Ohio Office of Budget and Management offered their input on Issue 2, the Drug Price Relief Act appearing on the November ballot.
How does it work?
The measure would require the state to negotiate prices for the prescription drugs they purchase to be at a rate lower than the Department of Veterans Affairs, which typically gets a 24 percent discount off market prices. It’s a move supporters say could save the state and its taxpayers up to $400 million.
RELATED: What is Ohio's Drug Price Relief Act? Issue 2 explained
How much money would it save?
The report found that while its likely the Issue would save taxpayers money it is extremely difficult to estimate what that savings would be for a number of reasons. “In fact, OBM does not believe that it can calculate net state savings with an acceptable degree of accuracy,” the report read.
First and foremost they found was the fundamental issue that VA final prices are often not known.
“Supplemental drug discounts negotiated by the VA are considered confidential according to the terms of the agreements with the drug manufacturers,” they found.
Medicaid
Medicaid is the state’s largest distributor of prescription drugs serving around 3 million Ohioans. In fact of the $2.8 billion the state spends on prescription drugs each year, $2 billion of that is spent through Medicaid.
The report cited studies that showed that Medicaid programs very often negotiate their own very low discounted prices with drug companies.
“Medicaid programs across the country are paying prices for prescription drugs that may already be as low or lower on average than what the VA pays,” which would impact potential savings.
Beyond that the report found that the two entities serve different audiences, while the typical VA patient is a male over the age of 45, Medicaid deals heavily with women and children.
“As a result, in many cases, there will be no VA equivalent purchase price for drugs that are purchased by the state. In those cases, there would be no potential savings,” the analysis read. Beyond that, they speculated that insurance companies may try to recover any losses by raising the cost of non-VA drugs.
