OHIOANS AGAINST THE DECEPTIVE Rx BALLOT ISSUE FREQUENTLY ASKED QUESTIONS

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1 OHIOANS AGAINST THE DECEPTIVE Rx BALLOT ISSUE FREQUENTLY ASKED QUESTIONS WHAT S ISSUE 2, THE OHIO DRUG PRICE RELIEF ACT, AND WHAT WOULD IT DO? The so-called Ohio Drug Price Relief Act is a deceptive and vaguely worded ballot issue (technically called an initiated statute ) that will appear on the November 2017 ballot. It would prohibit our state government from paying more for prescription drugs than the lowest price paid by the U.S. Department of Veterans Affairs (VA). It would also give Issue 2 s four named sponsors the right to intervene at taxpayer expense in any legal challenges that may be filed against it if it becomes law. 1 HOW DID THIS GET ON THE BALLOT? Through a paid petition drive funded by controversial, out-of-state activist Michael Weinstein, CEO of the AIDS Healthcare Foundation (AHF). HOW MUCH DOES THE VA PAY FOR DRUGS? How much the VA pays for any particular drug is a moving target. Under federal law, the VA receives special discounts on prescription drugs for veterans in honor of their service to our country. In addition to specified percentage discounts, the VA negotiates additional discounts on many prescription drugs. THAT SOUNDS GOOD WILL OHIO PAY THE VA PRICE IF WE PASS ISSUE 2? No. Things that sound too good to be true usually are and that s certainly the case here. Since the VA does not disclose purchasing agreements for medications, 2 the state can t know what the VA s lowest price is and, therefore, what benchmark to meet. Experts who have studied the initiative including three former Ohio Medicaid directors and a former state Budget director say Issue 2 is not only unworkable but could actually end up increasing drug costs for state programs and the majority of Ohioans, while also reducing patients access to needed medications. 3 WOULDN T IT AT LEAST CUT COSTS FOR THE STATE AND SAVE TAXPAYERS MONEY? No. First, the time and effort our state government would expend in trying to implement a plan that experts say is unworkable would cost money, not save it. And second, it s important to note that three quarters of the state s drug purchases are for Medicaid recipients. 4 Like the VA, the Medicaid program receives a large, federally mandated drug discount. 5 And also like the VA, Ohio routinely negotiates additional, voluntary discounts and rebates with manufacturers. 6 Experts say passing the ballot issue could invalidate many of the contracts and supplemental discounts the state has already negotiated, thus potentially increasing the state s prescription drug costs by tens of millions of dollars per year. 7 July 27, 2017 Ohioans Against the Deceptive Rx Ballot Issue FAQ ½ 1 Paid for by Ohioans Against the Deceptive Rx Ballot Issue

2 In addition, Issue 2 would not lower drug costs for the seven million Ohioans 64 percent of the state s population who are insured through their employers, have private insurance or otherwise don t obtain their prescription drugs through state programs. They aren t covered under this proposal and could actually see their drug costs increase. 8 ARE THOSE THE ONLY FINANCIAL RISKS ISSUE 2 POSES FOR TAXPAYERS? No. Everyone knows the devil is in the details, and this issue does not contain any language to guide implementation by state government. The lack of detail and information about how to implement the measure is likely to lead to bureaucratic in-fighting, delays, lawsuits and higher costs for taxpayers. And because the promoters of this ballot issue wrote into it an unprecedented provision giving themselves the right to intervene at taxpayer expense in any legal challenges that may be filed against it if it becomes law, taxpayers would be stuck paying their attorney fees, win or lose. 9 ISSUE 2 SUPPORTERS SAY VETERANS WON T BE HURT. ARE THEY RIGHT? No. Passing Issue 2 could reduce or eliminate the additional