Steiner Hayward Sponsors Senate Bill to Regulate Drug Prices

As Portland Democratic Rep. Rob Nosse tries to get a comprehensive prescription drug price reform bill through the House, his counterpart in the Senate has tried a more piecemeal approach, requiring more transparency in the price of drugs and giving DCBS the ability to regulate the price and prevent steep price increases.

Sen. Elizabeth Steiner Hayward, D-Portland, has introduced two of her own pharmaceutical price reform bills into the Senate, keeping pressure on the Legislature to do something about the skyrocketing costs of prescription drugs in case similar legislation falters in the House.

Senate Bill 792 requires drug advertising to denote the price of their products for consumers, while Senate Bill 793 would set a fair drug price when the cost of a pharmaceutical is found to increase excessively -- a proposal that’s similar to Rep. Rob Nosse’s House Bill 2387.

Steiner Hayward’s bill is less prescriptive -- rather than referencing the prices that are charged in other developed countries, SB 793 gives state regulators the authority to determine a fair price, based on information that drug manufacturers provide. Any cost deemed excessive would be rebated back to health insurers.

Her bill applies when drug prices increase beyond 3.4 percent a year, after the drug has been on the market for three years. A number of generic drug manufactures have consolidated business with brand-name drug manufacturers and Wall Street profiteers have been buying up the rights to old “orphan drugs” -- generics with no competition -- and jacking up the price hundreds or even thousands of percent.

The bill makes no references to blockbuster drugs that cost more than $10,000, and frequently cost much more in the United States than elsewhere.

A member of legislative counsel told The Lund Report that a review of federal law shows no preemption that would prevent state regulators either pricing or labeling pharmaceuticals.

Pat Allen, the director of Department of Consumer & Business Services, the agency that would regulate the premium rebate program for health insurers, agreed: “I do not believe there is anything thing that would preempt us from drug prices,” he said. “And I think that if that were the case, the [drug] industry would have raised that issue by now.”

Allen testified that the bill would require new staff to implement.

The pharmaceutical lobby on Thursday repeated earlier arguments that regulating drug prices in Oregon would hurt Oregon biotechnology labs -- which develop products for a global market -- and that rebates to insurers would simply shift the profit windfall to them.

“We do not believe there will be a windfall for the insurance industry, otherwise we would not support it,” said Jesse O’Brien, a healthcare expert at Oregon State Public Interest Research Group.

O’Brien closely monitors the state’s individual and small-group health insurance rate-setting process, which would be assigned to prevent insurers from pocketing savings in those markets. In large-group markets, independent actuaries could assist companies with negotiating health plans for employees that reflect drug savings.

The industry also opposed SB 792, arguing that being forced to advertise their prices was “mandated speech” -- and ran afoul of the First Amendment of the U.S. Constitution, which protects the freedom of expression.

Steiner Hayward said this was bunk: “The requirement to add information to an advertisement has never been found to violate the First Amendment.”

While Steiner Hayward’s bills are more moderate than Nosse’s comprehensive bill, they could face a more difficult path to passage. While Nosse was deputized by the liberal lion Rep. Mitch Greenlick, D-Portland, to come up with a solution, a Senate path is tested by moderate gatekeepers Sen. Laurie Monnes Anderson, D-Gresham, the Senate Health chairwoman, and Senate President Peter Courtney, D-Salem, who often puts the brakes on progressive legislation from the House of Representatives to fit the more conservative, business-friendly Senate Democrats.

However, the push to rein in the high price of prescription drugs is being backed by Oregonians for Affordable Drug Prices, a broad-based coalition of good-government groups and business interests including health insurers like Regence BlueCross BlueShield and hospital systems like Providence Health & Services.

Jon Bartholomew, a lobbyist for AARP-Oregon, one of the groups fighting high drug prices, said one member told him he must split his drugs in half in order to afford them. “Many people could be choosing between medications and other needs like housing, food and utilities.”

This has been particularly true as health plans pass off higher out-of-pocket costs to avoid driving up the cost of premiums, particularly as the health insurance market seems more sensitive to upfront premium costs than less obvious costs to businesses and consumers.

For now, Monnes Anderson has tasked Steiner Hayward with negotiating with Sen. Jeff Kruse, R-Roseburg, and consolidating several bills into one package.

Reach Chris Gray at chris@thelundreport.org.

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