Drugmakers step up attacks on Oregon board eyeing price caps

As Oregon moves closer to limiting prescription drug prices, the pharmaceutical industry has stepped up its efforts targeting the state board that could set those limits.

Under a law crafted by the Legislature in 2023, the Oregon Prescription Drug Affordability Board is developing a plan for setting “upper payment limits” on how much government and commercial health plans could pay for prescription drugs the board deems too costly.

The plan is due in September. And if Oregon lawmakers then grant the board the authority to set price caps, it would put the state near the forefront of state-led efforts to contain skyrocketing drug costs.

Spending on pharmaceutical drugs rose more than on any other type of health care between 2013 and 2019, according to a state report released in July 2022. Commercial insurers’ per-person spending on pharmaceutical drugs nearly doubled to over $1,000 a year in that time period.

Public forums on drug costs scheduled for April and May could generate support for the caps. But as they draw closer, the board’s efforts have been under assault:

• PhRMA, a national pharmaceutical manufacturer trade group, has been aggressively criticizing Oregon’s board as ill-suited to take on the complex issue of drug prices, including in a letter last month.
• Last month, the industry group persuaded U.S. District Court Judge Michael Mosman to block the state from requiring manufacturers to submit reports to the state explaining their drug price increases.
• Meanwhile, to support criticisms of the Oregon board, industry lobbyists are pointing to similar criticisms leveled by allied patient groups who often receive funding from the industry.

Reid Porter, senior public affairs director for national pharmaceutical manufacturer trade group PhRMA, is blunt that his organization is questioning whether the state board is up to the job it’s taken on.

“Frankly, there seems to be political points that were scored by establishing the board,”he told The Lund Report, while adding that such boards “are set up to fail from the start.”

Asked for an interview with board executive director Ralph Magrish to discuss the situation, a state spokesperson declined. But in an interview with state auditors in late 2022, Magrish blamed the lack of progress in curbing drug prices on lobbying by drugmakers as well as insurers.

“Pharma lobbyists have an endless and infinite bench of resources and that can be difficult to go up against,” he said, according to notes from the interview.

To state Sen. Deb Patterson, D-Salem, said the industry has aggressively opposed the board ever since she spearheaded a bill creating it in 2021. She said the board’s work seeks to tackle an important issue.

“The bottom line Oregonians need to have information on what it costs to purchase prescription drugs and they need help to be able to afford … life-saving medications,” she told The Lund Report

National battle over boards

At least 9 states engage in drug affordability reviews, most of them using boards. Other states are also considering setting up similar boards. Drugmakers are fighing them around the country, including in court.

During a media call last week, Megan O’Reilly, a national AARP vice president for government affairs, called the boards “another tool in our toolbox to lower prescription drug prices at the state level.” She said that the boards analyze high-cost drugs and recommend ways to lower spending on them.

Five states have given their boards the ability to set prices for some drugs, with Colorado and Maryland in the lead.

Last month, Colorado’s board voted to declare rheumatoid arthritis drug, Enbrel, unaffordable, becoming the first state to begin setting a price cap for a prescription medication.

“We all know prescription drug prices have been too high for too long and too many Americans struggle to afford the life-saving medication they need,” Sara Schueneman, state director AARP Colorado, said. “In short, lives are at stake.”

The board determined that on average Enbrel cost over $46,000 for a person to take it for a year in 2022, with an out-of-pocket cost of $2,295. However, Schueneman noted that the board’s vote to initiate a price cap on the drug drew a legislative effort to undo it. In a Securities Exchange Commission filing, Amgen, the maker of Enbrel, cites Colorado’s efforts as having the potential to “negatively affect” product sales.

Oregon efforts spark resistance

The state boards’ role essentially makes them referees in an ongoing tug-of-war between drugmakers seeking to maximize profit by steering patients to higher-cost patented drugs, and health insurers who try to push patients toward generics while limiting overall drug spending.

The Oregon Coalition for Affordable Prescriptions, a consortium that includes insurers and labor unions, backed the legislation creating Oregon’s board.

“We firmly believe that every Oregonian should have access to the medications they need without undue financial burden,” coalition president John Mullin wrote in testimony to the board last year. “The creation of the PDAB is a significant step in the right direction, and we commend the board for its ongoing efforts to fulfill its statutory mandate.”

