A controversial AIDS activist is financing an Ohio ballot initiative that would cap drugs prices for the state at rates obtained by the Department of Veterans Affairs, a measure critics say could limit access to pharmaceuticals and raise costs.
In November, voters will vote on the Ohio Drug Price Standards Initiative, which would limit the prices that state agencies pay drug companies based on what the pharmaceutical industry charges the VA. Supporters say that the move would save taxpayers hundreds of millions of dollars on what it spends on state employees, retirees, Medicaid recipients, and prisoners. The initiative is a near duplicate of a measure rejected by California voters in 2016's most expensive ballot initiative campaign.
Both of those initiatives were financed by the AIDS Healthcare Foundation and its president, Michael Weinstein, a gay rights activist who has used his $228 million organization as springboard for political influence. AHF has already spent about $2.5 million on the Ohio initiative, including funding the cost of the petition process that netted more than 200,000 signatures to get the measure on the ballot. He has faced scrutiny in the past for his political activities that stray from AIDS advocacy and the medical centers sponsored by the foundation. The foundation shelled out $5 million on a failed Los Angeles ballot measure that would have prevented development near his Los Angeles headquarters. That campaign and subsequent media attention from the L.A. Times, as well as a lawsuit alleging that the foundation bilked millions of taxpayer dollars, led nonprofit watchdog Charity Navigator to post a "Moderate Concern Advisory" to the foundation's page.
"The nature of these allegations of illegal activity, improper conduct, or organizational mismanagement are such that Charity Navigator has issued this CN Advisory to provide donors with content that they may find useful when making their giving decisions. The views and opinions expressed here are those of the authors of sources used for the reported information, and not those of Charity Navigator," the site said.
AHF denied the allegations in the lawsuit in a response to the website, saying, "it has done nothing wrong and that the lawsuit demonstrates the plaintiffs' ignorance of applicable laws." The foundation declined an interview with Weinstein, instead directing the Washington Free Beacon to the foundation-funded Ohio Taxpayers for Lower Drug Prices. Rick Taylor, a campaign consultant for the initiative, defended AHF's involvement in the campaign, citing the foundation's "major presence in Cleveland and Columbus" and predicted that the campaign would eventually attract 5,000 small donors in addition to the funding provided by the foundation.
"Voters will be much more aware of who the good guys are and who the bad guys are," he said. "We'll be putting money back into the pockets of the Ohio taxpayer rather than the CEOs of major drug companies."
AHF faces an uphill battle in Ohio, just as it did in California, where opponents backed largely by the pharmaceutical industry spent $109.1 million—a six-to-one advantage over the $19 million spent by AHF and its allies—to defeat the measure by 7 points. In May, opponents of the measure formed Ohioans Against the Deceptive Rx Ballot Issue. Opposition spokesman Dale Butland acknowledged that the group will receive funding from the pharmaceutical industry—though exact figures will not be known until campaign finance reports are released in July—and pledged that his group would be transparent about its funding. He said that opposition is fueled by more than just the bottom line, pointing to the endorsements the group has received from the state associations for doctors, pharmacists, and nurses, as well as 11 veterans organizations.
"This is just bad public policy that is going to boomerang and have the opposite effect of what it says it will do and will reduce access to treatment options," he said. "A ballot issue can only limit what the state pays for a product. It can't require the company to sell it at that price."
Butland said that the initiative could force higher co-pays for residents as drug companies attempt to make up for the losses generated by price caps or could lead the state to drop certain drugs and treatments if the company refuses to lower prices. He said that the state already receives discounts for pharmaceuticals based on Medicaid and volume purchases, but said that state operations are markedly different than that of the VA, which owns its own pharmacies. Price caps, he said, could force Ohio pharmacies to sell drugs at a loss, leading them to drop Medicaid patients.
"This will in all probability raise drug costs for a majority of Ohioans and reduce access for the most vulnerable," he said. "Everyone agrees that Ohioans deserve affordable prescription drugs, but the ballot initiative isn't going to fix the problem."
Taylor dismissed those critiques, saying that they reflected the interest of drug companies and pointing to skyrocketing costs of epi-pens and other headline-grabbing mark-ups of medicine.
"The only way it would drive up costs would be if pharmaceutical companies decide to drive up costs to punish Ohio voters," he said. "It's a threat they always make. They're bullies and the people of Ohio are going to see right through it."
Butland has experience with health care ballot initiatives. In 2003, he assisted the Coalition for Affordable Prescription Drugs comprised of union groups and charities. The coalition launched a drive for a ballot initiative, but dropped it after pharmaceutical companies reached an agreement to negotiate drug prices for residents without insurance. Butland contrasted that measure with Weinstein's measure.
"The initiative I was involved in would have required the state to negotiate drugs prices, rather than place an artificial price cap on what the state can pay. There's a big difference between dictation and negotiation," he said. Weinstein "has a history of using tax-exempt dollars from his foundation to finance political ballot initiatives across the country, including issues that have nothing to do with HIV and AIDS."
The election is scheduled to take place November 7, 2017.