Bipartisan Support for Drug Price Transparency Shows Limits of PhRMA’s Clout

While transparency advocates did not get everything they wanted from health insurers and pharmacy benefit managers, the drug manufacturers will have to explain steep price hikes beginning July 2019.

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Sweeping bipartisan majorities last week passed into law House Bill 4005,setting up a system for the state to demand more transparency from drug manufacturers about their escalating prices, over the protests of the pharmaceutical industry.

But just what does HB 4005 make the drugmakers show to accomplish that end?

They won’t have to explain prices for all medications; only drugs that cost more than $100 a month, and only when those drugs’ prices climb by more than 10 percent in a calendar year. Rep. Rob Nosse, D-Portland, laid out ten key provisions in his floor speech.

  1. The price of the drug and the percentage increase

  2. The length of time the drug has been on the market

  3. Generic substitutes, if any

  4. The amount of research and development paid for with public dollars

  5. The factor driving the price increase

  6. Sales revenue

  7. Drug profit

  8. Original price of the drug when it entered the market

  9. The price change in the past five years

  10. The 10 highest prices for this drug in other countries.

The first report of this information is due in July 2019, and pharmaceuticals that don’t comply will be hit with civil penalties. In addition, health insurers will have to list their 25 most popular drugs and the 25 most expensive, the 25 drugs with the biggest percentage price increase from the year before and the effect of drug spending on premium rates.

Opponents of HB 4005, including Rep. Gene Whisnant, R-Sunriver and Sen. Bill Hansell, R-Pendleton, complained that the bill targets the drug industry while ignoring the opaque system of rebates that help health insurers pay a lower price and the effect that the for-profit middlemen, pharmacy benefit managers, might have on driving up prices.

But the bill was amended to draft a broad-based task force that will look at remedies to increase transparency in those areas, with a report due by November 2018.

“The goal is to create transparency across the price chain,” Nosse said.

The new Oregon law became easier after California passed a similar law last year, a key achievement in one of the most Democratic states.

But HB 4005 was notably bipartisan, with 46-14 votes in the House and 25-4 votes in the Senate, a sign that the clout of the pharmaceutical lobby is losing its clout, at least when put up against other influential lobbies, including the hospitals, the health insurers and public advocates like AARP.

“We’ve got to reform healthcare and we’ve got to reform education and this is a chance to do something,” said Sen. Brian Boquist, R-McMinnville.

“My constituents, regardless of where they fall on the political spectrum are concerned about drug prices,” said another McMinnville Republican, Rep. Ron Noble. “Sunshine is the best disinfectant.”

Reach Chris Gray at [email protected]