Guest column/Why Ohio employers should care about Issue 2
This November, Ohioans will be asked to vote on Issue 2, a statewide ballot initiative that proposes to regulate how state government contracts for prescription drugs.
Proponents of Issue 2 claim that the proposed law will protect Ohio taxpayers from the “corporate greed” associated with pharmaceutical companies. While most Ohioans will agree that the costs of prescription medications are too high and pharmaceutical companies seem to be making more money, Issue 2 is not the solution that Ohioans so desperately want.
Voters may wonder why the proponents of this act are based in California with little stake in the outcome of this vote.
Despite proponents’ claims that Issue 2 will provide relief, I can tell you it will not provide any of the relief it claims for most Ohioans. I encourage you to educate yourself on the impact that this legislation will have on the access and cost of prescription drug care for Ohioans and vote “No” on Issue 2.
If Issue 2 is passed, State of Ohio public entities and public programs will be required to purchase medications from pharmaceutical companies at or below the price paid by the U.S. Department of Veterans Affairs. Federal law generally requires pharmaceutical companies to provide their medications to the U.S. Department of Veterans Affairs at a price that is 24 percent below the average manufacturer price paid by wholesalers.
Proponents of the legislation argue that everyone ought to be able to purchase prescription medications at the same cost as the VA.
However, the VA’s steep discount on prescription medication is based on several unique factors, including its ability to purchase medications directly from pharmaceutical companies.
The initiative fails to address a few key issues; first, state government already operates aggressive drug purchasing plans, starting with mandated discounts in our Medicaid program and supplemental rebates on top of discounts.
State government currently negotiates the best purchase price possible. Second, Issue 2 mandates what prices the public health insurance programs can pay for prescription medications, but pharmaceutical companies would not be under any obligation to sell their products at prices set by this initiative. Moreover, pharmacies will not have any obligation to participate in state sponsored networks.
This could result in Ohioans being unable to obtain necessary medications under their state funded prescription plan.
Private and public entities often work in collaboration to combine their purchasing power to leverage pharmaceutical prices. If passed, Issue 2 will limit the role that public entities can play in this collective and directly impact the bargaining power of both public entities and private companies in negotiating pharmaceutical prices. Representatives from the VA have voiced their own concerns that this initiative could end up costing the VA an extra $3.8 billion because of the necessity of manufacturers to increase what will become a benchmark price.
Public insurance programs include government-funded health care and employment-based insurance offered to state and local government employees and make up approximately 35 percent of all coverage in the state. If pharmaceutical companies are forced to sell their products at drastically reduced prices to 35 percent of their consumers, they will make up for their losses by increasing the prices they charge to the other 65 percent of Ohioans who have private health insurance.
In shifting this burden, individuals with private insurance will see an increase in their insurance premiums and co-pays, essentially causing private companies to indirectly subsidize state funded prescription plans.
Moreover, any litigation subsequent to Issue 2 passing, must be funded by Ohio taxpayers.
Consumers are feeling the impact of price hikes in the cost of prescription coverage nationwide, but Issue 2 is not the answer for Ohioans. If passed, this initiative would shift the economic burden of publicly funded prescription drug coverage onto all privately insured Ohioans. This November, get out and vote “No” on Issue 2.
(Goff is the CEO and general counsel of the Employers Health Purchasing Corp. in Canton.)