CLEVELAND, Ohio - If you're confused about Ohio Issue 2 on the November ballot, welcome to the club.
The campaigns for and against Issue 2 have been divisive, puzzling and even misleading.
Recently, we asked readers whether they fully understood the ballot initiative. By an overwhelming margin, Issue 2 and its possible effects weren't entirely clear.
At cleveland.com, we have explained aspects of Issue 2 through our reporting - including fact checking and insight into who is behind the campaigns.
With this piece, we've set out to give more context to the Issue 2 debate, including answering questions you might have before heading to the polls.
Note: The editorial board of cleveland.com and The Plain Dealer came out against Issue 2. The endorsement process is separate from this reporting and the editorial board's opinions are not reflected in this piece.
If you have any other questions about Issue 2, feel free to email the reporter at srichardson@cleveland.com.
What is Issue 2?
Issue 2 - the Ohio Drug Price Relief Act - would require the state of Ohio to pay no more for pharmaceuticals than the U.S. Department of Veterans Affairs pays.
There is also a provision for the proponents of Issue 2 to receive outside legal counsel at taxpayer expense should the state decline to defend the initiative in court.
What is the ballot language?
To enact Chapter 194 of the Ohio Revised Code, which would:
- Require the State of Ohio, including its state departments, agencies and entities, to not pay more for prescription drugs than the price paid by the United States Department of Veterans Affairs.
- Establish that the individual petitioners responsible for proposing the law have a direct and personal stake in defending the law; require the State to pay petitioners' reasonable attorney fees and other expenses; require the petitioners to pay $10,000 to the State if the law is held by a court to be unenforceable and limit petitioners' personal liability to that amount; and require the Attorney General to defend the law if challenged in court.
The full statutory language can be viewed by clicking here.
When would Issue 2 become law?
If approved by a majority of Ohio voters, Issue 2 would become law 30 days after passage.
Who is behind both sides?
The group proposing Issue 2 is Ohio Taxpayers for Lower Drug Prices. Their financial backing mostly comes from the AIDS Healthcare Foundation - a California-based nonprofit organization with a footprint in Ohio. The man behind the AIDS Healthcare Foundation is AHF President Michael Weinstein, a controversial figure in his own right.
Who is the controversial man behind Ohio's drug price ballot initiative?
The opposition has labeled Weinstein as a "California health care CEO," which doesn't paint the whole picture. The Aids Healthcare Foundation is a nonprofit organization, and Weinstein is not a CEO. Weinstein's salary is around $409,000, relatively low considering the nonprofit is a $1.3 billion organization.
AHF has a presence in Ohio, including overseeing the AIDS Task Force of Greater Cleveland and a thrift store and clinic in Columbus.
Other supporters include Our Revolution, the Cleveland Branch of the NAACP, National Nurses United, the Ohio Academy of Family Physicians and the Cuyahoga County Democratic Party.
The group opposing Issue 2 is Ohioans Against the Deceptive Rx Ballot Initiative. It is financially backed by the Pharmaceutical Research and Manufacturers Association - more commonly known as PhRMA. PhRMA is a lobbying group of some of the largest pharmaceutical manufacturers in the country, including Pfizer, Purdue, AstraZeneca and Bayer.
Because of the way PhRMA is funneling donations to the group, we do not know which companies are directly contributing.
The opponents have taken on an aggressive advertising campaign, outspending the proponents of the campaign by nearly 5-to-1 as of mid-September, according to a report from The Columbus Dispatch.
Other opponents include numerous statewide organizations, industry groups and veterans coalitions, including the Ohio Hospital Association, the Ohio Pharmacists Association, the Ohio Chamber of Commerce and the American Legion Department of Ohio.
Is Issue 2 partisan?
Not really. The initiative has created strange bedfellows on both sides, with typically partisan rivals joining forces.
Each side has hired Republican and Democratic heavy hitters.
Ohio Taxpayers for Lower Drug Prices, the supporters' campaign, hired Matt Borges, former executive director of the Ohio Republican Party, and Dennis Willard of Precision Media, which provides communications services for Democratic candidates and progressive causes such as Planned Parenthood.
Among campaigners for the opposition, Ohioans Against the Deceptive Rx Ballot Issue, are Curt Steiner, a longtime Republican strategist who was former Gov. George Voinovich's chief of staff, and Dale Butland, who worked 20 years for former Democratic U.S. Sen. John Glenn.
Politicians haven't really weighed in, though of the few who have, Democrats have mostly been for it while Republicans have been against it.
Will politicians provide clarity on Issue 2? Probably not.
How does it work?
In the simplest terms, Issue 2 would require the state of Ohio to pay no more for pharmaceuticals than what the VA pays.
It does NOT require pharmaceutical companies to sell to the state of Ohio at what the VA pays, but instead puts the onus on the state.
Do we know the price the VA pays?
Many of the drugs the VA purchases are a matter of public record and posted on their site monthly in what is known as the Federal Supply Schedule.
However, the VA also negotiates further discounts below the price via contracts. Some of those contracts are not a matter of public record, meaning the lowest price is unknown.
The opposition argues that because the VA price can't always be known, that makes the initiative essentially unworkable. Neutral experts have said it could be workable but would likely require a court challenge or tweaks via legislation or rules.
How does VA pricing work?
From cleveland.com:
Under federal law, the VA receives a 24 percent discount on drug prices. Those prices are known as the Federal Supply Schedule - FSS - and are all published online on the VA's website.
However, the FSS is not the limit on discounts the VA receives for pharmaceuticals. Because it is the largest purchaser of pharmaceuticals in the country, it often negotiates further discounts in the form of contracts.
