pays for drugs. This would force the California Public Employees’ Retirement System (CalPERS) to drop  medications for CalPers beneficiaries,  dropping dozens of branded and generic options patients and physicians rely on today.
• Higher drug costs for the VA – Medicaid “best price” regulations could lead to higher prices for veterans in California.
• Higher drug costs for CalPERS – If CalPERS were forced to limit its coverage to more expensive medicines, California taxpayers would foot the bill.
• Less investment in California’s biotech start-ups – Slashing U.S. drug prices by 40%–50% would lead to a 30%–60% reduction in early-stage drug development R&D.

Howard unravels the rhetoric used by Prop. 61 supporters to shed light on the crippling unintended consequences Californians could face. In summary, he argues that Prop. 61, although well meaning, will not lower prescription drug prices. Instead, California should focus on improving patient health through preventive care and encouraging continued medical innovation.    

Click here to read the full report.