Labor bills to rein in drug costs face roadblock

By DON McINTOSH, Associate Editor

With rapid increases in the cost of health care taking money out of the pockets of America’s workers and employers, pressure is building for lawmakers to do something. But at the same time, drug companies are earning legendary profits from a topsy-turvy system of pricing, and they’re using every bit of their political influence to drag down efforts at reform. That’s what leaders of the Oregon AFL-CIO are seeing in the 2003 Oregon Legislature.

The state labor federation came into the session with a set of proposals to rein in health care costs. Chief among those is a proposal to create an entity to purchase prescription drugs in bulk quantities in order to get a better deal.

Prescription drug costs are the biggest driver of health care cost increases, and the price paid for a pill depends entirely on who’s paying. Cheapest are the prices paid by the Veterans Administration, which uses its purchasing power — buying drugs for millions of veterans — to push prices down. The cost is slightly higher when it’s Medicaid, which pays, by law, the average wholesale price minus a certain percentage.

Then there are a myriad of private insurers, many of whom contract with a new kind of company called pharmacy benefit managers, which negotiate discounts from pharmacy networks and rebates from pharmaceutical manufacturers. The uninsured — those least able to afford it — pay the most of all.

That’s an intolerable situation, said Maribeth Healey, executive director of the labor-supported coalition Oregonians for Health Security. An estimated half a million Oregonians, one out of every eight residents, are uninsured, and therefore pay the highest prices for the drugs they need — or in many cases go without. And union-employer health and welfare trusts that cover tens of thousands of union members are paying much more than bigger entities for the same prescription drugs.

On April 15, the Health Policy Committee of the Oregon Senate held its first hearing on a bill that would pool purchasing power to bargain better drug prices for Oregonians. Healey, the former director of the Florida State Council of the Service Employees International Union, organized 60 people from all walks of life to attend the hearing and share stories of being burdened by high prescription drug prices.

“Nobody got to tell their story,” Healey recalled.

The hearing was intended to get public input on Senate Bill 875, a bill to create a preferred drug list for state agencies that purchase drugs. Labor and allies decided to add the bulk purchasing proposal as an amendment to that bill.

Healey and her 60 citizens were there — along with Oregon AFL-CIO President Tim Nesbitt and Research Director Lynn-Marie Crider and American Federation of State, County and Municipal Employees Oregon Council 75 lobbyist Mary Botkin.

Nesbitt, Crider and Botkin got to testify. But most of the remaining hearing time was taken up by Jim Gardner, lobbyist for the pharmaceutical lobby Pharma, and Senator John Minnis, R-Wood Village.

Healey decided to put the stories in legislators’ mailboxes — one person a day. Two months later the stories are still coming; they’re available on the group’s Web site at www.oregoniansforhealthsecurity.org.

And the proposal to use the state to pool purchasing power?

“It’s being work-grouped to death,” Healey said.

At the request of Pharma’s Gardner, the Senate Health Policy Committee formed a work group on the issue — expecting proponents and opponents to achieve a consensus. Crider is the lone voice of labor (and everyone else who stands to benefit from bulk purchasing) on the work group, which otherwise consists of legislators and pharmaceutical lobbyists.

Not surprisingly, Crider said, the proposal is stalled.

“The fact is that the industry doesn’t want something that would take away their ability to charge whatever they can to different payers.”

Crider said there’s no way legislators can expect to help consumers get a better deal on prescription drugs without cutting into drug company profits.

“Ultimately the Legislature has to decide whether it wants a bill and whether they’re going to buck the industry to get it,” Crider said.

If the plan to amend SB 875 dies a slow death in the work group, labor and allies may try to use another bill as a vehicle for the bulk purchasing proposal. They could try to amend Senator Kurt Schrader’s SB 324, which currently proposes bulk purchasing for public agencies only.

Or they could push Senator Tony Corcoran’s SB 567, which would let in any group or individual that wanted to join the bulk purchasing pool — union and employer health plans, Medicare recipients and uninsured individuals.

If opponents succeed in quashing bulk purchasing proposals altogether this legislative session, labor and its allies may organize to put the issue on the ballot. Healey says polls suggest an overwhelming majority of the public would favor such a ballot measure.

© Oregon Labor Press Publishing Co. Inc.