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Drug makers, advocates skeptical about impact of curtailing drug prices

The proposed drug pricing regulations would be a first in the nation.


Capital Bureau

Published on March 3, 2017 5:32PM

SALEM — Pharmaceutical representatives warned an experimental bill to curtail the rising cost of prescription drugs could have unintended consequences on the quality and availability of drugs in Oregon.

“I am concerned that it will stifle innovation,” said Sandra Shotwell, CEO of DesignMedix, a drug developer that got its start at Portland State University.

The legislation by Rep. Rob Nosse, D-Portland, goes farther than any other law in the nation to regulate prescription prices.

The bill would cap patients’ out-of-pocket copayment for prescriptions, require pharmaceutical companies to explain steep increases in the cost of a medication and mandate rebates when prices exceed a certain threshold.

Oregonians need relief from exorbitant drug prices, but addressing the problem is complicated, Nosse said.

“The way drugs are developed and the way they are paid for makes solving this problem very hard,” the Portland lawmaker said.

The story of one Oregon family, featured in the Portland Business Journal, stands out, Nosse said. When Les Rogers’ 4-year-old daughter was diagnosed with a rare seizure disorder, the family learned the treatment, a drug called Acthar, cost $35,000 per vial. The drug has been available since the 1950s, but when California-based Questcor Pharmaceuticals bought the rights to it, the company raised the price by 85,000 percent, from $45 a vial, Nosse noted.

DesignMedix has for the past nine years been building on research initiated at PSU. The start-up company has received state support from the Venture Development Fund and has contracted for clinical trials and capsules with Oregon companies, DesignMedix CEO Shotwell said.

“I’m looking at this (bill) and thinking, so we’ve had all this wind on our back, and now it’s in our face,” Shotwell said.

The company can only take the product so far before it will need the help of a pharmaceutical company to run expensive and complicated clinical trials.

“When I ask investors to help us with the funds to move a program forward, they say to me: What about government policies? What about things like price caps?” she said.

A coalition of 10 health care organizations, such as The Leukemia & Lymphoma Society and the American Cancer Society Cancer Action Network, also have concerns about how the bill could impact research and availability of drugs.

“There is no precedent for doing something like this, said Thea Zajac, regional director of governmental affairs for The Leukemia & Lymphoma Society. “It is just a big unknown. It’s really hard to know how it would play out.”

The coalition has offered an alternative proposal in the Senate that would require insurers to offer at least one plan at each level that requires only a set copayment for prescription drugs. Other plans often require patients to pay a percentage of the drug’s cost.

“Patients have reported going into debt, forgoing other necessary expenses and, at worst, abandoning their treatment completely,” Zajac wrote in a statement about the bill. “Patients who abandon treatment can end up getting sicker and perhaps even end up back in the hospital, which only triggers more costs to our healthcare system. Simply put, high cost-sharing lowers medication adherence, a problem estimated to cost the US $290 billion annually.”

Nosse’s bill came out of a work group that has been meeting since August to brainstorm solutions for the high cost of prescription drugs.

The proposal caps out-of-pocket patient copayments to $100 per drug per month. Pharmaceutical manufacturers would be required to explain to the Oregon Department of Consumer and Business Services any price increases that exceed $10,000, or 3.5 percent a year.

Finally, the bill requires DCBS to calculate the average cost of drugs sold in 35 industrialized nations that are members of the Organisation for Economic Cooperation and Development. Pharmaceutical manufacturers would be required to provide rebates to insurers for the difference between the average cost in those other nations and the actual cost in the United States.

The member nations negotiate drug prices with pharmaceutical companies.


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