As the cost of prescription drugs continues to rise in the nation that already pays the most in the worldfor medications, federal legislators and ballot-measure committees are proposing ways to curb those prices. But pharmaceutical companies, worried their profit margins will decline under the pending proposals, are spending millions of dollars against the initiatives — and in one political bellwether state, they are employing a controversial tactic that uses shell companies to let them evade longstanding campaign finance disclosure laws.
In Ohio, the drug industry faces Issue 2, the Ohio Drug Price Relief Act — a citizen-initiated ballot measure designed to prevent state agencies, including the state Department of Medicaid, from purchasing drugs at rates any higher than the lowest amount paid by the federal Department of Veterans Affairs, which negotiates with drug companies and saves between 20 and 24 percent on drug costs. Proponents of the measure say it would save taxpayers hundreds of millions of dollars per year, while detractors say it would actually raise drug prices and reduce access to medications.
To oppose Issue 2, the Pharmaceutical Research and Manufacturers of America (PhRMA), the biggest trade organization in the U.S. representing major drug companies, created a political action committee on May 1 called Ohioans Against the Deceptive Rx Ballot Issue. On the same day, PhRMA also founded a limited liability corporation of the same name and registered at the same address; under normal circumstances, it would not be required to disclose its donors. Campaign finance reports document only one donor to the ballot measure committee: the linked LLC. With the LLC’s individual corporate donors being hidden, PhRMA is wading into a legal gray area: The committee is revealing its donor, the LLC, but not the true sources of the funds given to the LLC.
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