discounts the VA currently receives. In fact, in an issue briefing last year concerning the potential impact of a California ballot initiative that was virtually identical to Ohio s, the VA warned that these additional discounts could be eliminated if VA pricing is extended to other entities like state governments, and that its prescription drug costs could potentially increase by $3.8 billion a year. 10 On several occasions, the U.S. Government Accountability Office (GAO) has examined the issue of extending VA discounts to other programs and similarly concluded that a mandatory extension could undermine the VA s ability to obtain favorable pricing for drugs and limit the availability of some medications to the VA. 11 In 2000, the GAO advised against including Medicare in the VA's pricing structure for this very reason. And this year, a former Secretary of Veterans Affairs who served under President George W. Bush is urging veterans organizations to oppose Issue 2, calling it a risky scheme that could result in higher prescription drug co-pays and reduced access to medicines for Ohio s 866,000 veterans and potentially millions of veterans nationwide. 12 That s why numerous Ohio veterans organizations including the Veterans of Foreign Wars, Department of Ohio; American Legion, Department of Ohio; the Ohio National Guard Association; the Korean War Veterans Association, Department of Ohio; the Ohio Military Order of the Purple Heart, Department of Ohio; the Catholic War Veterans, Department of Ohio; the Jewish War Veterans, Department of Ohio and the Ohio State Association of County Veterans Service Commissioners are opposing this initiative. 13 HOW ABOUT SENIOR CITIZENS ON MEDICARE WILL DRUGS BE CHEAPER FOR THEM? No. Medicare is a federal (not state) program, so the drugs it buys aren t covered under Issue 2. July 27, 2017 Ohioans Against the Deceptive Rx Ballot Issue FAQ ½ 2

3 WHO S BEHIND ISSUE 2, AND WHO S PAYING FOR THE YES CAMPAIGN? Michael Weinstein the controversial, California-based author of this proposed law is the founder and CEO of a tax-exempt, billion-dollar organization, the AIDS Healthcare Foundation. Eighty percent of AHF s revenue comes from selling prescription drugs. 14 The drugs are generally acquired by AHF at a significant discount, but those discounts do not appear to be passed on to AHF s patients. Weinstein has also been accused of using millions of tax-exempt dollars generated by his organization for political purposes wholly unrelated to the mission of his foundation. 15 An April 2017 profile in the New York Times Magazine, The CEO of HIV, says Weinstein has underwritten a dizzying number of controversial projects, some of which seem only tenuously connected to the core mission of his foundation the most recent of which was Measure S, a ballot proposal defeated by voters earlier this year that would have halted housing construction projects in the city of Los Angeles. 16 AHF and Weinstein are also very litigious and have filed at least 52 lawsuits against government agencies in multiple states, including three in Ohio. 17 Three of the ballot issue s four sponsors, who would have the right to intervene in legal challenges if the issue passes, work for Weinstein. 18 WOULD PASSING ISSUE 2 RESULT IN LOWER PRICES FOR THE HIV/AIDS DRUGS OHIO BUYS? No. Contrary to what AHF and its affiliated organizations have implied, 19 there s no evidence that passing the ballot issue would impact the cost of HIV/AIDS drugs in Ohio. In fact, because the Ohio Department of Health belongs to a multi-state purchasing collaborative that negotiates optimal drug pricing, experts say Ohio s cost for these drugs may already be below what the VA pays. 20 WHO S OPPOSING ISSUE 2, AND WHO S PAYING FOR THE NO CAMPAIGN? Nearly 60 organizations have joined the coalition opposing Issue 2, including the Ohio Nurses Association; Ohio State Medical Association; Ohio Hospital Association; Ohio Pharmacists