Nevada takes on PBMs and pharma in broad drug-pricing transparency bill

A Nevada drug-pricing bill that targeted diabetes drugmakers didn’t make it past the governor’s veto pen, but state lawmakers renewed their efforts with a new bill that not only zeroes in on pharma, but pharmacy benefit managers, too. And this time, the governor is more supportive, according to one report.

In addition to forcing drugmakers to justify price hikes on diabetes meds, the new bipartisan bill, Nevada’s SB 539, will require PBMs to disclose rebate information. It also forbids them to punish pharmacists for “selling a less expensive alternative drug” to patients. The bill passed both the state’s Assembly and Senate Monday.

Both bodies had approved an earlier proposal that targeted only the diabetes drugmakers, but Nevada Gov. Brian Sandoval vetoed it Friday on grounds that it “poses serious risks of unintended and potentially detrimental consequences” for patients, according to a veto statement. He said the bill “ignores” the role PBMs play in drug pricing.

Related: Nevada bill could force Sanofi, Novo and Lilly to reveal their insulin pricing secrets

With their earlier effort scrapped, the lawmakers got together to pass SB 539. The new bill looks to bring transparency to the drug industry by requiring companies to hand over diabetes drug pricing information for posting on a government website. It also would require drugmakers to submit a list of sales reps in the state and patient groups to disclose contributions from the industry.

Sanofi, Novo Nordisk and Eli Lilly are the leading diabetes drugmakers, and they've been targeted in lawsuits for repeated insulin price increases over the past several years. Sanofi and Novo have specifically promised their price increases won't top a particular percentage, health inflation in Sanofi's case and 9.9% in Novo's. Other companies that sell diabetes drugs include Merck & Co. and Johnson & Johnson.

If the Nevada bill becomes law, drugmakers will have to disclose manufacturing, marketing and advertising costs for essential diabetes drugs and their profits on those  meds. The companies would also disclose pricing history and PBM rebates. PBMs, for their part, would have to disclose their total rebates negotiated for drugs on the list and the amounts they retain.

Gov. Sandoval is more supportive of the new measure, according to Stat News. The industry trade group PhRMA, however, is urging the governor to veto the latest bill, too, saying it won't help patients afford their meds.

“Gov. Sandoval’s own words–that the original legislation lacked ‘sufficient evidence’ that it would lead to lower drug costs–also ring true for SB 539," PhRMA said in a statement. "The legislation sheds no light on the fact that the large rebates and discounts insurance companies are receiving are not being passed on to patients at the pharmacy counter ... There is nothing in SB 539 that will help that patient get the same savings their insurance company is getting."

The Pharmaceutical Care Management Association, which represents PBMs, is also opposed to the legislation. In an email, a spokesperson said the "costly fiduciary mandate in this bill is similar to those that have been rejected by federal courts on constitutional grounds for conflicting with federal benefits law."

Further, the bill "would grant the kind of transparency that the Federal Trade Commission and economists say will raise costs by giving drug companies inside information that would empower them to collude with their competitors," PCMA said in a statement.

Drugmakers and PBMs both consider rebate information proprietary. Rebates can vary from company to company and product to product.

Nevada’s effort comes amid continuing controversy over drug pricing and as dozens of states around the country look to take the matter into their own hands. In Maryland, a law prohibiting price gouging on generic drugs will become law without the governor’s signature, according to a recent letter from Gov. Larry Hogan. In a letter to Maryland’s Speaker of the House, Michael Busch, Hogan wrote that the bill—which outlaws “unconscionable” price increases—may be too vague to enforce, among other potential problems.

“I am not convinced that this legislation is truly a solution to ensuring Marylanders have access to essential prescription drugs, and may even have the unintended consequence of harming citizens by restricting their access to these drugs,” Hogan wrote, while still allowing it to become law.

Related: Maryland lawmakers pass a bill aimed at stopping 'unconscionable' drug pricing

According to a recent note from Bernstein analyst Ronny Gal, Maryland’s law is the “first state-level restriction of drug pricing” to take effect that his firm could identify. Gal said the laws coming out of state governments “are now at the 'annoyance' level” for pharma, “rather than material commercial impact,” but could continue to gain steam

Around the country, lawmakers in more than 30 states have introduced laws taking on pharma pricing as of April 27, according to the National Academy for State Health Policy.

Nationally, Congress is weighing a handful of proposals to cut drug costs that include allowing Medicare price negotiations, importation from Canada and new restrictions on the industry. New FDA chief Scott Gottlieb has said he's focusing on measures to speed generic drugs to market to boost competition and lower prices.