Nevada Pushes for Transparency On Diabetes Drug Prices

A state lawmaker calls insulin prices ‘outrageous.’ PhRMA and BIO are fighting the law in court on grounds that it interferes with their patent rights.

Ed Silverman

As rising drug prices became a hot political issue, Yvanna Cancela was looking for a way to make a difference. So early last year, the Nevada state senator introduced a transparency bill that would require drugmakers to report pricing, costs, and rebates—but only concerning diabetes medications.

Yvanna Cancela

The move quickly gained notice. Transparency bills were being studied by legislators around the country, and California and Vermont had already taken the next step by enacting laws. But these efforts did not distinguish among medications for different diseases. Cancela, however, thought diabetes needed extra attention.

“Drug costs across the board are high, but the increase in insulin costs, an almost century-old drug, seemed outrageous to me,” says the Nevada Democrat, who previously worked as political director of the Culinary Workers Union. “I think patients deserve to understand why their drugs are expensive.

“No one really has access to data to understand why the cost of medications has increased for diabetes patients in the last decade,” she continues. “At all levels of the drug-pricing chain, different entities present different information, and without unbiased data, it’s difficult to make policy decisions.”

Pharma on edge

Cancela was motivated to introduce the bill after looking at the numbers in Nevada.

In 2014, state figures showed spending was nearly $2.5 billion for diabetes-related medical costs, while prediabetes care cost $194 million. As of 2016, more than 280,000 adult Nevadans—which works out to be about one in every eight adult residents—had been diagnosed with diabetes, according to the American Diabetes Association. That prevalence puts Nevada in the middle of the pack of other states.

Cancela’s timing focused still more national attention on diabetes drugs. In the months before Cancela introduced her bill, Sen. Bernie Sanders of Vermont called for a federal investigation into alleged collusion among the big three insulin makers—Eli Lilly, Novo Nordisk, and Sanofi. Soon afterward, a high-profile class-action lawsuit filed by consumers in federal court in Boston made the same claim.

These events put the pharmaceutical industry on edge. But despite fierce opposition from drugmakers, the Nevada bill was signed into law last fall, although not before being modified. To assuage political opponents, pharmacy benefit managers must disclose rebates paid to health plans.

Fearing other states would quickly follow suit, two industry trade groups—the Pharmaceutical Research and Manufacturers of America and the Biotech Innovation Organization—went to court, arguing that the Nevada law was “unprece­dented and unconstitutional.” The trade groups complained the Nevada law interferes with well-established patent law by robbing drugmakers of their right to protect trade secrets. In hopes of preserving the law, state officials crafted a draft regulation that would allow companies to mark certain diabetes drug pricing data as confidential when they begin complying with a new transparency law this spring. Nonetheless, the lawsuit is proceeding.

Despite the litigation, other state legislators are emulating Cancela. In recent months, lawmakers in four other states—Colorado, Hawaii, South Carolina, and Mississippi—have introduced transparency bills concerning diabetes drugs, according to the National Academy of State Health Policy, an independent group of state policymakers that is working with state legislators to draft bills.

Whether any of these legislative efforts achieve their goals is uncertain. Vermont lawmakers, for instance, are searching for ways to bolster their own law, which gathers pricing data from drugmakers, but so far has not translated into any meaningful action.

As for Cancela, she concedes there are no guarantees, but argues the bill has made a difference already.

“The law is already a success, because it forced a conversation in Nevada about why diabetes care is so expensive and brought others to the table to talk about drug pricing in the regulatory process. Hopefully, the dialogue will result in lower prices for patients.”

Ed Silverman founded the Pharmalot blog and has covered the pharmaceutical industry for 20 years.

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By Ed Silverman