Oregon Bill To Lower Drug Prices Runs Into Industry Opposition

Mar 16, 2017

Rapidly rising prices for prescription drugs are being blamed for increased health care costs, as well as a growing number of people not being able to afford medicines they need. A bill pending in the Oregon legislature proposes to cap excessive drug prices. But the pharmaceutical industry is pushing back.

At a recent legislative hearing in Salem, cancer patient Brian DeLashmutt held up a prescription bottle for members of the House Health Care Committee.

“This prescription right here is $17,000,” he said. He held up a single pill. “This pill right here – same pill – $608, every single day. That’s the rest of my life.”

Jacob Thompson, with Providence Health and Services, said pharmaceutical costs for his organization are rising faster than every other aspect of health care. For example …

“Nitroprusside, an injectable drug used to lower drug pressure, increased 268 percent over two years,” he said. “Isoproterenol, an injectable drug used in heart failure, increased 719 percent over two years.”

Portland TV station KGW last year found one hundred drugs which had risen in price anywhere from 70 percent to more than 12,000 percent since 2012.

Jon Bartholomew, representing AARP Oregon, told lawmakers his group had collected stories from members who described hardships such as having to come out of retirement to earn the money for their prescriptions.

“Many people go without their medications, or cut back because of the cost,” he said. “And many people are choosing between medications and other needs like food, housing and utilities.”

Democratic Representative Rob Nosse of Portland is sponsoring a bill he hopes will get a handle on spiraling drug costs. House Bill 2387 would cap patient drug co-pays at one hundred dollars a month for each prescription. It would require drug makers to report to the state information on their profit margins, their costs for marketing, research and development and more. 

Then there’s this part, which Nosse calls the “foreign price cap.”

“If a drug manufacturer charges a price for a drug in Oregon that is higher than the average price charged among the next top five nations for that drug, the difference between that average price and what is charged to Oregon will be rebated to the insurers.”

Not surprisingly, the drug companies oppose Nosse’s bill, but they really, really hate the foreign price cap. They took out full-page ads in the Portland Oregonian slamming what they call a “big bailout” to the health insurance industry.

Ryan Dunlap, with the Oregon Bioscience Association, represents companies that use cutting-edge technologies to develop new drugs. He said this kind of research is a high-risk investment, and that limiting the potential for big profits would cripple the industry.

“If you do anything to regulate or cap or otherwise limit the reward side, without doing anything to the risk side, you do create an imbalance which drives investment away,” he said

Dunlap’s group says Oregon’s growing bioscience sector employs more than 46,000 people and creates more than $10 billion in economic value.

Tara Ryan, a VP with PhRMA, the pharmaceutical industry group, said the bill’s approach is shortsighted.

“Trying to focus a bill entirely on addressing the pharmaceutical industry without looking at the supply chain and the other stakeholders that play a role in pricing and the development of benefit design that actually dictate how patients pay for their medicine leaves a big gap in how we have to look at this process,” she said.

Ryan argued that drugs are a relatively minor component of rising health care costs. She pointed the finger at insurance companies.

“What’s actually happening is that costs that used to be covered by the insurance industry are now being shifted onto patients,” she said. “Patients are now paying more in deductibles, they’re paying more in premiums and they’re paying more in out-of-pocket costs.”

Bill sponsor Rob Nosse acknowledged later that opponents have some valid concerns. But he expressed frustration that – during 18 months of monthly meetings to hammer out a workable solution, the drug industry had not, in his view, made a serious effort to reach a compromise.

“So far, I don’t think PhRMA is trying to play ball,” he told JPR. “They’ve told me that as long as Section One is in the bill, they’re not willing to talk about any other kind of compromises on other sections.  And Section One is where you have the foreign price cap reference and the rebate system.”

Nosse says, given the intense industry pushback, the House Health Care Committee plans to meet again near the end of March to look for alternative approaches to reducing drug costs.

But, he says, something has to be done because pharmaceutical prices show no signs of heading down anytime soon.