June 23, 2021

Oregon State Legislature
900 Court St NE
Salem, OR  97301

Dear Legislator,

You will soon consider a price control bill SB 844 for pharmaceuticals sold in Oregon.  On behalf of the 32,554 members and supporters of the Council for Citizens Against Government Waste (CCAGW) in Oregon, I urge you to oppose this legislation.

SB 844 would create the Prescription Drug Affordability Board, a new agency that will review prescription drugs with an introductory wholesale acquistion cost (WAC) above certain price thresholds for both brand name and generic drugs.  The bill also establishes the Prescription Drug Affordability Stakeholder Council with up to 26 members appointed by the legislature and the governor to assist the board in carrying out its duties.

The board will conduct an “affordability review” based on any public information available and will enter into a memorandum of understanding with other states that are studying drug pricing.  If the board finds that a drug will lead to an affordability challenge based on various criteria, it may establish “an upper payment limit for the drug” sold in Oregon and shall recommend to the legislature any proposals on how to make it more affordable.

Establishing an upper payment limit is a price control and basing it on the WAC is a faulty premise.  Price controls cause market distortions and never solve the problem they were intended to fix.  The WAC is not what a patient would pay as it does not take into consideration the substantial discounts that private insurers, pharmacy benefit managers, pharmacies, and other stakeholders negotiate to lower prices for their customers.  Plus, the legislation would assess fees from manufacturers to pay for the program, which will drive up their costs, leading to higher drug prices.

CCAGW has long opposed using price controls to lower drug prices.  The United States leads the world in pharmaceutical research and development in large part because most pharmaceutical pricing is still negotiated in a free marketplace, while other countries use various forms of price controls.

A better way to lower drug costs is for legislators to contact Oregon’s federal representatives and encourage them to hold the Food and Drug Administration’s feet to the fire for faster generic drug approvals, and create an environment that encourages more “me too” drugs that will foster competition among branded pharmaceuticals that are in the same class and still under patent.

Again, I urge you to vote against SB 844.

Sincerely,

Tom Schatz
President, CCAGW

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