Oregon lawmakers are considering changes to the state’s drug transparency law that would prevent pharmaceutical manufacturers from exploiting a potential loophole to avoid reporting price hikes and give state regulators more authority to expect timely information from drug companies.
Lawmakers backing Senate Bill 1535 characterize the changes to the state’s 2018 Prescription Drug Price Transparency Act as largely technical as the state refines the new program, overseen by the Department of Consumer and Business Services.
The Senate Committee on Health Care had a hearing Tuesday on the proposal. It marks the first change to the program since the state released its first drug transparency report in December. The report identified drugs with the highest price changes in Oregon. Lawmakers passed the 2018 legislation to address the state’s problem of soaring prescription drug prices that force Oregonians to make tough choices about their health and what they can afford.
But the pharmaceutical industry, already suing Oregon over its existing drug transparency law, is sharply opposed. The industry says the changes are overly broad and vague, giving the state too much leeway to continue to pry trade secrets from manufacturers.
The bill would change the definition of drug price increases that triggers the requirement for a manufacturer to report data to the state. Specifically, the bill would clarify that the threshold is a cumulative 10% price increase within a year, not the current net 10% increase.
Here’s why the difference between “cumulative” and “net” matters: A cumulative increase would capture the sum of all increases throughout a year. But a net increase is reported only after factoring in drops in prices. That has raised concerns a manufacturer could deliberately raise a price and lower it within the same year to keep their net increase down and circumvent the reporting requirements.
Rep. Rob Nosse, D-Portland and a bill sponsor, said the net vs. cumulative question was “hotly debated back in 2018 when we first debated the bill.”
Other chief sponsors of the bill are Sen. Dennis Linthicum, R-Klamath Falls, and Sen. Elizabeth Steiner Hayward, D-Portland/Beaverton.
To be clear, lawmakers and state officials aren’t accusing manufacturers of deliberately doing that, just acknowledging that it’s possible to do the way the law currently stands.
“Are we aware of that kind of shenanigan going on?” asked Linthicum, also the committee vice-chair.
“I can’t tell you whether or not we’ve seen that in the data,” responded Cassie Soucy, the state’s drug price transparency program coordinator. Soucy noted that sometimes prices also can change because of drug shortages or a disease outbreak.
The Pharmaceutical Research and Manufacturers of America, or PhRMA, opposes the bill, saying the change in the definition doesn’t take into account decreases in prices.
“This approach could lead to reporting when there is a cumulative decrease over the 12-month period, not a cumulative increase,” the powerful lobby group for the industry wrote in a letter.
The group is leading the charge in suing the state over the 2018 legislation, saying it forces them to provide trade secrets.
The bill also requires prescription drug manufacturers to respond promptly when the department requests information, including when incomplete reports are filed.
Soucy said the bill would help with the department’s compliance work to get information from drug companies when additional questions arise about the initial data provided. She stressed that the department works with manufacturers to resolve questions.
“We’ve taken a very deliberative approach to the program,” she said.
The bill would require the Oregon Department of Consumer and Business Services to investigate methods for collecting information about rebates and markups used in the pharmaceutical supply chain and report recommendations for collecting the information to interim legislative committees by October.
The bill also gives immunity to the department from lawsuits alleging trade secret disclosures.
The bill extends the sunset of the Task Force on the Fair Pricing of Prescription Drugs by another two years to December 31, 2022. That will give the group more time to talk about the factors that drive costs. The bill also increases the size of the 18-member task force to 22 members. The four additional members would be two consumer advocates, a small business that provides health insurance and a large self-insured business.