Rep. Rob Nosse, D-Portland, revealed his rough draft for reining in the exorbitant and escalating price of many pharmaceutical medications, while acknowledging that his ideas, which include price caps and copayment caps, appeared dead on arrival.
“How many socialists do you see up here? This bill cannot get through the Legislature without some changes to appease PhRMA,” Nosse candidly said after two hours of deliberation on Thursday.
But he said the draft was just an initial entry and a start to the conversation. The opening bid was classic Negotiation 101, where on your first move you shoot for the moon but then eventually settle for Cleveland.
Nosse said he would continue to work with fellow representatives Rep. Bill Kennemer, R-Canby, and Rep. John Lively, D-Springfield, as well as stakeholders who have been debating for months whether little Oregon could do something about the crisis.
Rob Nosse is appearing at an Oregon Health Forum breakfast about pharmaceutical costs next Wednesday, Nov. 2.
Drug prices are set at levels two to ten times higher than Europe and are escalating each year at a much higher rate than inflation.
For example, the autoimmune drug Enbrel costs $2,225 in the United States, versus $1,117 in Britain and $1,017 in Switzerland. Even common pills like acid-reflux drug Nexium costs $215 in the United States versus $58 in Spain and just $23 for the same dosage in The Netherlands, according to CNN Money.
Nosse’s initial draft caps copayments at $100 to $200 a month for consumers, depending on the cost level of their premium. To help insurance companies, the draft limits pharmaceutical revenues, per drug, per patient to $5,000 a year, an amount that would be indexed and tied to rises in a federal affordability threshold.
That would be a particularly hard sell given that some drugs, such as Solvaldi for Hepatitis C, currently cost almost $100,000 per patient.
Nosse offered a compromise to PhRMA lobbyist Jim Gardner that would have set a different cap for high-priced biological drugs, but he was rebuffed.
“The philosophy of a cap or a forced rebate is not something we could accept,” Gardner said.
Gardner said that as drafted, the bill “will kill innovation, and it would have the effect of lining health insurers’ pockets without ensuring that it will pass the savings down to consumers.”
Jessica Adamson, a lobbyist for Providence Health Plan, countered Gardner’s remarks, insisting that the forced rebates would not be pocketed by the insurance companies because they are subject to a stringent rate review process at the Oregon Department of Consumer & Business Services -- at least for the individual and small group markets.
“We have a very thorough rate review process in this state,” she said. “We believe it’s folly to think that the balance of these costs will be absorbed by the insurers.”
The Pharmaceutical Research and Manufacturers of America had sat on the discussion, as well as Oregon Bio, a trade group for developers of some of the highest cost drugs, but neither were willing to change their lucrative status quo, lamented Nosse, in comments that were echoed by Tom Holt of Regence BlueCross BlueShield.
“Those who had the most control of the overlying costs offered no solutions,” Holt said.
Holt called foul at the position of Oregon Bio’s representative, Rocky Dallum, who said they couldn’t propose any legislative solutions because it might compromise the trade group’s proprietary and anti-trust status.
Instead Dallum decried the “cynical” way that the healthcare community was discussing only the high costs of life-saving drugs like Solvaldi rather than the benefit consumers face.
And it’s not just PhRMA, its allies, and the politicians who rely on campaign donations from the pharmaceutical industry that would have a problem with Nosse’s initial proposal.
Jim Thompson, a former moderate Republican representative and long-time consultant for the Oregon State Pharmacy Association, said the caps on high-price biological drugs would just cause pharmaceutical companies to stop offering them in Oregon pharmacies, forcing people to buy them in Vancouver, Wash. “We’re less than 3 percent of the U.S. population. It’s easier for them to pull out of the state than comply.”
Thompson was less hostile to another possibility -- joining with the cost control model of California’s Proposition 61, which ties the cost of drugs purchased for state-sponsored health plans to the price negotiated by the U.S. Department of Veteran’s Affairs, which is known to strike a hard bargain with drug companies but negotiates the price of each drug discretely, as opposed to setting blanket caps as in Nosse’s draft.
“If they were negotiated fairly that might work,” said Thompson, who said that the West Coast could spur some action, even if the negotiating issue should be handled federally by Medicare. “Where are in the free market can we not negotiate on price?”
Congress has, in fact, twice intervened on behalf of PhRMA to drive up drug costs for American citizens. In 1987, the Prescription Drug Marketing Act banned the re-import of drugs where the price has been negotiated by other countries. In 2003, the prescription drug bill for seniors barred Medicare from negotiating prices, too. The Affordable Care Act also provided a windfall for PhRMA, requiring insurers to pay for their products for previously uninsured customers while doing little to improve negotiating power.
The proposed Oregon legislation does apply to a different set of consumers -- those who receive an employer-sponsored health plan regulated by the state, as well as two government health plans -- the Public Employee Benefit Board and the Oregon Educators Benefit Board.
A Prop 61 copycat applied to the group of payers in Nosse’s scope would also not get through without a fight -- the pharmaceutical industry has spent $109 million propagandizing against it. The drug companies have largely threatened to raise their prices to even more exorbitant levels on other consumers if Prop 61 passes, but studies have shown that drugs costs are already setting on maximizing profits and have little connection to the actual price of the drug.
The California measure was introduced by the AIDS Healthcare Foundation, with the support of AARP and the California Nurses Association. Polls in September showed Prop 61 with a winning margin, and a victory could be an affirmation that other states, like Oregon, would have public support to follow its lead.
Chris can be reached at [email protected].
