Fact check: Who is promoting Ohio Issue 2?

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The Ohio Statehouse, located in Columbus, Ohio

October 18, 2017
By Taylor Kempema

Ohio voters will decide on November 7 whether to require state agencies to not pay more for prescription drugs than the federal Department of Veterans Affairs.[1]

Ohioans Against the Deceptive Rx Issue, a political action committee (PAC) opposed to the Issue 2 initiative, claims, "Issue 2 is being promoted by a billion-dollar California-based nonprofit, the AIDS Healthcare Foundation (AHF), that gets nearly 80% of its revenue from selling prescription drugs."[2] On its website, the group also claims that the AHF is "Issue 2's main funder."[3]

Does the AIDS Healthcare Foundation (AHF) receive nearly 80 percent of its revenue from selling prescription drugs? Is the AHF the main funder of support for Issue 2?

According to the AHF's 2016 financial statement, 79.4 percent of its revenue ($924 million of total revenue) came from reimbursements from insurers for providing prescription drugs to patients.[4][5][6]

In regard to the second claim, the AHF provided $6.2 million to Ohio Taxpayers for Lower Drug Prices, the political action committee supporting Issue 2, which equates to 99.998 percent of the PAC's funding as of June 30, the latest data filed with the Ohio Secretary of State.[7]

Background

Issue 2, the Ohio Drug Price Relief Act, is an initiated state statute that would, if enacted, prohibit any state entity from entering into a purchasing agreement with a pharmaceutical manufacturer if the net cost of the drug exceeds the price paid by the U.S. Department of Veterans Affairs.[8][1][9]

The primary pro-initiative PAC, Ohio Taxpayers for Lower Drug Prices, claims that Issue 2, if enacted, "could save hundreds of millions of dollars on drug purchases – freeing up funds to redirect to other needs, including health care improvements."[10]

The primary opposition PAC, Ohioans Against the Deceptive Rx Ballot Issue, claims that Issue 2 "could invalidate many of the contracts and supplemental discounts the state has already negotiated, thus potentially increasing the state’s prescription drug costs by tens of millions of dollars per year."[11]

The Foundation promoting Issue 2

The initiative qualified for the ballot after Ohio Taxpayers for Lower Drug Prices managed a petition drive that collected 227,503 valid signatures. Some $6.2 million in funding for the PAC—representing 99.998 percent of its total funding as of June 30—came from the AIDS Healthcare Foundation (AHF), according to reports filed with the Ohio Secretary of State.[7][12][13]

The AHF is a Los Angeles-based tax-exempt nonprofit organization. The Foundation’s mission, according to its website, is "to provide cutting edge medicine and advocacy regardless of ability to pay."[14][15]

The AHF owns and operates pharmacies and clinics throughout the United States, including two locations in Ohio, and manages patient care under contracts with some states.[16] Because the AHF delivers care reimbursed by Medicare and Medicaid and receives federal grants, it is eligible for price discounts negotiated by the state government.[4][16][17]

AHF revenue

According to the AHF's latest financial statement, 79.4 percent of its revenue ($924 million of total revenue) came from filling patient prescriptions billed primarily to patient insurance in 2016. Of that revenue, nearly 6 percent ($52.3 million) was for "pharmacy revenue receivable," or pharmacy sales in 2016 paid primarily by insurers in 2017.[4][6]

Of the AHF's revenue in 2014 and 2015, 79.1 percent and 77.2 percent, respectively, came from reimbursements from insurers for providing prescription drugs to patients.[18][6]

Issue 2 campaign finance

Issue 2 opponents, organized as Ohioans Against the Deceptive Rx Ballot Issue, raised $16.2 million as of June 30—100 percent of which came from the Pharmaceutical Research and Manufacturers of America (PhRMA) and a PhRMA subsidiary, according to reports filed with the Ohio Secretary of State.[19]

Conclusion

On November 7, Ohio voters will decide whether to require state agencies to not pay more for prescription drugs than the federal Department of Veterans Affairs. Opponents claim that the AIDS Healthcare Foundation is Issue 2's main funder, and that the Foundation gets nearly 80 percent of its revenue from selling prescription drugs.[2][3]

