CALIFORNIA – In 1992, the federal government allowed health care providers to receive a drug discount if they care for low-income and at-risk patients. The providers are then able to sell these drugs at retail prices, resulting in a tidy profit.

In theory, 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 unsuccessful statewide rent control initiatives and supported Proposition 33 on this year's ballot, which would allow California cities to adopt rent control laws they deem necessary.

She has also opposed laws requiring local governments to allow denser housing and in 2017 supported a partial moratorium on new high-rise development in Los Angeles.

This had raised the ire of the California Apartment Association and other real estate interests, and they organized and financed a scheme that appeared to be narrowly targeted at the AIDS Healthcare Foundation.

Proposition 34, also known as “Protect Patients Now,” requires certain California providers to put at least 98 percent of drug profits into “direct patient care.” This new rule would apply to organizations that spent at least $100 million over a 10-year period on expenses other than direct care and operated multifamily properties with more than 500 “serious” health and safety violations. Eligible providers who fail to comply risk losing their license, tax-exempt status and government contracts.

Proposition 34 would also permanently allow the state to negotiate drug prices for drugs.

According to the Los Angeles Times, the AIDS Healthcare Foundation has spent more than $300 million funding various rent control and anti-development initiatives. According to a November 2023 Times investigation, the company also purchased a number of apartments on L.A.'s Skid Row that faced numerous problems with heating, plumbing, bugs and more.

Supporters of Proposition 34 include the California Apartment Association, which represents the rental housing industry, the ALS Association, Rep. 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. According to CalMatters, advocates have raised an impressive $22.1 million, with the overwhelming majority coming from a $21.8 million donation from the California Apartment Association Issues Committee.

“The Protect Patients Now Act will force the worst abusers of the drug discount program, like Weinstein's (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 focuses only on the program’s worst offenders and introduces new accountability measures to ensure they are using taxpayer dollars appropriately.

“The law requires the program’s worst offenders, like AHF and all others, to spend 98 percent of their taxpayer-generated revenue on direct patient care. It also prevents them from overwhelming government prescription drug agencies. As long as these worst offenders comply with these requirements, they can continue to operate their healthcare operations while complying with all requirements.”

Among the proposal's early opponents is, of course, the AIDS Healthcare Foundation, which unsuccessfully sued to keep the proposal off the ballot. Although the foundation has spent hundreds of millions on its various campaigns over the years, it has only donated $426,000 to the fight against Prop. 34, accounting for the majority of the $536,000 raised by opponents. AHF advocacy group Housing is a Human Right and California consumer watchdog Consumer Watchdog have also spoken out against the proposal.

“The anti-tenant California Apartment Association is pushing a fraudulent, unconstitutional ballot measure cleverly disguised as a patient protection law, but in reality aimed at harming both patients and low-income renters. It’s a wolf in sheep’s clothing,” said Susie Shannon, policy director for Housing is a Human Right. “Make no mistake: The Patient Protection Act targets an organization, the 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 and veterans.”, single parents and patients with HIV/AIDS.

“CAA, which does not represent patients, has shown it is willing to deceive voters in its pursuit of unbridled profits for the class of billionaire landlords they represent while patients and low-income tenants suffer.”

According to a recent poll from the Public Policy Institute of California, 47% of voters support Prop. 34.