A 2018 law requiring pharmaceutical companies to report to the state the reasons for raising already expensive drug prices has been spared for now 

By Shaanth Nanguneri, Oregon Capital Chronicle

A federal appeals court reinstated a paused Oregon law meant to ensure transparency behind rising prescription drug prices after a legal challenge claimed it infringed on the property and free speech rights of pharmaceutical companies.

In a 2-1 decision on Aug. 26, the 9th Circuit Court of Appeals reversed a February 2024 ruling by U.S. District Court Judge Michael Mosman, who suspended new rules passed in a 2018 Oregon law — House Bill 4005 — that require drug manufacturers to submit annual price reports on increasingly expensive prescription drugs costing more than $100 for a month’s supply. Under the law, the Oregon Department of Consumer and Business Services required pharmaceutical companies to provide “a narrative description and explanation of all major financial and nonfinancial factors” surrounding the drug price increases.

The State of Oregon received support in the suit from 21 states attorney generals, who filed an amicus brief upon appeal defending the law with the hopes of supporting their own states’ similar planned or existing legislation.

Oregon’s law promised penalties ranging up to $10,000 in daily fines for not reporting to the consumer and business department, but in the year after it passed, the D.C-based industry trade group Pharmaceutical Research and Manufacturers of America, or PhRMA, sued the agency. The group alleged the law compelled manufacturers to effectively confess sensitive and competitive information to the state while assigning them all the blame for price increases. 

At the time, Mosman sided with the plaintiffs, writing in his 2024 opinion that “Oregon has not identified studies or evidence to show how the reporting requirements of HB 4005 will directly advance its legislative goals.” But the appeals ruling found merit to the various reporting requirements that the 2018 law mandates regardless, saying it was fair for the state to ask such questions of prescription drug manufacturers. 

“The state has never claimed that HB 4005’s reporting requirement itself will directly lower drug prices. Rather, the state’s stated goal in enacting HB 4005 was to reduce information asymmetries in the pharmaceutical market and provide drug purchasers with leverage in negotiations with manufacturers,” reads the ruling, authored by Circuit Judge Lucy Koh. 

“It is common sense that collecting and publishing information about drug pricing costs and pharmaceutical market conditions directly advances this goal,” the opinion reads.

Reid Porter, a spokesperson for PhRMA, said in an emailed statement that the organization was reviewing the decision and evaluating next steps. 

“The Ninth Circuit’s decision to reverse the District Court’s ruling that invalidated key provisions of Oregon’s HB 4005 drug pricing law is disappointing,” he wrote. “The lower court correctly found that forcing manufacturers to disclose trade secrets without compensation is unconstitutional and compelling companies to speak on a controversial topic violates the First Amendment.”

The Oregon Department of Consumer and Business Services, which handles the reporting requirements from the manufacturers, referred an inquiry about the decision to the state’s Department of Justice. In a written statement, Attorney General Dan Rayfield vowed to continue working to uphold the law in service of Oregon’s working families. 

“The cost of living — including prescription drug prices — continues to climb,” he said. “This ruling ensures we all have transparency into the prices we pay at the pharmacy, and it’s a significant win for Oregonians.”

Recent tracking lacked ‘meaningful transparency or analysis’

Reports from the consumer services department to the Oregon Legislature show that since 2019, the agency has fielded hundreds of required reports for the drug transparency legislation. Drugs such as blood thinners, antivirals, steroid hormones for pain and inflammation, opioids, and cancer treatments were among the most commonly reported in the agency’s 2023 report.

But in 2024, state analysts noted a significant decline in price increase reporting from the pharmaceutical companies – a 94% drop. The 2024 court ruling pausing the reporting requirement for companies meant the state could no longer provide for the public information comparing generics and brand name drugs, drug prices in comparison to inflation and broader trends over time. 

“With such a small amount of limited data collected, the program cannot provide meaningful transparency or analysis as it has in prior years,” analysts wrote.

One lead sponsor of House Bill 4005, state Rep. Rob Nosse, D-Portland, told the Capital Chronicle that he was “thrilled” with the ruling and hopeful the state could begin to track the disputed factors driving up prices yet again. He expressed optimism that Oregon could restart its pursuit of drug-cost transparency, but the state agency behind the effort hinted the battle may not be over.

“While there has been a judgement in the case, it is not a final disposition — technically this means the litigation is still ongoing,” Numi Lee Griffith, a senior policy advisor for the agency, wrote in an email. “Accordingly, we are unable to comment on the case as an agency.”

Shaanth Kodialam Nanguneri is a reporter based in Salem, Oregon, covering Gov. Tina Kotek and the Oregon Legislature for the Oregon Capital Chronicle. This story previously appeared in the Oregon Capital Chronicle.