How does it work in Ohio?
The state of Ohio does not have a schedule of drugs like the VA, but also negotiates bulk rates and rebates with the pharmaceutical companies. This is done on a drug-by-drug and company-by-company basis.
What about drugs that are not purchased by the VA?
The opponents have argued that the initiative creates a legal quandary for drugs not purchased by the VA. The argument is that if a drug is not on the FSS, it technically does not have a lowest price.
According to a video released by Secretary of State Jon Husted's office, no such quandary exists.
"Only the types of drugs purchased by the federal Department of Veterans Affairs would be affected by this price negotiation policy," the video states. "If the federal Department of Veterans Affairs does not offer its patients a certain prescription, then that drug would remain unaffected by Issue 2."
Does Issue 2 affect my drug prices?
Most Ohioans will not see any drug discounts if Issue 2 passes. Issue 2 will only affect your prices if your drugs are purchased by the state through a state-run program. Supporters say that's about 4 million people.
Ohioans who rely on private insurance will not see a decrease in drug prices. It also has no effect on federal programs like Medicare.
That means the initiative doesn't directly affect about 70 percent of Ohioans' drug prices.
The opposition - funded by the pharmaceutical lobby - has said Issue 2 could result in higher prices for the 70 percent of Ohioans who aren't affected.
Which programs are affected?
There is some disagreement over which state programs would be affected by Issue 2, but the proponents argue state employees, university and community college employees, Medicaid, Department of Health programs, Department of Mental Health and Addiction Services, youth services and all five retirement systems.
However, the state retirement systems have said they would not have to comply. Both the campaigns for and against Issue 2 have said the retirement systems would need to comply.
Could drug prices increase?
The opposition, which is fully funded by the pharmaceutical industry, has said the industry could raise drug prices to offset lost profits should Issue 2 pass.
Dale Butland, spokesman for Ohioans Against the Deceptive Rx Initiative, said there's nothing nefarious about pharmaceutical companies threatening to increase prices over this initiative.
The practice is known as cost-shifting and is used to keep profits steady, Butland said.
A report from the state found "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. In fact, it was just such a reaction that gave rise to the federal law that requires VA drug discounts today."
Would Issue 2 save the state money?
There's strong disagreement here.
The proponents have often cited a paid report from Case Western Reserve University professor Max Mehlman that shows savings of as much as $536 million per year, though the figure supporters mostly give is around $400 million.
A memo from the opposition citing a former state budget director and three former Ohio Medicaid directors analyzed the Mehlman report, calling it "extremely flawed." The memo states Mehlman based the savings on a footnote in another study that did not consider the difficulty of implementation or current savings.
A report from the Office of Budget and Management said savings are plausible, but it's impossible to determine exactly how much could be saved - if anything.
The report said if implementation can be worked through and court challenges overcome, the state could realize some savings. Any benefit to Medicaid or the HIV drug purchase program was unlikely, it said.
Is it enforceable?
That's another big question with an unclear answer.
Proponents argue the enforcement is in the sheer volume of drugs purchased by the state. They argue pharmaceutical companies would lose far more money by not selling prescription drugs to the state than if they sold at the negotiated prices.
The opposition notes there is no mechanism in the Issue 2 language that would force drug companies to sell to the state at the VA price. Rather, the onus is on the state to not pay more than the VA.
J.B. Silvers, professor of health finance at the Weatherhead School of Management at CWRU, said enforcement is arguably the biggest question surrounding Issue 2.
"I get my hands on a price and I go to the drug companies and say this is the price that I want. They say no. What's the enforcement mechanism?" Silvers said.
Does Issue 2 cut taxes?
An advertisement put out by the proponents stated Issue 2 would cut taxes by $400 million. A fact check by cleveland.com found that claim to be false. Issue 2 does not address taxes at all.
Will it face legal challenges?
Yes. Opponents have openly stated the pharmaceutical companies will sue if Issue 2 is passed.
What's this about lawyers?
Part of the initiative would give the proponents a chance at legal representation for any court challenges to the law. Weinstein, the AHF CEO, argued this was a necessary part of the initiative because of the drug companies' influence on politicians.
During a press call, the petitioners of the initiative said they have no reason to execute that portion of the initiative because Ohio Attorney General Mike DeWine has indicated he will defend the law from the inevitable lawsuits.
Dan Tierney, a spokesman for DeWine, declined to comment on Issue 2 specifically, but said generally, the attorney general's office will defend any Ohio law in a lawsuit as long as it is not blatantly unconstitutional.
Both candidates for attorney general in 2018, Republican Dave Yost and Democrat Steve Dettelbach, have said they would defend the law as well.
Should the court find Issue 2 is unenforceable, the petitioners would be fined $10,000.
Other materials
For all of cleveland.com's coverage of Issue 2, click here.
Issue 2 fact check: Does Issue 2 cut taxes in Ohio?
Issue 2 fact check: Are all of the VA's prices public record?
Cleveland.com editorial: Reject Issue 2, the drug pricing proposal
The Columbus Dispatch editorial: Drug-price measure carries terrible side effects
Akron Beacon Journal editorial: Issue 2, all message and too little detail
Canton Repository editorial: Vote 'no' on Issue 2
The Herald Star (Steubenville) editorial: Issue 2 is just bad medicine
Opposition memo on Mehlman Report
Opposition analysis of Murray Report
Fiscal Analysis from Ohio Office of Budget and Management
Pro-Issue 2 list of endorsements
Anti-Issue 2 list of endorsements
Issue 2 debate, Sept. 19:
Laura Hancock contributed reporting.
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