Oregon House Health Committee Grapples with Out-of-Control Drug Costs

The committee is considering three bills aimed at tackling one of the biggest cost drivers in medicine today -- outrageously priced biological wonder drugs. One bill would prevent health insurers from gouging consumers who need these medications. A second bill would require pharmaceuticals to report their profit information to the Oregon Health Authority. The third bill would free pharmacists to dispense FDA-approved biosimilars without special state barriers.

The out-of-control and arbitrary pricing of designer prescription drugs dominated the House Health Committee on Monday, with three bills aimed at helping consumers, the state and health insurers to address the problem.

Two of the bills have the support of health insurance companies and the strong opposition of the Pharmaceutical Research and Manufacturers of America.

The third bill is opposed by the health insurance industry and targets insurers such as Moda Health that have contended with these high-cost medications by forcing consumers to spend as much as a few thousand dollars in a single month to get the drugs they need to stay alive.

House Bill 2951 caps the amount health insurance companies can charge each month for prescription drugs to $100. It’s likely to be amended so that catastrophic-style bronze health plans can charge $200 for the drugs, in keeping with low actuarial values.

Thea Zajac of the Leukemia & Lymphoma Society, testified that some insurers were charging people $1,500 to $5,000 for a 30-month supply of cancer drugs. “For some people, those copayments are out-of-reach. That’s an astronomical amount of money for patients to pay to stay alive.”

Before the session, The Lund Report reported that in addition to cancer patients, insurance companies had been gouging people living with HIV as well. Before the Affordable Care Act, many of these people would have received insurance through the high-risk Oregon Medical Insurance Pool, which capped drug costs at $40 a month. Additionally, not all insurers have followed Moda’s lead in charging such high coinsurance.

Leanne Gassaway of America’s Health Insurance Plans said that forcing insurance companies to limit the copayments for the high-priced drugs -- of which the total cost might be as high as $100,000 for a 12-week treatment -- would invariably force the insurers to raise their copayments for other services for all customers. She said that HB 2951 would protect drug companies by shielding their high costs from consumers, and she angered Rep. Mitch Greenlick, D-Portland, who supports the bill, when she called it a “shell game.”

“Calling this a shell game impugns the people who brought this forward,” Greenlick said.  “A shell game is a con game.”

Health insurers are already limited in how much they can charge consumers for out-of-pocket costs to about $6,000 a year. Since consumers might reach this limit in the first month, Greenlick argued that the only way that passing this cost onto consumers would save any money is if some people went without necessary medications.

“I’m having a hard time believing that these high copayments are doing a good job controlling costs,” agreed Rep. Bill Kennemer, R-Oregon City.

Robert Judge of Moda Health testified that the bill would raise Moda’s premiums costs from 0.6 to 1 percent, and said the drugs had basically worked to prolong the lives of of people who had been untreatable.

“It was a lot cheaper when they died early,” Greenlick quipped.

Pharmaceutical Reporting Bill

The other bills -- House Bill 3486 and House Bill 2026 -- are supported by the health insurance industry.

House Bill 3486 would require drug manufacturers whose annual wholesale price is more than $10,000 to report to the Oregon Health Authority on costs borne by the pharmaceutical company related to that drug -- essentially providing the state with the drug’s profit margin.

PhRMA opposed HB 3486 on the grounds that it would force them to reveal proprietary trade secrets.

“They report that data to the [Securities & Exchange Commission] already if they’re publicly traded,” Gassaway said. She also noted that major drug companies on average pay twice as much on sales and marketing as they do on research and development.

In addition to the health insurance companies, HB 3486 is supported by Greenlick, Rep. Alissa Keny-Guyer, D-Portland and Sen. Jeff Kruse, R-Roseburg, and the Oregon State Public Interest Research Group.

OSPIRG’s Jesse Ellis O’Brien compared the information pharmaceutical companies would be required to provide to the data given to the Insurance Division by health insurers during the individual and small group market rate review process.

“Done right, this information could inform drug purchasing decisions and pharmacy benefit designs to help consumers achieve greater value for their dollar,” O’Brien wrote. “It could also help create a baseline of accountability for drug manufacturers to keep drug prices reasonable.”

Biosimilar Barrier Lifted

The last bill, HB 2026, would enact the exact opposite policy that PhRMA is pushing in the Senate Health Committee. PhRMA wants to protect its patents in Oregon on biological drugs by restricting the ability of pharmacists to prescribe biosimilar generic equivalents to brand-name drugs. Senate Bill 147 would extend indefinitely requirements that pharmacists notify physicians of substitutions, a restriction that became law in 2013 but was designed to expire before any of these drugs became available.

The health insurers’ bill would remove the barrier entirely and provide instructions on how pharmacists can begin dispensing the medications without being required to give special notification to prescribing physicians.

Tom Holt of Regence BlueCross BlueShield said that consumers could save as much 25 to 35 percent as biosimilar medications become available, if pharmacists were free to prescribe them. Patient advocacy organizations, often reliant on drug company funding, have argued that the drugs are too unusual to substitute, but many consumers currently struggle to afford the brand-name drugs.

“The state should leave this policy to the FDA and not get in the way,” Holt said. “These drugs have to go through extensive scrutiny,” he said, before the FDA will approve them as interchangeable.

Bill Cross, the lobbyist for the Oregon State Pharmacy Association said his organization was not behind House Bill 2026, but would likely support it.

European countries have been able to save on drug costs with the use of biosimilars for a decade, but the drugs are no longer just a hypothetical in the American market. Just last week, the FDA approved the very first biosimilar for use in the United States -- Zarxio, a generic equivalent of Amgen’s drug Neupogen, which is used to treat leukemia.

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