Analysis

Public referendum on drug prices in the US: will it bring relief?

BMJ 2016; 355 doi: https://doi.org/10.1136/bmj.i5657 (Published 31 October 2016) Cite this as: BMJ 2016;355:i5657
  1. Thomas J Hwang, researcher,
  2. Aaron S Kesselheim, associate professor of medicine
  1. Program on Regulation, Therapeutics, and Law (PORTAL), Division of Pharmacoepidemiology and Pharmacoeconomics, Department of Medicine, Brigham and Women’s Hospital and Harvard Medical School, Boston, MA 02120, USA
  1. Correspondence to: A S Kesselheim akesselheim{at}partners.org
  • Accepted 18 October 2016

Thomas Hwang and Aaron Kesselheim assess how California’s proposed new law on drug pricing could affect healthcare costs in the US and beyond

Concerns over the rising cost of new medicines have prompted calls for a more sustainable system of drug pricing.1 2 3 Public unease is particularly acute in the US, where brand name drug prices are the highest in the world and the costs are increasingly being passed on to patients.4 This has led to federal and state policy efforts seeking to tackle high drug prices.5 6 In November, one such policy initiative will be put to a vote: voters in California will decide whether preferential pricing provided to the US Department of Veterans Affairs should also be available to other public payers in the state.

Successful ballot measures in California have historically triggered national reforms (box 1). The outcomes of the California referendum are also likely to have global implications, because attempts to reduce drug prices in the US could have a ripple effect on the prices negotiated by other countries.7 We examine the potential savings from the proposed change.

Box 1: Importance of policy reforms in California

California has a long history as a laboratory for national policy reforms. It is the most populous US state (about 39 million people), accounting for roughly 12% of the US population. California also grants its voters the power to initiate or repeal legislation by referendum. Examples of influential health policy changes in California include:

  • Tobacco control program—In 1988, voters in California passed Proposition 99, which increased excise taxes on cigarettes to fund a public anti-tobacco use campaign, serving as a model for similar initiatives globally

  • First rebates for Medicaid programs—Attempts by California and several other states to obtain discounts on prescription drugs led to federal legislation in 1990 establishing the first …

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