Voters rejected a proposal aimed at slashing prescription drug prices for Ohio’s 3 million Medicaid recipients on Tuesday by a 4-to-1 margin after pharmaceutical companies raised about $60 million for ads and organizing against the measure.
The measure would likely have incurred a legal battle had it passed. It mandated that Medicaid bean-counters pay the same prices that drug companies offer to Veterans Affairs beneficiaries, without specifying how exactly the low-income health insurance system would achieve that aim.
The pill industry argued the measure would have been unenforceable — and that if the state did somehow manage to achieve the more than 24 percent cut in drug prices that Ohio Issue 2 mandated, the industry would raise prices on privately insured customers to make up the difference. The measure’s backers, chiefly the Los Angeles-based AIDS Healthcare Foundation, argued that 3.7 million Ohioans across Medicaid and similar state programs would save as much as $400 million a year under the proposed rules.
Drug companies spent about $4 for every dollar in ads and voter mobilization work conjured by supporters, ultimately winning the vote by roughly the same margin. Voters were left to sift a dizzying flood of TV, radio, and direct advertising for and against the measure, hearing contradictory claims daily for months without any clear referee to adjudicate the truth of the thing.
The business community framed the proposed drug bill as a zero-sum contest between lower-income families and wealthier ones, forecasting a drastic jump in prices for anyone insured through their work or as an individual rather than through a state program.
The apparent success of that messaging strategy spotlights the policy and electoral logic that boosts single-payer health care proposals: If drugmakers are negotiating with one counterparty that’s in charge of costs for every patient, they lose their ability to pit working families against one another.
The industry’s spending to defeat the measure similarly underscores the magnitude of the potential savings to Ohio taxpayers and Medicaid recipients from the change. The business community raised at least $58 million for the “no” campaign — a record expenditure for Ohio that signals the companies saw a far larger chunk of profit at stake in the vote.
Similar firms dropped major coin to defeat this same idea in California last year, outspending supporters $109 million to $20 million in that far larger state. The referendum there came up 6 points short on election day. Backers of each attempt plan to move forward with similar measures in South Dakota and Washington, D.C., despite the two defeats.
Congress has dithered on prescription drug price controls at the federal level. The vacuum created by that neglect has invited state lawmakers and unelected policy thinkers to focus elsewhere.
Maryland, California, Nevada, and New York legislators have each tried to tackle the power differential between insurers and drugmakers on one side and the public on the other. Those states’ laws go a little further than the Ohio referendum in trying to lay out specific methods for combating the spike in drug prices. Maryland’s law is particularly tough, allowing the state’s attorney general to take companies to court for civil law violations under certain price-gouging circumstances.
Legislators have floated similar ideas in Tennessee, Montana, Rhode Island, and Massachusetts.