Rep. Rob Nosse, D-Portland, introduced his comprehensive drug bill to the House Health Committee on Friday before a packed room of insurance company and pharmaceutical lobbyists in high-priced suits.
Nosse is attempting to pass major legislation that would rein in the skyrocketing and unfettered cost of pharmaceuticals in Oregon, a herculean effort that would achieve what Congress has repeatedly failed or refused to tackle.
HB 2387 aims to tackle two of the biggest cost drivers in healthcare -- the exponential increase in the cost of blockbuster speciality medications and the price-gouging behavior of pharmaceutical companies that have taken hundreds of old drugs and raised their prices by many times more than the drug cost just a few years ago.
Nosse said he had a constituent whose infant needed a drug that cost $35,000 per vial, even though it had been on the market since the 1950s. In 2001, the drug cost only $40. That’s an increase of more than 85,000 percent.
Friday’s hearing was animated, with Rep. Mitch Greenlick, D-Portland, feistily pushing back against claims made by pharmaceutical lobbyists. Republicans on the committee, including Rep. Jodi Hack of Salem and Rep. Knute Buehler of Bend, largely agreed with the pharmaceutical reps and found fault in Nosse’s legislation.
Greenlick promised another hearing on HB 2387 to would allow the members of his committee more time to debate the issue and possibly come closer together.
Nosse crafted HB 2387 after meeting for 18 months with representatives from a wide array of stakeholders, including health insurers, pharmaceutical companies and patient and consumer advocates.
The bill seeks to give each side something that it wants, but ultimately Nosse said the pharmaceutical industry refused to offer any solutions, and so he introduced a bill that they opposed.
HB 2387 implements an idea first sponsored by the pharmaceutical industry -- capping annual drug costs for consumers at $100 -- but also creates a mandatory rebate program for health insurers that requires pharmaceutical companies to give back if they set costs considerably higher than they charge in other countries.
The rebate would be the difference between the price paid in Oregon and the highest price paid by other developed nations.
Health insurers would have to indicate the amount of savings they receive from the rebate programs when they file their annual individual and small group health insurance rates for approval by the Oregon Department of Consumer & Business Services. The rate review program would prevent the profit windfall that pharmaceutical companies allege would happen-- a claim made by the industry this week in full-page ads in the Oregonian.
Opponents from the pharmaceutical industry threw up a laundry list of points against the bill, many of them apparent red herrings, but a key concern was that the rebate program could lead the pharmaceutical companies to stop selling to Oregon insurers if they had to sell at the rate they’ve agreed to in other countries.
While they would still likely make a good profit, it was unclear whether some companies would be willing to block access to medications in order to pressure the state into repealing the law, since Oregon represents just over 1 percent of the total U.S. market.
“I think that would be unconscionable if they did that,” Rep. Rob Nosse, D-Portland, told The Lund Report.
Tara Ryan of the Pharmaceutical Researchers and Manufacturers of America testified that a South Korean manufacturer delayed introducing a drug into its home market because it would have to be priced according to South Korea’s rigorous value-based drug pricing system, thus affecting the price it could set elsewhere.
“It’s absolutely a possibility that this would impact patient access,” said PhRMA spokeswoman Caitlin Carroll, who declined to say whether a company might actually pull out of the market, citing antitrust concerns for her trade organization.
BJ Cavnor, a patient advocate at Four in One Chronic Health, also opposed the bill, arguing that high-cost medications are taken by people with HIV and other serious but manageable chronic illnesses. “It’s disproportionately targeting people,” he said.
Cavnor preferred implementing just a cap on copayments to protect consumers.
While other states have implemented caps on copayments, this policy simply hides the cost of expensive drugs from insured consumers, and if health insurers are given no relief like the rebate process outlined in HB 2387, it could drives up the costs of healthcare premiums for everyone.
The pharmaceutical industry’s other arguments were less persuasive, particularly the blow the local bioscience industry might face if Oregonians no longer bore the brunt of the high cost of medications. Oregon’s share of the market is tiny for these companies, which sell their products globally.
Not all pharmaceutical companies oppose the bill -- Erik Tucker of Aronora Pharmaceuticals of Portland broke ranks to refute the industry’s arguments against HB 2387. “This bill will not have catastrophic ramifications for small, startup companies like mine, as is suggested by some lobbying groups,” Tucker wrote in a letter to Nosse, which he submitted as evidence. “We do need some mechanism to limit the cost of prescription medicines, and I applaud your efforts at making life-saving drugs more affordable for all Oregonians.”
Ryan Dunlap, chairman of the board of the Oregon Bioscience Association, argued that a cap on profits would hurt his organization’s members’ ability to attract the venture capital needed to bring a drug to market. He argued that the United States is a capitalist country and that legislators must let the capitalist system play out.
However, nearly all other developed countries of the world are also modified capitalist systems like the United States. The U.S. is only unique in that it allows the drug companies to operate monopolies without regulating the price of drugs.
Greenlick took umbrage at Dunlap’s assertion that drug companies used private investment more than government research to create new cures to diseases and bring drugs to market. “You guys have been funded by the government forever,” Greenlick said.
Dunlap’s testimony was also contradicted by an associate from his own organization, who noted the $200 million the state borrowed to chip in for a major expansion of the Knight Cancer Institute, which was matched by Nike tycoon Phil Knight and other philanthropists, allowing the institute to invest $1 billion in cancer research, from which the pharmaceutical industry will eventually profit.
Reach Chris Gray at [email protected]
This article has been corrected for clarity.
