CALIFORNIA – In 1992, the federal government allowed health care providers to receive drug discounts if they serve low-income and at-risk patients. The providers can then sell those medicines at retail prices, which yields a nice profit.
Theoretically, providers should use these profits to expand health care to disadvantaged groups. However, the Los Angeles-based AIDS Healthcare Foundation has spent millions of dollars in profits on a number of campaigns related to housing and urban development.
The foundation funded two failed statewide rent control ballot initiatives, and sponsored Proposition 33 on this year’s ballot, which would have allowed California cities to impose rent control laws they see fit.
It has also campaigned against legislation requiring local governments to allow denser housing, and in 2017 supported a partial moratorium on new high-rises in Los Angeles.
This had angered the California Apartment Association and other real estate interests, and they organized and funded a proposal that appeared to narrowly target the AIDS Healthcare Foundation.
Proposition 34, also known as “Protect Patients Now,” would require certain California providers to spend at least 98 percent of drug profits on “direct patient care.” This new rule would apply to organizations that have spent at least $100 million on expenses other than direct care over the past decade and that operate multifamily properties with more than 500 “very serious” health and safety violations. Eligible providers who fail to comply risk losing their licenses, tax exemptions and government contracts.
Proposition 34 would also permanently allow the state to negotiate Medi-Cal drug prices.
According to The Los Angeles Times, the AIDS Healthcare Foundation has spent more than $300 million to fund various rent control and anti-development initiatives. It has also purchased a number of apartments in L.A.’s Skid Row, which, according to a November 2023 Times investigation, suffered from numerous problems with heating, plumbing, pests and more.
Supporters of Proposition 34 include the California Apartment Association, which represents the rental housing sector, the ALS Association, Assembly Member Evan Low, a Democrat who represents the 26th Assembly District in Silicon Valley; the Republican Party of California and the San Francisco Women’s Cancer Network. Advocates have raised a whopping $22.1 million, according to CalMatters, although the vast majority comes from a $21.8 million donation by the California Apartment Association Issues Committee.
“The Protect Patient Now Act will force the worst abusers of the drug discount program, like Weinstein (AIDS Healthcare Foundation), to return to the program’s original mission of providing health care to low-income patients,” supporters said in a statement. “This measure targets only the program’s worst offenders, introducing new accountability measures to ensure they use taxpayer dollars appropriately.
“The law requires the program’s worst offenders, such as AHF and other similar programs, to spend 98 percent of their taxpayer-generated revenue on direct patient care. It also prevents them from overcharging government agencies for prescription drugs. As long as these worst offenders meet these requirements, they can continue their healthcare operations.”
The proposal’s first opponent is, of course, the AIDS Healthcare Foundation, which has unsuccessfully filed a lawsuit to keep the proposal off the ballot. Although the foundation has spent hundreds of millions on its various campaigns over the years, it has donated only $426,000 to the fight against Prop. 34, which makes up the majority of the $536,000 opponents raised. The AHF advocacy group Housing is a Human Right and California consumer protection group Consumer Watchdog have also spoken out against the proposal.
“The anti-renter California Apartment Association is launching a misguided, unconstitutional ballot measure, cleverly disguised as a patient protection bill, but in fact designed to harm both patients and low-income renters. It is a wolf in sheep’s clothing,” says Susie Shannon, policy director of Housing is a Human Right. “Don’t be misled: the Patient Protection Act targets one organization, AHF, the largest HIV/AIDS organization in the world, and the leading organization working to expand rent control for the most vulnerable in our society – seniors with low income, veterans, single parents and patients with HIV/AIDS.
“CAA, which does not represent patients, has shown that they are willing to mislead voters in their quest for unbridled profits for the billionaire class they represent while patients and low-income renters suffer.”
According to a recent poll from the Public Policy Institute of California, 47% of voters support Prop. 34.
