Prop 34

Restricts Spending of Prescription Drug Revenues by Certain Health Care Providers

initiative statute

Official Summary

Requires certain providers to spend 98% of revenues from federal discount prescription drug program on direct patient care. Authorizes statewide negotiation of Medi-Cal drug prices.

Fiscal Impact: Increased state costs, likely in the millions of dollars annually, to enforce new rules on certain health care entities. Affected entities would pay fees to cover these costs.

• Official CA Voter Guide Summary ; text of proposed law

• Legislative Analyst Office Analysis

• Show Me The Money

  • support: $41,795,742 - The ALS Association; California Chronic Care Coalition; Latino Heritage Los Angeles

  • oppose: $15,741,006 - National Org. for Women; Consumer Watchdog; Coalition for Economic Survival; AIDS Healthcare Foundation; Dolores Huerta

• Ballotpedia Summary

• Vote 411

Notes

Opponents of this proposition say it is a revenge proposition intent on punishing supporters of Prop 33, in particular it would affect AIDS Healthcare Foundation who sponsored Prop 33.

Affected health care entity:

• participates in federal drug discount program

• has/had a license to opwerate in CA as a health plan, pharmacy or clinic or has had certain contracts with Medi-Cal or Medicare

• Has 10 year period where it spent more than $100 million on purposes other than direct patient care

• owns & operates multifamily housing units with at least 500 severity level “high” violations

The affected entities would have to report how much revenue they earned in California and nationwide from the federal drug discount program and how they spent this revenue.

Providers tend to earn net revenue from the federal drug discount program. They do so by charging payors of health care (such as private health plans and government programs) more than the cost to provide the drugs. However, providers generally do not earn net revenue on these drugs in Medi-Cal. This is because state law bans providers from charging Medi-Cal more than the discounted price of the drug.

Penalties established would include (for 10 years):

• entity loses CA tax exempt status

• entity loses license

• entity cannot receive state and local government contracts or grants

• entity’s leaders cannot serve leadership roles in a California health plan, pharmacy or clinic