But Porter, the drugmaker representative, said the board’s focus leaves out the role of pharmacy benefit managers, companies that represent insurers, manage their drug coverage and negotiate drug prices. Critics at the federal and state levels accuse them of strong-arm tactics that have harmed patients and retail pharmacies. Porter pointed to an Oregon Secretary of State audit last year that called for state officials to increase oversight of them.

The legislation that set up Oregon’s board in 2021 initially required it to set price caps, though industry lobbying led to a softer version. It consists of seven members and a small staff.

Oregon lawmakers in 2023 passed a bill that tasked the board with designing a program that could similarly cap the cost of prescription drugs. At the time, Patterson said it was the next step for the board.

Currently, the board’s central tasks include providing reviews on nine prescription drugs and at least one insulin product that Oregonians may have trouble affording. It also provides recommendations to the Legislature. Last session, lawmakers signed off on two of the board’s recommendations: capping the out-of-pocket cost of insulin to $35 and increasing regulation of pharmacy benefit managers, drug supply middlemen.

PhRMA has submitted multiple letters to the board sharply criticizing its processes since it began meeting in 2022. In its most recent one, State Policy Director Dharia McGrew and Assistant General Counsel Merlin Brittenham asserted that the board has not been following its own law and regulations, including failing to consider health equity as well as the effect of discounts and rebates on drug affordability.

There are “serious questions about the validity of the Board’s affordability review process,” they wrote.

While the board allows for public testimony, the PhRMA executives wrote that it needed to do more to proactively seek out input for patients and caregivers who rely on a drug under an affordability review.

Patient groups join industry in criticism

Patient groups, which often receive significant funding from drugmakers and often join them in advocating on issues, have also submitted critical testimony to the board. Nathaniel Brown, director of advocacy for the Portland-based Chronic Disease Coalition, wrote that the board uses drug manufacturer prices as a starting point, “but any given drug’s list price usually doesn’t align with patient costs.”

Lorren Sandt, executive director of Oregon City-based patient advocacy group Caring Ambassadors Program, Inc. told The Lund Report that the board doesn’t give patients enough time to comment during its meetings. She said the board should have an advisory committee to get specific feedback from patients.

Sandt, who authored a recent op-ed criticizing the board, also questioned the affordability review process. She said that some drugs may cost more but will save the health care system money if patients who use them are healthier. Placing price caps on drugs could cause manufacturers to raise costs of other medications, she said.

“Nobody’s done this yet,” she said. “And that’s part of the issue.”

When asked about her relationship with PhRMA, she said she speaks with its representatives and receives a “small grant” from them each year.

Suit knocks out data requirements

Before Oregon set up its board, the state’s 2018 Prescription Drug Price Transparency program required drug manufacturers to disclose to the Department of Consumer and Business Services data on price increases. The program has faced difficulty in getting manufacturers to comply with its requirements.

PhRMA in 2019 sued the state in federal court, alleging the program was unconstitutional and made manufacturers fork over trade secrets.

Earlier this month, U.S. District Judge Michael Mosman issued a ruling that mostly sided with PhRMA. The ruling left intact drug manufacturer reporting requirements for drugs covered by patient assistance programs that see a 10% increase from the previous year.

However, drug makers won’t have to report “percent price increase, reasons for the price increase, research and development costs supported by public funds, direct costs related to manufacturing, marketing, distribution, and ongoing research, sales revenue, profit, and prices paid in other countries for the drug” and “there will be fewer eligible drugs that may be subject to affordability reviews,” according to a state spokesperson.

Jonathan Bartholomew, AARP director of government affairs, said his group was still analyzing the effects of the ruling.

But he said that Oregon’s board will still have “plenty of information” to do its work, including claims databases and other sources. While the board doesn’t have the ability to set price caps they could recommend bulk purchasing of costly drugs or push for higher rebates from manufacturers.

The state plans to appeal the ruling.

This story was originally published by The Lund Report, an independent nonprofit health news organization based in Oregon. You can reach Jake Thomas at jake@thelundreport.org or via X.com @jakethomas2009.