Politics, Pricing

Public combat over US drug prices centers on Prop 61 as rhetoric heats up to fever pitch

A week ago, Proposition 61 looked like a sure winner for its advocates. With sentiment running strongly against Big Pharma companies, polls showed plenty of support for a ballot measure in California that would cap drug prices for the state at the level that the Veterans Administration reaches through price negotiations.

Eli Lilly CEO John Lechleiter

Eli Lilly CEO John Lechleiter

But with the vote now just hours away, the industry is seeing the polling results leaning to a dead heat after throwing more than $100 million into the fight, which is reaching a fever pitch in the hours before final voting begins.

As Eli Lilly CEO John Lechleiter made crystal clear in his Q3 call with analysts a few days ago, he and other industry leaders are dead set against Proposition 61 for a variety of reasons. Here’s what he had to say:

Prop 61, we’re fighting that tooth-and-nail in California. It’s not only bad legislation, it’s bad for your health. And we’re trying to impress that on the voters. What we’ve found is that the more people become aware of what’s at stake here and what’s the likely outcomes of Proposition 61, the more they’re prone to vote against it and vote it down. So we have a pretty big campaign underway in California right now to increase that level of awareness and hopefully to continue to shift voters toward a position of being against it for a whole variety of reasons.

One of the arguments that’s being thrown against the measure is that the VA isn’t going to find it so easy to negotiate the big discounts it’s been winning — around 40% — if that number becomes the cap that state payers are focused on. And the prospect that the end result of Prop. 61 is that vets will pay more as a result has helped turn the tide in California.

But it’s impossible to say now who’s on top.

Proponents, meanwhile, aren’t about to give up now, and they’re turning up the already heated rhetoric. In a new release out today, they opted to vilify Lechleiter and a group of Big Pharma CEOs for their companies’ past marketing infractions. New 15-second ads featured 6 pharma execs on “Wanted” posters: Alex Gorsky at J&J; Ken Frazier at Merck; Ian Read at Pfizer; Richard Gonzalez at AbbVie; Robert Bradway at Amgen and even Brent Saunders at Allergan, cited for a 2010 violation on promoting Botox — long before Saunders bought the company.

Organizers say that the CEOs have “the morals and ethics of junkyard dogs.”

Garry South, a lead strategist who’s being outspent by about $10 to $1, cited the support of Bernie Sanders in the fight. He said:

Are you going to trust Sen. Bernie Sanders, the California Nurses Assn., AARP and Consumer Watchdog, who strongly back Prop. 61? Or are you going to trust the criminal drug companies – convicted of all sorts of illegal behavior – who are now spending $126 million of their ill-gotten gains to lie about Prop. 61?

Whatever happens in California, after the election these same pharma execs are likely to face a grueling debate in Washington DC over drug prices, where execs from Mylan, Valeant and Turing have already had to face dyspeptic lawmakers. Right now, the industry will have to wait and see who comes up a winner on election day Tuesday. But no matter who wins the votes, this is one issue that will not be going away anytime soon.

The latest emails from Hillary Clinton’s campaign released by WikiLeaks in recent days underscores that the campaign tried to carefully calibrate its attacks on pharma. And not all her advisers were content with the idea.

This is what Mandy Grunwald, a senior communications adviser, had to say when told that the campaign was dialing down the attack on biopharma:

On Medicare, it’s not clear that it is actually against the law for Medicare to use its purchasing power to negotiate for lower prices — the way the VA does. That’s what’s completely crazy. On Advertising, you’re missing the outrage that taxpayers are helping to pay for those ads we all hate. On innovation — boy I think you’ve gone too far in sucking up to these companies. Remember Joel and Anzo’s polling shows that people think these guys are bigger villains than Wall Street bankers. We should take it as a point of pride that they are going to attack her — but her belief is that all companies should be held accountable if they’re ripping off the American people — whether its drug companies or oil companies or for profit colleges or wall street….



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Head of Business Development
Wren Therapeutics Boston, MA
Life Sciences Venture Professional
Northpond Ventures Washington, DC
Senior Drug Discovery Oncologist
Schrödinger New York, NY

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