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Issue 2 won't cure high drug costs: ENDORSEMENT


On the surface, Issue 2 seems like a great idea, requiring the state to buy drugs at the same discounted rate as the U.S. Department of Veterans Affairs, but the unintended consequences of passage could be disastrous for Ohio.

By federal law, the VA typically gets a roughly 24 percent cut on the prices it pays for drugs, although additional discounts are sometimes negotiated. Issue 2 would require the state to receive the same discounts for drugs it purchases through programs such as Medicaid, which already gets its own bulk discounts on medications, and for state employees.

But that's a limited pool of Ohioans.

As Issue 2 opponent Dale Butland told us, roughly two-thirds of the state's population, or about 7 million people, don't get their drugs through state programs and wouldn't be affected by Issue 2's price controls.

There's no guarantee the drug companies wouldn't respond to passage of Issue 2 by jacking up the prices for those who aren't protected by the measure.

True, most insurance plans pay the majority of the cost of drugs with patients only making a fixed co-pay, but if the cost of the drugs goes up, it seems improbable that the insurance industry would simply absorb the cost without trying find a way to protect profits. That could lead to higher insurance premiums, which already go up every year.

Dennis Willard, a spokesman for the Yes on Issue 2 campaign, told us that market forces likely would keep the drug companies from raising their prices given how much medication already costs.

"How much can they raise the prices?" he asked.

The answer, of course, is quite a lot. The pharmaceutical industry is as mercenary as they come and drug companies have done little to demonstrate their commitment to keeping prices affordable.

Willard argued that passing Issue 2 in Ohio would lead to pressure on drug companies to lower their prices. We find that outcome unlikely from an industry that always seems to be struggling with high-profile examples of price gouging.

In its official analysis of Issue 2, Ohio's Office of Budget and Management warned that when the government has imposed price controls in the past, the drug companies have looked for ways to protect their bottom lines.

"Thus, the idea that drug manufacturers might react to legislative restrictions on prices by changing what they charge other purchasers is not theoretical; it has been observed in the past," the report said.

Another key reason for concern is that a substantial portion of the proposed law has more to do with legal fights than actually cutting drug prices.

The measure would require Ohio Attorney General Mike DeWine to defend Issue 2 from legal challenges, which makes sense. But it also contains provisions that would recognize that those who petitioned for the law "have a direct and personal stake in defending the law" and require the state to pick up their legal fees.

Willard said Issue 2 backers are confident that DeWine would fight to protect the law from any lawsuits that materialize and wouldn't need to make use of that provision. But DeWine won't be attorney general beyond next year and there's no telling who will replace him and what his position would be on it.

Even if DeWine and his eventual successor did defend the law with everything they had, there'd be nothing to stop the Issue 2 petitioners from demanding their own legal representation.

Legal fights can get expensive in a hurry and there is zero chance that passing Issue 2 wouldn't result in some form of legal challenge.

So the question becomes whether the cost of the legal battle would offset the savings that supporters promise would materialize for the state government.

They put the figure at around $400 million, although the Office of Budget and Management report said it's impossible to say how much money the state would save.

Voters can be forgiven for being confused about what exactly Issue 2 would do.

The massively expensive campaigns for and against it have muddled the debate so much that many think the proposed law would regulate drug costs for everyone, but that isn't the case.

Additionally, many people are uncomfortable siding with the pharmaceutical industry, which is bankrolling the opposition to Issue 2. People are understandably angry about the high cost of drugs and want to send a message to Big Pharma. It's tempting, but ultimately Issue 2 would do more harm than good.

There does need to be some sort of regulatory scheme to keep medication affordable, but Issue 2 isn't it.

Voters should reject Issue 2.

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