Oregon lawmakers are considering legislation to rein in soaring prescription drug prices for Oregonians and help rural independent pharmacies stay open.

Prescriptions are an expensive part of Oregonians’ health care, especially for specialty or cancer medications necessary to treat life-threatening illnesses. The highest priced drug in Oregon in 2022 was Carvykti, a new drug that costs $465,000 on the wholesale market for a one-time infusion and uses a patient’s white blood cells to target cancer, according to a 2022 state report. Wholesale prices influence overall drug costs but they are different from what consumers pay, which varies based on insurance plans.

Oregon lawmakers passed bills in 2018 and 2021 to increase the transparency of drug prices for Oregonians and establish a state prescription affordability board that recommends ways to make prescriptions cheaper. But the program lacks regulatory muscle to control prices.

Meanwhile, the pharmaceutical industry’s system of selling drugs to pharmacists has become so complex and expensive, it threatens to put independent pharmacies out of business — and reduce access for people in small Oregon towns.

“The rural pharmacies in my district are closing or struggling to stay open,” Rep. Christine Goodwin, R-Canyonville, said in a presentation Tuesday to the House Committee on Behavioral Health and Health Care. “The low reimbursements to pharmacies are harmful to patients because staff and hours of operation must be decreased. And the result is long wait lines, sometimes as long as 24 to 72 hours. For vital medications, this may have serious consequences.”

Bills target middleman

Goodwin and other lawmakers are considering ways to regulate a behind-the-scenes operator in the drug industry: prescription benefit managers. They serve as a middleman between insurance companies that cover patients and pharmacies and drug manufacturers. 

They negotiate the prices that are reimbursed to the drug maker and the pharmacist and are part of a complex system that includes drug manufacturers, pharmacies, insurers and prescription benefit managers.  

As brokers, they have the ability to influence drug pricing, availability and the reimbursements pharmacies receive. Their business practices can impact whether a pharmacy can stay open – and the prices Oregonians pay for their medicine.

The bills under consideration:

  • House Bill 2716 would prohibit prescription benefit managers from discriminating against pharmacies that participate in the federal 340B program, which provides patients drugs at discounted prices. 
  • House Bill 2725 would prohibit prescription benefit managers from charging certain fees to rural pharmacies. They can cause pharmacies to lose money on some sales, supporters say.
  • House Bill 2715 would prevent insurers and pharmacy benefit managers from requiring patients to go to a pharmacy to get physician-administered drugs. These medications usually involve an infusion or injection a patient receives in a doctor’s office.
  • House Bill 3015 would prohibit pharmacy benefit managers from retroactively charging pharmacies fees after reimbursing them. 
  • House Bill 3013 would require pharmacy benefit managers to be licensed by the Oregon Department of Consumer and Business Services. The bill would allow pharmacies to appeal price disputes directly to the state agency instead of the pharmacy benefit manager.

Pharmacists, others weigh in 

In rural Oregon, the need for more regulation to control prices is acute, pharmacists said in testimony. 

“Prescription benefit managers must be reined in,” Michael Daher, owner of Myrtle Drugs, located south of Roseburg in Myrtle Creek, told the committee. “I implore you to vote for the bills.”

Emily Savage, the store’s pharmacy manager, gave an example: A patient’s payment was $90 less than the pharmacy’s cost for the medication. The pharmacy appealed the amount to the prescription benefit manager and was denied, Savage said. 

The issue has also come up in urban areas. The Portland-based Cascade AIDS Project, in submitted testimony, said House Bill 2716 is necessary for Prism Health, its LGBTQ health center that serves low-income Oregonians regardless of ability to pay. The center is in the federal discount program. Pharmacy benefit managers give participating pharmacies lower reimbursement rates because they get limited revenue from the program, the group said.

Supporters voiced frustration. Joshua Free, a pharmacist and past president of the Oregon State Pharmacy Association, criticized the practice of some pharmacy benefit managers to require patients to visit a different pharmacy instead of receiving medicine in their doctor’s office.

“The requirement to use an outside pharmacy isn’t for safety,” he said. “It’s only for greed.”

Lawmakers also heard from Tonia Neal, senior director of state affairs for the Pharmaceutical Care Management Association, which represents pharmacy benefit managers.

Neal said the pharmacy benefit managers view their role as helping people save money. Neal said the group is still reviewing the bills but urged lawmakers to consider the potential impact of more regulation: “A lot of costs go on to the consumers.”

In a letter, Kaiser Permanente, which provides insurance and has a network of Oregon clinics and hospitals, told lawmakers the company is concerned the legislation would limit its ability to pick its pharmacies. 

“Requiring health insurers or integrated systems such as KP to contract with all willing pharmacies would undermine the quality and savings achieved through carefully tailored pharmacy networks,” Elizabeth Edwards, the company’s director of government relations, wrote to lawmakers.

Oregon Capital Chronicle

Oregon Capital Chronicle is part of States Newsroom, a network of news bureaus supported by grants and a coalition of donors as a 501c(3) public charity. Oregon Capital Chronicle maintains editorial independence. Contact Editor Lynne Terry for questions: info@oregoncapitalchronicle.com. Follow Oregon Capital Chronicle on Facebook and Twitter.

Ben Botkin covers justice, health and social services issues for the Oregon Capital Chronicle. He has been a reporter since 2003, when he drove from his Midwest locale to Idaho for his first journalism job. He has written extensively about politics and state agencies in Idaho, Nevada and Oregon. Most recently, he covered health care and the Oregon Legislature for The Lund Report.