Serious Concerns about Ohio Issue 2



October 16, 2017

(by guest blogger Lauren Payne)

Issue 2, also known as the “Ohio Drug Price Relief Act,” is a real puzzle for most voters in our state. Its stated purpose is to lower drug costs by requiring state-funded health programs to “pay the same price for prescription drugs as the prices paid by the United States Department of Veterans Affairs.” Supporters and the opposition have spent millions on advertising, yet all of this is still very confusing. Details are vague and will require additional legislation. There are two major problems with this proposed plan.

First of all, Issue 2 creates an unrealistic, artificial ceiling for drug negotiations. State programs are not structured like the VA. By buying drugs in bulk from wholesalers and distributing them using postal services and their own pharmacies, the VA is able to drastically curb the net cost of drugs. Studies demonstrate that:

[T]he federal rebate program already provides Medicaid with a discount off average manufacture’s price on par with the VA’s discount. However, Medicaid might still need to obtain additional reductions because it might include is distribution expenses in “net costs.” (Corcoran)

 

In the VA, only 1% of drugs are dispensed through community retail pharmacies – the majority are through the mail or VA pharmacies. By contrast, state programs rely heavily on commercial pharmacies to dispense drugs. Therefore, when the VA negotiates drug costs, they can keep drug prices low. However, enforcing this pricing standard on state programs would impose an unattainable and unrealistic requirement on the state. Commercial pharmacies would lose money, forcing them to raise rates for private insurance companies.

The second major problem is that Issue 2 actually gives its supporters legal standing against challenges to the act. Proponents would have sweeping access to funds to pay for legal expenses. Due to the vague language of the original statute, Issue 2 will require extensive legislation to implement, contributing to the high costs.

Coming this November, Issue 2 presents Ohio voters with a solution to the problem of drug overpricing, but the cure may be worse than the disease. Voters should decide for themselves whether an imposed price ceiling will improve drug costs or exaggerate the problem.

(Lauren Payne graduated from Cedarville University in May of 2017 with a degree in Political Science)

References:

Issue 2 Summary
Maureen M. Corcoran et. al. “Analysis of Proposed Ohio Initiated Statute to Regulate State Prescription Drug Purchasing,” Vorys Healthcare Advisors, Sep. 22, 2016. 10.
Opposition Website: Deceptive Issue 2
Cedarville PharmD Students Debate the Issue

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