The AHF received 79.4 percent of its revenue in 2016 from reimbursements from insurers for providing prescription drugs to patients.[4][16] Ohio Taxpayers for Lower Drug Prices, the PAC supporting Issue 2, raised $6.2 million as of June 30, of which 99.998 percent came from the AHF, according to reports filed with the Ohio Secretary of State.[7]

See also

Sources and Notes

  1. ↑ 1.0 1.1 Ohio Secretary of State, "Full Text of Issue 2 (pages 6-7)," accessed September 30, 2017
  2. ↑ 2.0 2.1 Ohioans Against the Deceptive Rx Issue, "ISSUE 2: Ohio’s Misleading Rx Ballot Issue is Bad for Taxpayers," July 26, 2017
  3. ↑ 3.0 3.1 No on Issue 2, "About," accessed October 5, 2017
  4. ↑ 4.0 4.1 4.2 4.3 AIDS Healthcare Foundation, "AIDS Healthcare Foundation Audited Consolidated Financial Statements and Supplementary Information As of and For the Years Ended December 31, 2016 and 2015 with Report of Independent Auditors, Page 4," accessed October 2, 2017
  5. ↑ Of the $924 million, $52.3 million was for "pharmacy revenue receivable," or pharmacy sales in 2016 paid in 2017.
  6. ↑ 6.0 6.1 6.2 Taylor Kempema, "Email communication with Ged Kenslea, Senior Director of Communications, AIDS Healthcare Foundation," October 11, 2017
  7. ↑ 7.0 7.1 7.2 Ohio Secretary of State, "Committee Information - Ohio Taxpayers for Lower Drug Prices (Contribution Results)," accessed October 5, 2017
  8. ↑ The price ceilings would apply to "all programs where the State of Ohio or any state department, agency or other state entity is the ultimate payer for the drug, even if it did not purchase the drug directly." These programs include, but are not limited to, the Ohio Best Rx Program, the Ohio HIV Drug Assistance Program, and the Ohio Public Employees Retirement System.
  9. ↑ According to Issue 2, state departments affected include, but are not limited to, the Ohio Department of Aging, the Ohio Department of Health, the Ohio Department of Insurance, the Ohio Department of Jobs and Family Services, and the Ohio Department of Medicaid.
  10. ↑ Yes on Issue 2, "Get the facts," accessed October 4, 2017
  11. ↑ No on Issue 2, "FAQ's," accessed October 4, 2017
  12. ↑ Nine other individuals contributed between $1 and $50.
  13. ↑ The AHF provided $18.7 million (97.6 percent of the PAC Californians for Lower Drug Prices) in support of California Proposition 61, an initiative similar to Issue 2 that was defeated in November 2016.
  14. ↑ AIDS Healthcare Foundation, "About," accessed October 4, 2017
  15. ↑ AIDS Healthcare Foundation, "Leadership," accessed October 6, 2017
  16. ↑ 16.0 16.1 16.2 AHF Pharmacy, "AHF Pharmacy Locations," accessed October 5, 2017
  17. ↑ In addition to Medicaid and Medicare funding, the AHF receives grants under Part C of the Ryan White HIV/AIDS Program (the Early Intervention Services and Capacity Development Program). It received a $285,000 grant in FY 2016. U.S. Health Resources and Services Administration, "FY 2016 Ryan White HIV/AIDS Program Part C Early Intervention Services Grant Awards," accessed October 5, 2017
  18. ↑ AIDS Healthcare Foundation, "AIDS Healthcare Foundation Audited Consolidated Financial Statements and Supplementary Information As of and For the Years Ended December 31, 2015 and 2014 with Report of Independent Auditors, Page 4," accessed October 2, 2017
  19. ↑ Ohio Secretary of State, "Committee Information - Ohioans Against the Deceptive Rx Ballot Issue (Contribution Results)," accessed October 5, 2017
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