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Proposed amendment to major pharmaceutical bill makes minor policy tweaks, creates appeals process for reimbursements

Megan Messerly
Megan Messerly
Health CareLegislature

Democratic Sen. Yvanna Cancela is amending her pharmaceutical bill to make a number of technical changes and shore up the policy behind a proposed reimbursement system to control price increases on certain diabetes drugs and create an appeal process for manufacturers, according to a copy of the amendment obtained by The Nevada Independent.

Since the hearing on the bill last month, Cancela said she worked with supporters of the bill, including insurers, the unions and other individuals, as well as the state agencies that would be responsible for carrying out the provisions of the legislation, namely the Department of Health and Human Services, to craft the amendment. Though the pharmaceutical industry expressed numerous concerns over the bill at the hearing, Cancela said they have not brought forward any proposed amendments or changes to the bill in meetings with her.

“This is something that’s never been done before in the state or anywhere else in the country, so there were a lot of questions at the hearing and there was a lot of input on how to make the language stronger and make sure it fits into what our current statutes are around drug pricing and pharmaceuticals,” Cancela said. “The intent of the amendment is to make sure the bill is as clear as possible about how it’ll be enacted, where it fits into statute and that it is simple enough to be dealt with in the regulatory process.”

The previous language of the bill, SB265, laid out two methods for calculating when a reimbursement on certain essential diabetes would kick in, either if the list price of a drug exceeds what the drug usually sells for in certain countries, called the foreign price cap, or if the list price increases by more than the increase in the Consumer Price Index’s Medical Care Component over the previous year. The current amendment simplifies that process by only using the Consumer Price Index metric to determine when manufacturer would be required to issue a reimbursement.

The amendment also includes language to avoid violating the United States and Nevada Constitutions by creating a process for a pharmaceutical manufacturers to challenge a required reimbursement. Companies would be able to ask the Department of Health and Human Services through an appeals process to declare the reimbursement confiscatory under the Constitution and require the department to reduce the amount of the reimbursement or cancel it entirely.

The Takings Clause in the Fifth Amendment protects against confiscation of private property, preventing the government from depriving a person of property without due process of law or from taking private property for public use without just compensation. Laws setting rates or prices can violate the clause if they do not allow the regulated business to earn a reasonable return.

The amendment also broadens some of the language requiring certain disclosures about the costs of manufacturing diabetes drugs. Manufacturers will be required to report the total cost of research and development for the drug, any other costs of producing the drug, any administrative expenditures related to the drug like marketing and advertising, the profit the manufacturer has earned from the drug and the total amount of reimbursements available and paid for the drug, among other metrics.

It also inserts language requiring health care nonprofits that have received contributions from a trade or advocacy group for drug manufacturers — in addition to the manufacturers themselves — to report those contributions and post them publicly on their website.

The amendment also strikes significant portions of the original bill specifying exactly how the reimbursement process should be carried out, instead requiring the Department of Health and Human services to adopt regulations specifying the form and manner by which a manufacturer must accept claims for reimbursement by patients and insurers.

It also deletes a section that required employers comply with certain standards already in place for public schools allowing for individuals to self-administer medication for asthma, anaphylaxis or diabetes, while keeping in the provision applying those standards to private and charter schools.

The amendment also specifies that manufacturers entering into contracts or agreements with a state or state agency for a contract for one of the covered diabetes drugs are not required to provide reimbursements during the current term of the contract or agreement. The purpose of that change is to exempt the state Public Employees’ Benefit Program, Medicaid and the Children’s Health Insurance Program from the bill, all which expressed concern that the reimbursement process would interfere with their existing agreements with pharmaceutical manufacturers.

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