What is Prop 34? What to know about the prescription drug revenue-spending measure

LOS ANGELES (KABC) -- You may be familiar with Prop 33, the California ballot measure that focuses on expanding rent control, but what about Prop 34? To understand this proposition, you first need to understand how the two are connected.

What is Prop 34?

Prop 34 requires certain providers to spend 98% of revenues from federal discount prescription drug program on direct patient care. It also authorizes statewide negotiation of Medi-Cal drug prices.

The measure will apply to providers that have spent more than $100 million on purposes other than direct patient care and that own and operate multi-family housing units with at least 500 severe health and safety violations.

"Proposition 33 and Proposition 34 are intrinsically linked," explained Susie Shannon with the "No on 34" campaign.

Critics call the proposition the "revenge ballot measure."

"It is the California Apartment Association that represents corporate landlords targeting one specific nonprofit, which is AIDS Healthcare Foundation," explained Shannon. "They are doing that because the AIDS Healthcare Foundation has put two earlier rent control initiatives on the ballot. This is a third one, and they don't want to keep paying to oppose it."

That rent control initiative is Prop 33. The "Yes on 34" campaign is also behind the "No on Prop 33" campaign, and they claim they are not targeting a specific organization.

"There are other bad actors out there. An entity called Bon Secours has used this essentially taxpayer money to buy naming rights of NFL training facilities," said Nathan Click with "Yes on 34."

However, Bon Secours does not operate in California.

Prop 34 also requires affected entities to report how much they make, and how they spend the revenue earned from the drug discount program, and it establishes penalties, like losing their tax-exempt status.

"This is really about people coming together for taxpayer accountability, and to ensure that patient money actually gets to patients," said Click.

Prop 34: What does a "yes" vote mean and what does a "no" vote mean?

A "yes" vote would require the AIDs Healthcare Foundation and similar providers to follow these rules. A "no" vote means these rules would not go into effect.

To learn more on Prop 34, click here.