Association; Ohio Osteopathic Association; Ohio Chapter of the American Academy of Pediatrics; American Congress of Obstetricians and Gynecologists, Ohio; National Alliance on Mental Illness of Ohio; Ohio Chamber of Commerce; ACTOHIO Ohio s Affiliated Construction Trades; Equitas (Ohio s largest HIV/AIDS organization); Ohio Interdenominational Ministerial Alliance of Columbus and Vicinity; Columbus Branch NAACP; Ohio State Grange; Veterans of Foreign Wars, Department of Ohio; Ohio Fire Chiefs Association; American Legion, Department of Ohio and many other state organizations representing health care providers, patients, veterans, faith leaders, the business community and organized labor. 21 The pharmaceutical industry is paying most of the campaign s costs. WHY ARE DOCTORS AND NURSES OPPOSED TO ISSUE 2? While Ohio health care providers are concerned about affordable medications, they fear passing the ballot issue could result in a double whammy: increased drug costs for the majority of Ohioans and reduced access to needed medications for the very people and patients the initiative s sponsors claim they want to help. The majority of Medicaid recipients, for instance, are low-income women, children and infants who use numerous medications including many specialty drugs that aren t on the VA s relatively narrow formulary designed to treat military veterans. In fact, according to a recent report July 27, 2017 Ohioans Against the Deceptive Rx Ballot Issue FAQ ½ 3

4 from the nationally respected consulting firm Avalere, the VA formulary covers 49 percent fewer drugs than Ohio's largest Medicaid managed care plan 22 and 68 percent fewer drugs than the state's Medicaid fee-for-service preferred drug list. 23 But since Issue 2 doesn t specify how the state should handle drugs that aren t on the VA formulary, whether and at what price Ohio would be allowed to purchase these drugs is entirely unclear. And if the ballot issue passes, reduced access could also be a major problem for thousands of other Ohioans who obtain their prescription drugs through state programs, including state government employees and retirees, prisoners and those who work at state colleges and universities. Health policy experts say that if Ohio is unable to negotiate the prices mandated by Issue 2, the state would be forced to find other ways to achieve those savings, such as increasing patient co-pays, restricting formularies, reducing the number of pharmacy networks patients may use or even dropping coverage for certain drugs altogether. 24 HAVE OTHER STATES PASSED BALLOT ISSUES SIMILAR TO THIS ONE? No. Weinstein put a virtually identical version of this initiative on the ballot in California last year. Known as Proposition (Prop) 61, it was defeated by California voters 53 percent to 47 percent, and every major newspaper in the state liberal, conservative and moderate alike opposed it. 25 IF ISSUE 2 IS UNWORKABLE AS WRITTEN, CAN T THE LANGUAGE BE FIXED BY STATE LEGISLATORS BEFORE WE VOTE ON IT? No. Legislators can't change the initiative s language. If passed by voters, the new law would go on the books exactly as written and would create an entirely new section in the Ohio Revised Code. HOW COULD THE STATE IMPLEMENT SOMETHING THE EXPERTS SAY IS "UNWORKABLE?" If Issue 2 passes and becomes law, the state would be required to comply. But the initiative s vague wording and the fact that it would be nearly impossible to implement are almost certain to generate a tsunami of bureaucratic and legal challenges. That, coupled with the unprecedented provision giving sponsors the right to intervene at taxpayers expense in legal challenges against the law, means Ohioans could be on the hook for millions. 1 The Ohio Drug Price Relief Act Initiative Text: Ohio Revised Code, Section (D)(1) and (G). 2 John McCarthy, Negative Consequences of the Ohio Prescription Drug (or Rx) Ballot Issue, Upshur Street Consulting LLC, April 11, 2017, p.4. 