After taking on the pharmaceutical industry two years ago with an insulin pricing transparency bill, Democratic state Sen. Yvanna Cancela plans to continue drilling down into the murky world of drug costs this session.
A suite of three bills, which Cancela plans to introduce next week, will establish a prescription drug review board, create additional pharmaceutical pricing transparency requirements and mandate that savings in the drug pricing process are passed along to patients. Like the legislation last session, the bills will address the roles that both pharmaceutical manufacturers and the middlemen in the drug pricing process, called pharmacy benefit managers, play in determining drug costs.
“The problem states generally have in looking at ways to address prescription drug costs is that a lot of the work that states can do is pre-empted by federal law,” Cancela said. “Until we have more case law that more clearly defines what states can and cannot do across the country, states are trying to be innovative to address what’s a real problem.”
One of the bills would create a state-level board to review drug prices and set limits on what can be paid for them. Cancela is modeling the legislation off of a similar proposal in Maryland heard in its legislature this week.
Jane Horvath, who designed the model behind the Maryland bill and has consulted with Cancela on the Nevada legislation, said the goal is to ensure that cost savings actually make their way to the patient.
“The thing is, there’s different ways to lower costs but not necessarily for the consumer. All the tools that are out there right now don’t benefit the consumer at the point of service. There are background rebates to reduce the insurer’s net cost, but that doesn’t help the consumer,” Horvath said. “So you have to sort of drive the supply chain and get a lower cost product to the pharmacy.”
Like the Maryland bill, Cancela’s legislation will propose to create a five-member prescription drug review commission made up of clinical experts and health-care economists responsible for identifying pricey drugs that could create financial difficulties for patients. The board would be required to analyze costs associated with manufacturing the drug and then cap how much can be paid for the drug.
There is some precedent for the legislation in Maryland, which has had a hospital rate-review board for more than four decades. While no similar health-care payment review board exists to date in Nevada, Cancela sees some parallels between what she’s trying to create and other regulatory authorities that oversee other industries, such as the Public Utilities Commission or the Gaming Commission.
“In Nevada, we have different models for how authorities can be crafted to receive and deal with confidential data,” Cancela said. “There’s all these bodies in the state that are insulated from being politicized and are able to do really good work with data to shape policy-making right now.”
The Maryland bill spells out four triggers for review by the board based on the cost of the drug per year or over the course of the treatment: new brand name drugs that enter the market at $30,000 or more; existing brand name drugs that increase by $3,000 or more; generic drugs that increase by $300 or more; or any prescription drug that may create affordability challenges for the state health care system and patients.
While the Nevada bill will be modeled off of the Maryland one, Cancela noted that it is just a starting point and that she plans to include feedback from patients, drug manufacturers, pharmacy benefit managers, insurers, and others into the bill. She also said the legislation may fit in with what Gov. Steve Sisolak has proposed accomplishing with his Patient Protection Commission, the details of which have yet to be publicly released.
“I think there’s an opportunity to craft a system where the different boards — or maybe it ends up being one — where we’re having a conversation about a regulatory framework for health care in this state,” Cancela said. “I think the challenges, whether it’s surprise billing or the high cost of prescription drugs, it’s clear that we need more than 120 days to address these issues.”
A spokeswoman for the national drug lobbying organization, the Pharmaceutical Research and Manufacturers of America, said in an email that they need to see the language of the bill and analyze it, and Cancela’s other proposals, before commenting. However, the group is opposing the legislation in Maryland, and supporters of the bill expect PhRMA to mount a legal challenge against it should it pass.
“Unfortunately, proposals that would give government broad authority to set prices miss that mark,” PhRMA’s Nicholas McGee told the Washington Post.
The pharmaceutical industry has challenged a host of recent state legislation, including bills in California and Maryland, attempting to rein in drug costs by arguing that they violate the Commerce Clause, which restricts the power of states to regulate interstate commerce. But Horvath, who has had her proposal reviewed by several constitutional scholars, believes it will be able to withstand a legal challenge.
“[The scholars] thought it does not violate the Commerce Clause. The Maryland attorney general believes it does not violate the Commerce Clause. We have a number of legal experts who are now stacked up and do not believe it violates the dormant Commerce Clause,” Horvath said. “PhRMA will say differently. But I don’t believe the case law is there.”
Cancela additionally plans to introduce a bill that would extend the pharmaceutical transparency legislation she spearheaded last session — which required drug manufacturers and pharmacy benefit managers to report to the state costs associated with the production or sale of any essential diabetes drug — to asthma medicine.
She said she hopes to make it easier for Nevadans who are living with some of the worst air quality rates in the country to access affordable medication. In Nevada, 10.4 percent of adults and 11.5 percent of children have asthma, according to the CDC.
“You think about it the fact that we have wildfires, we have high winds levels because we’re in the desert, it makes it really difficult to manage a condition like asthma at no fault of your own,” Cancela said. “Unfortunately, asthma care can be really expensive and, depending on what triggers your asthma or what the condition is like for you, it can be something that can be as severe as causing you to miss work.”
Like the legislation from last session, the state would be required to compile annual reports aggregating the information they receive from manufacturers of asthma drugs and pharmacy benefit managers to explain why the costs of asthma drugs changed year over year, she said.
The third bill she plans to introduce seeks to take a proposed federal rule changing the way that drug discounts are negotiated between pharmacy benefit managers and drug companies and place it into state law. But Cancela said that the specifics of that legislation are still being ironed out.
“It’s clear to me that while drug manufacturers start the drug pricing process at every point in this system, there’s room for improvement — and improvement that benefits patients,” Cancela said. “I want to make sure that if it’s passed at the federal level that we have a version of that rule that’s in state law that makes sense for this state, but also that could potentially codify the federal rule in the event that that does not become law but is actually a good idea, and, frankly, just have a more thorough discussion about the role that PBM rebates play in the drug pricing process.”
A lobbyist for the Pharmaceutical Care Management Association, which represents PBMs nationally, did not respond to a request for comment on the proposed legislation.
Though PhRMA wined and dined legislative leaders and more than doubled the campaign cash the organization doled out to candidates in the last election cycle, Cancela doesn’t believe lawmakers on either side of the aisle will be deterred from tackling the high costs of drugs this session. She noted that legislative Democrats included lowering prescription drug prices in their blueprint and that Gov. Steve Sisolak talked about the issue in his State of the State and inaugural addresses.
“I think there’s an overall recognition from both parties that the high cost of prescription drugs is a real problem for Nevada,” Cancela said. “The hard part on prescription drugs is that a lot of it has to change federally before states can take action, but that doesn’t mean we can just sit around and wait for Congress to take action.”
Updated 3-8-19 at 8:19 a.m. to include a response from the Pharmaceutical Research and Manufacturers of America and to clarify that supporters of the Maryland bill anticipate a PhRMA lawsuit, should it pass.