Pharmaceutical transparency bill clears major legislative hurdle with bipartisan support
A major piece of pharmaceutical transparency legislation passed out of the Senate with bipartisan support Friday morning after weeks of behind-the-scenes discussions between lawmakers, pharmaceutical companies and others involved in the drug price-setting process.
The bill, sponsored by Democratic Sen. Yvanna Cancela, seeks to impose what could be the most robust mandates on pharmaceutical manufacturer transparency in the nation, requiring companies that manufacturer diabetes drugs disclose the list price of the drug, costs associated with manufacturing it and profits received, among other metrics. The legislation, SB265, passed out of the Senate on a 19-2 vote, with only Republican Sens. Joe Hardy and Don Gustavson voting against the measure.
The measure aims to ultimately lower the costs of certain diabetes drugs, such as insulin, by increasing transparency on companies that manufacture those drugs. An original version of the bill contained provisions seeking to directly control drug costs, but legislative legal counsel determined that doing so could possibly violate the Constitution.
Several Republican senators restated on the floor their desire to see the Legislature also take action on transparency mandates for pharmacy benefit manufacturers (PBMs) — third-party administrators responsible for administering prescription drug programs for health plans. In response to those concerns over the last several weeks, Cancela put forward an amendment to her bill over the weekend requiring manufacturers to disclose any rebates they give to PBMs in an attempt to head off those concerns.
But three Republican senators wanted more, saying they would “reluctantly” vote yes on the bill in the hope that legislation put forward by Republican Senate leader Michael Roberson, SB539, would move forward. Roberson’s bill, introduced earlier this week, would place even more stringent transparency mandates on PBMs, requiring the companies to post on their website the rate at which they reimburse pharmacies for diabetes drugs, the total amount of manufacturer’s rebates they received in the preceding calendar year and the amount of those rebates they retained, among other information.
In a floor speech, Roberson said Cancela’s bill is an “incomplete solution” on its own but coupled with SB539 would help provide full transparency to the drug supply chain. He added that Senate Majority Leader Aaron Ford’s office had made representations to him that his bill would move forward.
“Passing both Senate Bill 265 and Senate Bill 539 into law will provide the full transparency needed to adequately address the increasing insulin costs being imposed on diabetic patients in Nevada,” Roberson said. “I encourage my colleagues to support Senate Bill 265.”
Ford, however, said that his office only agreed to hear the bill, not to necessarily move it forward.
“That much I have committed to,” Ford said. “But as to this bill, 265, it’s important to note it is a great example again of quintessential compromise.”
Republican Sen. Joe Hardy, who voted against the bill, praised Cancela for the hard work she put into the bill but said it is “a work still in progress.”
“I look at this particular iteration as problematic for business,” Hardy said. “We did not hear testimony that said yes this will decrease costs.”
Cancela, in an interview after the vote, said she was thankful that her fellow lawmakers recognized that there is a problem with a lack of transparency in drug pricing, specifically with diabetes drugs.
“It is a testament to them recognizing that there is a problem, a lack of transparency, in drug costs, and I am very grateful for their support,” Cancela said. “I hope that this is the beginning of what will probably be a decade-long discussion on how to make drugs more affordable.”
On SB539, she said Ford made it clear the bill would get a hearing and that she trusts her colleagues to move the bill forward if they decide it has merit.
In addition to the reporting requirements on drug costs, Cancela’s bill will require manufacturers report to the state a list of all of their pharmaceutical sales representatives, who will be required to annually submit reports about which doctors they visit, what samples they hand out and whether they gave any gifts to doctors.
A last-minute amendment to the bill on the Senate floor removed a requirement from the original legislation that manufacturers of diabetes drugs disclose research and development costs to the state. The amendment also mandates that health care nonprofits disclose contributions they receive from PBMs, insurers and other third parties, building on the requirement in the original version of the bill that nonprofits disclose contributions from pharmaceutical companies or the trade associations and organizations that represent them.
The amendment also clarifies language in the transparency section of the bill, requiring manufacturer’s profits from diabetes drugs to be expressed as a percent of the company’s total profits over the timeframe during which they sold the drug.
Roberson, in an interview after the vote, said that his comments on the floor “speak for themselves” about what his expectations are for SB539 moving forward. He said that he plans to present an amendment to the bill during the hearing that would remove a requirement that PBMs pass along to the insurer at least 80 percent of the amount of any rebate obtained from a manufacturer related to the sale of a drug used to treat diabetes.
“There was concern about that from others, other legislators and the important thing is the transparency stays the same,” Roberson said. “PBMs will be required to disclose how much they get in rebates and what they do with those rebates. We need to see how much of those rebates they’re keeping and how much are being passed on.”
The amendment will also require manufacturers to provide the list price, known as the wholesale acquisition cost, for their diabetes drugs, something Roberson says is implied in the legislation but will be clarified. It will also expand a provision that says that PBMs cannot tell a pharmacist what to say and what not to say to a customer who comes in to everyone, including insurers.