An Oregon State Lawmaker Crafts a Winning Strategy for Transparency Legislation

Oregon State Rep. Rob Nosse

Last week, Oregon Gov. Kate Brown signed a drug cost transparency bill into law that requires drug makers to report the reasons behind dramatic drug price increases. The bill’s leading advocate and architect, state Rep. Robert Nosse, D-Portland, worked for nearly three years to create a prescription cost containment bill that would win bipartisan support with its pricing transparency approach.

Last year, Nosse tried unsuccessfully to pass a more aggressive bill that included mandated rebates and caps on consumer drug copays. This year’s successful campaign, which included careful coalition-building and scaled back aspirations, suggests a new playbook for state lawmakers aspiring to pass drug cost legislation.

NASHP interviewed Nosse, who also works as a labor organizer for a nurse’s union, to find out more about his drug legislation strategy.

Were you always interested in health care?
Because I worked with the nurses’ union, which is very politically active in Oregon, my answer to that would of course be yes. The union has worked on staffing issues, public health, hospital finance, the Affordable Care Act, and Medicaid. I came to the issue of prescription drug costs in 2015, during my first term. I worked on a couple of bills on prescription copays and neither passed. However, the chair of the House Health Care Committee asked me to run an informal, workshop among lawmakers and stakeholders in the health care policy arena to explore ways to lower drug prices. Although the work group was technically informal, it was staffed and included a variety of stakeholders from the insurance industry, consumer groups, patient groups, and of course the pharmaceutical industry. We met for 18 months and I learned a lot. For example, even though I had been around health care and health insurance, I didn’t know what a pharmacy benefit manager was.

[The work group was not able to reach a consensus, but Nosse proposed aggressive legislation (HB 2387) to tackle high drug costs. It included a transparency provision – requiring drug makers to justify big cost increases – and it mandated that rebates be paid to insurance plans if drug manufacturers charged too much and it proposed copay caps on insurance plans so consumers would never have to pay large out-of-pocket expenses for drugs.] 

What did you learn from that failure?
It was an aggressive bill, it was not a consensus product, and it did not end up passing for a lot of reasons. I learned a lot from that experience — running that work group and trying to pass that bill.

Oregon’s New Transparency Law:

Creates a program, funded by fees imposed on drug manufacturers, under the state’s Department of Consumer and Business Services (DCBS) to monitor prescription drug price increases.

Starting July 1, 2019, if the cost of a drug costing $100 or more for a 30-day supply increases more than 10 percent in one year, the manufacturer must report on:

  • Research, development, and other factors that contributed to the price increase;
  • The direct costs of producing, marketing, and distributing the drug;
  • Total sales revenue and profit for the drug during the previous calendar year;
  • The drug’s introductory price and its net yearly price increase over the last five years; and
  • The 10 highest prices paid for that prescription drug in any country outside the United States during the previous year.

DCBS can impose a penalty if manufacturers fail to provide this information report, or are found to have deliberately omitted relevant information.

The bill also asks insurance companies to report their top 25 most frequently prescribed and costly drugs and the impact of these costs on premium rates.

How did you regroup and prepare for your 2018 legislative session?
I and other supporters wanted to keep this effort alive. We have a short session of 35 days and we decided to try to pass just the transparency part from our 2017 bill. It doesn’t require drug manufacturers to spend significant money or change their business model radically. It’s the easiest part in that all it does is ask drug manufacturers to explain their price increase. Of course, I wanted to do more, but this is a first step and could be done in a short session.

Our coalition supporting the bill in Oregon became more hopeful when California passed its transparency bill last fall. We debated among ourselves whether to take the California bill and propose it [verbatim] here, but we decided to stick with our own approach to transparency that we had introduced the previous year.

To pass the bill here in Oregon [and get other lawmakers and policymakers on board] I also had to agree to another, more formal work group. This work group is tasked with looking at other opportunities for transparency and examining other parts of the drug price chain, including pharmacy benefit managers, pharmacies and health plans, to see if we can find other places where costs are added on to the price of drugs and if there are points of regulation we can consider.

What kind of opposition did the bill encounter?
Pharmaceutical manufacturers and the biotech industry opposed it. They got some patient advocacy groups to say this bill would stifle research, but they didn’t have a lot of credibility. Last year, a local television station compiled a list of 100 drugs that have increased in price more than 70 percent or greater between 2012 to 2016. It showed how the antibiotic tetracycline, a generic, increased from 7 cents a dose to $8.54 a dose, which is a 12,000 percent increase, and Humira, which is a brand-name drug used to treat arthritis, increased from $1,006 to $1,990 a dose, which is a 98 percent increase. I think that information really helped. It shows how the tide is turning, everyone knows how ridiculous these price increases are.

Who were your allies?
Our biggest ally was the insurance industry, which is also struggling to pay drug costs. [The law asks insurance companies to report their most frequently prescribed and costly drugs, including those whose prices have increased dramatically. The law requires them to detail the impact of these costs on insurance premium rates.]

We also had the labor unions and hospitals supporting the bill, as well as various consumer groups, including AARP. One of my strokes of good luck was gaining the support of a very conservative Republican state senator who has struggled all his life with diabetes and has experienced this problem first-hand. He is normally a very strong free-market kind of person, but he knows from experience that something is wrong with the so called free-market when it comes to drug prices. His support really helped my efforts especially in Oregon’s state Senate where the Democratic majority is more narrow.

What advice would you give to lawmakers in other states who are interested in proposing similar legislation?
You need a broad-based advocacy community behind you to overcome pharmaceutical industry opposition. You need a group of legislators who want it to pass, and partners in the health care, labor, consumer, and insurance sectors. It took me three years to get this passed. Also, be prepared for arguments that a transparency bill will reduce the supply of certain drugs in your state, or will frustrate future drug research. These arguments never took hold in Oregon, but you need to be prepared for them.

What is your next step to reduce drug costs in Oregon?
I know drug transparency is just the first step, and probably the easiest to legislate. I am interested in the rate-setting and drug importation legislative models that NASHP has developed. But right now, we need to study them through the committee and issue a formal report with recommendations.