High drug prices are the target of a new law passed in Oregon

Lisa F. Young

HB 4005 is a victory for Oregon patients struggling with high costs of medications. Heads to governor’s desk for signature. 

 

After years of effort the Oregon legislature today joined states around the country in passing landmark legislation to hold drug companies accountable for steep price increases that leave patients struggling to pay for their medications.

HB 4005, the Prescription Drug Price Transparency Act, passed on a bipartisan vote of 25-4, after calls from constituents and advocates for the legislature to take action.

Chief sponsor Senator Dennis Linthicum (R-Klamath Falls) helped lead the effort in the Senate, testifying in committee with his personal story as someone dependent on insulin, which has increased 300% over the past 15 years.

“Decades of protectionist lobbying has created a tangle of federal laws where drug maker monopolies are shielded from competition, deterring innovation and raising costs. High prices impact a host of pharmaceuticals including products like insulin, which has been around for decades,” said Senator Linthicum. “HB 4005 will provide transparency for base price information when price increases exceed 10% annually for expensive treatments. It also creates a task force to study the potential for transparency for the entire pharmaceutical supply and distribution chains.”

Chief sponsor Sen. Lee Beyer (D-Springfield) says that the examples of pharmaceutical price gouging were too egregious to ignore.

“When drug makers make extreme price increases without justification, patients pay the price,” he said. “HB 4005 will finally require manufacturers to provide some explanation and will hopefully make them think twice before charging double digit price increases.”

The bill had the support of a strong coalition that brought together nurses, patients, doctors, pharmacists, hospitals, health plans and labor organizations.

“We want to praise the lawmakers who put patients before politics to pass HB 4005,” said Diane Solomon, PhD, PMHNP-BC, CNM representing the Oregon Nurses Association. “Oregon’s patients too often cannot afford their medications and are forced to take reduced dosages, cut pills in half or make hard choice between medicine or rent or food.”

Oregon AARP members strongly advocated in favor of HB 4005, pointing out that the prices set by manufacturers too often leave essential medications out of the reach of seniors.

“Increasing prices put an unfair burden on older Americans. The average annual cost for one brand name drug used on a chronic basis now exceeds $5,800. For the average older American taking 4.5 prescription drugs per month, this translates into an average annual cost of therapy of $26,000,” said Jon Bartholomew, Government Relations Director for AARP Oregon.

Increasing costs are having an effect on the state budget as well. Shaun Parkman, co-chair of the Public Employee Benefits Board and SEIU 503 member says that pharmaceutical prices make it difficult to meet the state health care spending cap of 3.4%.

“When drug prices increase by hundreds of percent, managing public health care costs becomes increasingly difficult,” he said. “Lawmakers did the right thing with HB 4005. We believe transparency will help lower drug prices because HB 4005 requires drug companies to report their profits, their marketing costs, and whether there are generic alternatives available when they want to make a steep increase.”

HB 4005 requires manufacturers to HB 4005 requires drug manufacturers and insurance companies to be more transparent about drug prices and the effect on premiums. Under the bill, drug manufacturers would have to report to payers and to the state Department of Consumer and Business Services (DCBS) when there are steep price increases or when they bring a new expensive blockbuster drug onto the market. For all drugs that increased more than 10 percent in the prior years, the manufacturer must report to DCBS certain research and development costs, advertising and marketing costs, profits for the drug and whether generic drug alternatives are available. The bill also requires companies to report what the price for their medication is in other countries, an especially pressing issue when prices are, on average, 50 percent lower in other industrialized nations.

HB 4005 would also require insurance companies to report the 25 most expensive prescription drugs in their plans, which ones have increased the highest, and how those costs affect our premiums. HB 4005 requires DCBS to set up a consumer reporting system so Oregonians can report any drug price gouging they experience and to hold annual public meetings about prescription drug pricing. It also establishes a follow up task force to look at additional points in the distribution chain that affect price increases for possible future legislative recommendations.

Jesse O’Brien of OSPIRG, the statewide consumer group, says that greater transparency allows consumers and patients to be more informed about what is driving health care costs.

“With HB 4005, lawmakers created greater transparency and a public process that will allow patients and consumers to report when they are experiencing extreme price increases,” O’Brien said. “Lawmakers have taken drug pricing out of the shadows.”