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Gov. Brian Sandoval in Carson City on Feb. 14, 2017. Photo by David Calvert.

Republican Gov. Brian Sandoval vetoed today a Democrat-backed pharmaceutical transparency bill that would have required manufacturers of diabetes drugs to disclose information about their costs and profits, signaling strained tensions between the governor’s office and Democratic leadership in the waning days of the legislative session.

The bill, sponsored by Democratic Sen. Yvanna Cancela, sought to lower the cost of certain essential diabetes drugs, such as insulin, by requiring companies that manufacture them report the costs of producing and marketing the drug along with any rebates that they provide for the drugs. SB265 also would have required pharmaceutical sales representatives to annually report details of interactions with doctors, including who they visited and what samples or gifts they handed out.

Democratic Assembly Speaker Jason Frierson said the bill was discussed as part of a last-ditch negotiation effort with the governor's office over a bill to bring back the divisive Education Savings Accounts, a voucher-style program that was approved during the 2015 session and stalled after a state Supreme Court decision last year halted its funding mechanism.

"That was discussed," he said.

The governor said that certain parts of the bill are “laudable” and “well-intentioned,” seeking to address “legitimate concerns” about access to affordable health care. But he said that it poses serious risks of unintended and potentially detrimental consequences for Nevada patients and could possibly lead to rising health care costs.

“Before I support a bill as uncertain as SB 265, which deals so directly and extensively with the health and well-being of countless Nevadans, there must be compelling evidence that the benefits are worth the risks,” Sandoval wrote. “No convincing evidence has been offered to justify SB 265’s nascent, unproven, and disruptive change to public health policy.

He said that he made the decision after reviewing the legislative record, testimony from committee hearings and hundreds of constituent calls and letters and noted opposition to the bill from groups such as the Epilepsy Foundation, the Nevada Cancer Research Foundation, the Biotechnology Innovation Organization and the Neuropathy Action Foundation.

The move comes after a morning of negotiations between the governor and Democratic leadership in the wake of a Thursday blowup over end of session negotiations. The bill is one of about 20 piece of legislation that the governor had to sign or veto today or else they automatically become law without his signature.

Hours earlier, the governor signed Democratic Sen. Aaron Ford’s financial planner bill, which passed on party lines in both houses, about five minutes after the Senate passed Sandoval’s omnibus substance abuse prevention bill.

Cancela said in a statement that she was "deeply disappointed" in the governor's decision to veto the bill, adding that she worked "tirelessly" with all those involved with the drug pricing process to deliver a bill with bipartisan support.

"Nevada had the potential to lead the nation in taking on high drug costs, and tonight we have lost that opportunity," Cancela said in a statement. "I know patients deserve better and so do all those who voted for and supported this bill. Above all else, I'm incredibly grateful to all the diabetes patients who spoke out and made their voices heard. It's because of them that I fully intend on continuing to lead the charge. Nevadans deserve it."

Democratic Senate Majority Leader Aaron Ford said that Sandoval "put the interest of major pharmaceutical companies" ahead of the one million diabetic and pre-diabetic Nevadans with his veto.

“Senate Bill 265 had significant bipartisan support because it would have finally lifted the shroud and shined some light on the skyrocketing costs of insulin," Ford said. "Tonight, one million Nevadans and their families have a reason to be disappointed in their state government.”

Other parts of the bill, which passed the Senate 19-2 and the Assembly 26-14 last month, would have required manufacturers to notify the state 90 days ahead of any planned price increases and mandated that health care nonprofits disclose contributions they receive from pharmaceutical companies or the trade associations that represent them.

Sandoval said the 90-day notification could create a “perverse incentive” for some to stockpile drugs to maximize profits and give purchasers, wholesalers and secondary distributors of drugs greater financial incentive to restrict access to drugs. The bill would create a “‘buy-low, sell-high’ culture” which would exacerbate health care challenges in the state, Sandoval said.

The governor’s office invested a significant amount of time in the bill, meeting with Democratic lawmakers, insurers, pharmaceutical companies and others. Sandoval was previously noncommittal about the bill, only noting his office’s involvement with the legislation.

He also said that the bill failed to address the role that middlemen in the drug pricing process known as pharmacy benefit managers, or PBMs, play in the costs of prescription drugs. A separate bill from Republican Senate leader Michael Roberson, SB539, sought to mandate transparency from PBMs.

Sandoval also noted potential constitutional and legal concerns with the bill that surfaced during discussions about Cancela’s original bill draft, which sought to control the price of diabetes drugs. He said that possible legal challenges could “destabilize” the market for drugs and jeopardize their supply.

“SB 265 fails to account for market dynamics that are inextricably linked to health care delivery and access to prescription drugs,” Sandoval wrote. “This failure cannot be overlooked and it could cause more harm than good for Nevada’s families.”

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