California wants to cap drug prices, but Big Pharma isn't having it. Amid a growing backlash over drug pricing, companies such as Johnson & Johnson ($JNJ) and Bristol-Myers Squibb ($BMY) are funneling millions of dollars into stamping out a new proposal that would curb drug spending in the state.
J&J pitched in $5.86 million, BMS gave $2.88 million, and other companies including Pfizer ($PFE), Eisai, Purdue Pharma, The Medicines Co., Sunovion Pharmaceuticals and Daiichi Sankyo contributed to a fund that would quash a state ballot initiative, according to a report filed with the California Secretary of State. The initiative, dubbed the California Drug Price Relief Act, would only allow government health programs to strike contracts with drugmakers at prices that are the same or lower than those paid by the U.S. Department of Veterans Affairs, which usually gets steep discounts on meds from manufacturers, Bloomberg reports.
The drugmakers are mostly staying mum about their bid to head off the proposal, with J&J, BMS and Purdue declining to comment to the news outlet. But Daiichi Sankyo "has serious concerns about this measure and its potential impacts" and is contributing $10,000 to fight the initiative, the company told Bloomberg in an email.
It's no surprise that drugmakers are worried about California's proposal, especially in light of Turing Pharmaceuticals' recent price hike debacle and the aftermath. In September, Turing Pharma bought a toxoplasmosis drug and jacked up the price by 5000%, taking it from $13.50 per pill to $750. The move and response from CEO Martin Shkreli prompted outcry from the public and lawmakers, including democratic presidential candidate frontrunner Hillary Clinton.
Last month Clinton laid out a plan to reduce pharma price-gouging, including forcing drug manufacturers to justify their prices and require that the largest companies invest a minimum amount in R&D. She also suggested exploring new research funds to spur the creation of cheaper generic copycats, taking aim at skyrocketing drug prices.
Meanwhile, at least one pharma company is already feeling the burn from Turing's public roast. Valeant ($VRX) recently came under fire for its price-hiking moves, with 18 Democratic members of the House Committee on Oversight and Government Reform sending a letter to the Committee Chairman to get CEO J. Michael Pearson to testify about soaring prices for two of its heart meds.
"Valeant is using precisely the same business model as Martin Shkreli," the committee members wrote in their note, "acquiring potentially life-saving drugs to maximize their own corporate profits."
But Valeant did not take the news lying down. Earlier this week, the Canadian pharma struck back at investment-community critics, disputing their claims that the company needs to jacks up prices to keep business booming. The company has raised prices on 56 drugs this year, but the "actual net effect" of a price-hike "is determined after taking into account any rebates/fees to: patients, managed care, government, wholesaler, group purchasing organizations, and customers," Valeant said.
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