3 Maureen Corcoran, Barbara Coulter Edwards, Robyn Colby, James Downie, and Marisa Weisel, Analysis of Proposed Ohio Initiated Statute to Regulate State Prescription Drug Purchasing, VORYS Health Care Advisors and Health Management Associates, September 22, 2016, pp ; Greg Browning, Proposed Ohio Drug Price Relief Act: A Fiscal Management Memorandum, Capital Partners, April 26, 2017, p. 3; McCarthy, Negative Consequences, p Corcoran et al., Analysis of Proposed Ohio Initiated Statute, pp Corcoran et al., Analysis of Proposed Ohio Initiated Statute, p. 17; Browning, Proposed Ohio Drug Price Relief Act, p Fact Sheet: Understanding Medicaid Prescription Drug Spending and Value in Ohio. July 27, 2017 Ohioans Against the Deceptive Rx Ballot Issue FAQ ½ 4

5 7 Corcoran et al., Analysis of Proposed Ohio Initiated Statute, p Corcoran et al., Analysis of Proposed Ohio Initiated Statute, p. 27; Browning, Proposed Ohio Drug Price Relief Act, p. 3; McCarthy, Negative Consequences, p The Ohio Drug Price Relief Act Initiative Text: Ohio Revised Code, Section (G). 10 Corcoran et al., Analysis of Proposed Ohio Initiated Statute, pp U.S. Government Accountability Office, September 1991, Medicaid: Changes in Drug Prices Paid by VA and DOD Since Enactment of Rebate Provisions, accessed May 19, 2017, U.S. Congressional Budget Office, January 1996, How the Medicaid Rebate on Prescription Drugs Affects Pricing in the Pharmaceutical Industry, accessed May 19, 2017, 12 Former Secretary of Veterans Affairs Anthony J. Principi, Letter to Ohio Veterans Groups, February 10, Coalition Member Organizations 14 Vasquez and Company LLP, Audited Consolidated Financial Statements and Supplementary Information: AIDS Healthcare Foundation, As of and for the Years ended December 31, 2015 and 2014, with Report of Independent Auditors, accessed May 4, 2017, p. 4, Healthcare-FS-2015_FINAL-3.pdf. 15 The Times Editorial Board, An AIDS Advocacy Foundation is Bankrolling L.A.'s Draconian Anti-Development Measure. How Is This Social Justice? Los Angeles Times, accessed May 4, 2017, Christopher Glazek, The C.E.O. of H.I.V. The New York Times, accessed May 4, 2017, 16 Christopher Glazek, The C.E.O. of H.I.V. 17 Brian Grosh, AIDS Taskforce Fights Denial of Grant Money, Courthouse News Service, accessed May 4, 2017, AIDS Healthcare Foundation, AIDS Patients File Ohio Lawsuit to Halt Illegal Restrictions on AIDS Drug Access, accessed May 4, 2017, AIDS Healthcare Foundation, Committee Sues Jon Husted, Ohio Secretary of State, Over Voter Signatures on Drug Price Ballot Measure, accessed May 4, 2017, Cuyahoga County Clerk of Courts, Written Closing Argument of the Ohio Department of Health, May 30, 2017, AIDS Taskforce of Greater Cleveland v. Ohio Department of Health, Case No. CV , Filed March 24, 2017; Cuyahoga County Clerk of Courts, Opinion and Judgment, June 8, 2017, AIDS Taskforce of Greater Cleveland v. Ohio Department of Health, Case No. CV , Filed March 24, 2017; Cuyahoga County Clerk of Courts, Plaintiff s Motion for Preliminary Injunction, Filed 3/24/17, is Denied, June 9, 2017, AIDS Taskforce of Greater Cleveland v. Ohio Department of Health, Case No. CV , Filed March 24, LinkedIn, William Booth, accessed May 10, 2017, LinkedIn, Tracy Jones, accessed May 10, 2017, Prezi, WomenNation, accessed May 10, 2017, 19 Ged Kenslea and Christopher Johnson, AHF: Advocates Submit 171,205 Signatures for 2016 Drug Pricing Ballot Measure in Ohio, Business Wire, accessed May 4, 2017, 20 Corcoran et al., Analysis of Proposed Ohio Initiated Statute, pp Coalition Member Organizations 22 Across eight therapeutic areas, see Avalere, VA Formulary Coverage Much More Limited than Ohio Medicaid, accessed June 16, 2017, 23 Avalere, VA Formulary Coverage Much More Limited. 24 Corcoran et al., Analysis of Proposed Ohio Initiated Statute, p Major California Newspapers Opposed to the 2016 Prop 61 Ballot Initiative July 27, 2017 Ohioans Against the Deceptive Rx Ballot Issue FAQ ½ 5