Republican Senate Leader Michael Roberson’s bill to put transparency mandates on the middlemen in the drug pricing process known as pharmacy benefit managers received a tepid but not entirely unwelcome reception from Democrats during its first hearing Friday afternoon.
Roberson and co-sponsor Republican Sen. Heidi Gansert presented SB539 to the Senate Health and Human Services Committee as complementary legislation to a Democrat-sponsored bill placing transparency mandates on pharmaceutical manufacturers, which passed out of the Legislature Thursday. The Republican senators argued that the bill would help shed light on the “most opaque part” of the drug pricing process overseen by the third party administrators responsible for administering prescription drug programs for health plans known as PBMs,
The legislation would require PBMs to post on their website the rate at which they reimburse each pharmacy for a diabetes drug covered by a plan and submit a report to the state including the total amount of all rebates that the PBM negotiated with manufacturers in the preceding calendar year for diabetes drugs and the total amount of the rebates that were retained by PBMs, among other information. The bill also exempts that information from Nevada’s trade secret law, making it publicly disclosable.
“We’re proposing a very simple thing today. It’s more transparency,” Roberson said. “We just want to know when it comes to rebates, when you’re a PBM, how much do you get from a drug manufacturer and what do you do when you get those rebates?”
Democratic senators probed Roberson and Gansert about why the bill primarily targets pharmacy benefit managers instead of including language requiring transparency from insurance companies — paralleling a line of questioning from lukewarm Senate Republicans during a hearing on Democratic Sen. Yvanna Cancela’s manufacturer-focused legislation, SB265, about why her bill didn’t include PBMs.
“Your video that you presented suggested that insurance companies were also a significant part of the challenge,” Ratti said. “Why PBMs and why not insurance companies?”
Roberson said that insurance companies were initially a part of the legislation but that they are already mandated by law to provide more transparency than drug manufacturers or PBMs do today. He said that health plans and manufacturers don’t even know what PBMs are paying for various drugs and what kind of rebates they receive from manufacturers.
“I would encourage all of you to spend 10 minutes on Google and find source after source after source that talks about the rebates that are received by PBMs and what they do with them,” Roberson said.
Republican Sen. Scott Hammond repeated concerns he expressed during the hearings on SB265 about providing transparency throughout the drug pricing process, asking where the consumer would be left should SB539 not pass.
“Clearly nothing will change with regard to PBMs and what they do and what they don’t do,” Roberson said. “It’s not a complete solution without looking at transparency on PBMs.”
Roberson asked the committee to, at the very least, move forward the portion of his bill barring PBMs, insurers and others from putting gag orders on pharmacists preventing them from providing information to patients about the costs of copayments or coinsurance on their drugs and suggesting cheaper alternatives. He said it didn’t matter to him whether they move that provision forward in his bill or include it in another bill.
“At the very least we can prevent PBMs from continuing to put a gag order on pharmacists in our state,” Roberson said. “That would be a big, simple thing we can do in the waning days here.”
But a representative from the trade association representing PBMs told the committee that he had never seen or been privy to any contracts between a PBM and a pharmacy that included a gag order in his 20 years in the industry. He suggested that people who have raised complaints about that are parties in the contracts concerned about their reimbursement rate and attempting to find fault.
“I have not personally had a contract where it says you can’t talk to the patient about their therapy,” said John Jones, a health care policy consultant with the Pharmaceutical Care Management Association. “That is just not the case.”
The legislation also requires pharmaceutical manufacturers to annually report the list price of their diabetes drugs to the Department of Health and Human Services, which would then be responsible for compiling a list of drugs that are used to treat diabetes and have been subject to a price increase in the immediately preceding two calendar years. Those companies would then be required to submit to the department a report explaining why the price of the drugs increased.
An amendment to the bill presented to the committee on Friday removes a requirement that PBMs pass along to insurance companies 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.
“If nothing is done in the next 10 days one of you on this committee will become more informed on this issue and probably champion this issue in 2019,” Roberson said. “And if Congress hasn’t addressed this issue by then I’m sure you will.”