Legislative Work Group in Oregon Grappling With Drug Pricing

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April 18 — The death in the Oregon House of Representative of a drug-pricing transparency bill has led to the birth of a legislative work group with the ambitious goal of seeking “revolutionary” solutions at the state level to the national conundrum of high drug prices.

The work group, which has met a handful of times since September 2015, plans to come up its first concrete proposals at meetings in April and May. Proposals such as capping copayments and requiring drug-pricing transparency are likely to be considered, participants have told Bloomberg BNA.

So far the group's focus has been on educating itself with briefings on topics such as how much money drug companies spend on research and development; how the rebate system works with prescription benefits managers such as Caremark; and reviewing information from the state’s all-claims, all-payer database on prices and utilization of high-priced drugs.

The work group, which includes three members of the Oregon Legislature, also has representatives of the pharmaceutical industry, major insurance companies such as Cambia Health Solutions, provider/insurers such as Kaiser Permanente and Providence Health & Services, as well as consumers groups and organizations such as the Oregon State Public Interest Research Group and the American Cancer Society.

The work group was created by House Health Care Committee Chairman Mitch Greenlick (D) after he killed a bill in the 2015 session proposed by insurers that would have required drug manufacturers to reveal detailed financial information on a range of parameters, from research and development costs to profit derived from sales of a prescription medication.

Greenlick said he was skeptical that revealing such financial information would help solve the problem of very high and escalating prescription drug prices. “Drug companies have no shame,” he said. “Even if you get the information out in the public—if they tell the truth, which I'm not convinced they would—I don't think it would make a hell of a lot of difference.”

Greenlick also killed a bill proposed by consumers with the support of at least one major pharmaceutical company that would have prohibited the combined cost of copayments and coinsurance for a 30-day supply of a prescription drug from exceeding $100.

‘Come Up With Something Dramatic.'

Instead, Greenlick asked his vice chairman, Rob Nosse (D), to convene a drug-pricing work group “to come up with a revolutionary solution, not a consensus solution, because they're not going to get a consensus with the Pharmaceutical Research and Manufacturers of America included with insurers and consumers and a bunch of others at the table,” Greenlick told Bloomberg BNA in an April 13 telephone interview.

“I am urging my work group to come up with something dramatic,” said Greenlick. “And if they don't, I'm going to come up with something dramatic on my own.”

In other states, drug-pricing bills aren't gaining traction. A bill in Massachusetts that would have required reporting of pricing information by drugmakers, and would have imposed caps on drug prices in certain circumstances, has stalled in a legislative committee (14 PLIR 551, 4/15/16). And Colorado lawmakers recently killed a drug price transparency measure (14 PLIR 519, 4/8/16).

Nosse knows he has his work cut out for him, given the limits on state powers, which he sees as precluding the imposition of price controls on the manufacturers.

“In terms of how to make drug manufacturers charge less, I don't think we've got a real clear path on that just yet,” Nosse told Bloomberg BNA in an April 15 telephone interview.

“I think it's a lot easier at this moment to figure out how to help consumers pay for their medication,” Nosse said. He said solutions like capping copayments are still on the table. So is the drug-pricing transparency legislation, though Nosse said he's not sure it would work “to shame or embarrass them (drug manufacturers) to do something different.”

More Meetings

Nosse plans more meetings of the work group in April and May to elicit ideas for bills in the 2017 session “that both sides can live with.”

PhRMA Deputy Vice President Priscilla VanderVeer told Bloomberg BNA in an April 15 e-mail: “We want the discussion and resulting policy proposals to not just look at list prices for medicines, but also focus on the significant discounts and rebates that the state and private insurers are receiving when they purchase medicines, as well as the challenges patients are having affording their medicines. We would like to see legislation that gives patients and families what they need: predictable and accessible information about the out-of-pocket costs they will face and enforceable, common sense rules that prevent discrimination and remove barriers to receiving care.”

Work group participant Tom Holt, director of government affairs for Cambia Health Solutions, told Bloomberg BNA in an April 15 call that the cap proposal “just hides the cost. It would just make it that much more difficult to clinically manage and cost manage the drug benefit. We think that that kind of pure cap solution on co-pays would upend the way drug benefits get managed and would probably accelerate the cost issue instead of mitigating it.”

Not Sustainable

Holt says Cambia, consumers and other payers in the state still want a drug-pricing transparency bill.

“We have to figure out a way that really fundamentally changes the dynamic of how drug spending is rapidly taking the overall health-care dollar and taking more and more of the consumers’ out-of-pocket costs. We cannot continue this unsustainable pricing methodology that simply too often looks like exploiting the system rather than serving health care.”

Jesse O'Brien, policy director for Oregon State Public Interest Research Group, also sits on the work group.

He told Bloomberg BNA April 13 that the work group might well recommend a limitation on patient out-of-pocket costs for drugs, as well as “some sort of measure or set of measures to reduce the costs that payers are paying—insurers, employers and so forth. The challenge is going to be figuring out the specifics.”

“There are at least two, very powerful interests involved in the discussion who don’t want to give an inch,” he said, referring to PhRMA and insurers like Cambia. “It will be very hard to find a consensus. In fact, it may be impossible.”

While very supportive of the concept of finding a way to control prices charged by drug manufacturers, O'Brien added that “all the specific ideas I’ve heard are not ready for prime time. Limiting patient out-of-pocket costs is a more straightforward thing to do.”

To contact the reporter on this story: Paul Shukovsky in Seattle at Pshukovsky@bna.com

To contact the editor responsible for this story: Brent Bierman at bbierman@bna.com