California's treasurer on Friday became the second state official to ask leading makers of AIDS medications to extend lower prices and rebates for drugs to help the state's budget crisis.
Treasurer Bill Lockyer sent letters to eight pharmaceutical companies including Bristol-Meyers Squibb and Merck, asking them to extend special pricing negotiated last year as the state deals with a remaining $15.4 billion deficit. Last week, Controller John Chiang sent a similar letter to Gilead Sciences, which controls a large share of the HIV/AIDS drugs market, asking it to reduce the price of medications for California's AIDS Drug Assistance Program, or ADAP.
The AIDS assistance program provides lifesaving drugs to 38,000 low-income patients. There are more than 100,000 people in California that are HIV positive or have AIDS, according to the state Department of Public Health.
Lockyer thanked the companies for working with the state but used the letter to express his concern about how much drugmakers have profited from price increases in recent years. He said California's program has seen a 257 percent increase in drug spending since 2000, more than three times the rate of patient growth in the same period.
"California cannot afford to increase the budget for ADAP indefinitely in order to pay for higher drug prices," Lockyer wrote to the companies. "Nor can the state be put in the position of denying other essential health services in order to pay increasing drug costs. This tension must be resolved and in a manner that first serves Californians in need of health care."
Lockyer and Chiang both sit on board of the state's two main public pension funds, which are substantial shareholders of those companies.
The drug companies agreed to reduce prices and give rebates last year to help with the state's budget deficit, but Gov. Jerry Brown's administration expects the state will have to spend more this year because of increases in drug prices and a bigger caseload.
Last year, the state eliminated $25.5 million from the program, leaving it with $70.8 million in state funding. The governor has proposed cutting $16.8 million in state funding for the new fiscal year that will start in July. The program also receives federal support.
Cristi L. Barnett, a spokeswoman for Bristol-Myers Squibb, said the company headquartered in New York is "committed to helping ensure that people living with HIV and AIDS have access to our medicines." She said the company maintains an open dialogue with the HIV/AIDS community about its multiple access programs.
According to AIDS Healthcare Foundation based in Los Angeles, the reduced prices were negotiated last spring and some of the discounts have already expired.
Foundation President Michael Weinstein said it shouldn't be hard for the drug companies to extend lower prices because the cost of manufacturing the drugs is minimal. He said much of the funding provided by the state and federal government for AIDS drugs yields large profits for the companies.
"For other diseases, there isn't a drug assistance program. AIDS advocates have fought for this and it's an important safety net but it's also added revenue for them," Weinstein said of the drug companies. "This just comes down to corporate greed."