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State moves ahead with pharmaceutical transparency law implementation, releases list of 'essential diabetes drugs'

Megan Messerly
Megan Messerly
Health CareState Government
A bottle of insulin as seen on Friday, Jan. 25, 2008

Nevada’s Department of Health and Human Services formally identified on Wednesday more than three dozen types of drugs used to treat diabetes that will be subject to the state’s new pharmaceutical pricing transparency law.

The list of so-called essential diabetes drugs, which will be subject to certain pricing disclosures if their cost increases by more than the rate of medical inflation in a year, includes 44 different groups of drugs sold by nearly 100 different pharmaceutical manufacturers and wholesalers. Insurance companies will also be responsible for notifying customers during open enrollment if any of the drugs included on the list have been removed or will be removed from the the insurance company’s list of approved drugs, known as a formulary.

The department moved forward with publishing the list, the next step toward full implementation of the newly enacted law, after a federal court judge denied a request by pharmaceutical representatives to preliminarily enjoin major portions of the first-in-the-nation diabetes drug transparency law. Though the companies argued that merely publishing the list of drugs would immediately strip the pricing data of all trade secret protections, Judge James Mahan said they wouldn’t suffer any immediate harm since any potential disclosure of pricing information wouldn’t happen until July.

Manufacturers of drugs on the list will be required to report to the state the costs of producing the drug, profit earned, coupons and rebates handed out and any other information required to analyze the trends of drug costs. If a drug on the list increases by either more than the rate of medical inflation over the previous year or two times the rate of medical inflation over the prior two years, drug companies will also be required to report the list of factors contributing to why the drug has increased, the percentage of the total increase to attribute to each factor and an explanation of how those factors resulted in the cost of the drug increasing.

Pharmacy benefit managers, the go-between for drug manufacturers, insurers and pharmacies, will also be required to report any rebates they negotiated with manufacturers, how much of rebates they kept instead of passing the savings along to consumers and a breakdown of rebates negotiated for recipients of Medicare and Medicaid.

The state compiled the list by first soliciting suggestions from pharmacists employed by the department. They then circulated the draft list among prescribers in the state to see if any drugs should be added or removed, receiving more than 300 responses.

That list was then compared against the Medicaid pharmacy data, information from the Public Employees Benefit Program on prescribed drugs and the FDA database. No drugs included on the list of treatment of diabetes were considered an “off label” use.

“This process was designed to include the feedback from prescriber stakeholders along with addressing the concerns expressed by industry members regarding appropriate label use,” the department said in a memo accompanying the list of essential diabetes drugs.

The department has said that it welcomes feedback on the process that can be used to develop the next list of essential diabetes drugs.

But the question is whether there even will be a next list. The pharmaceutical industry is still challenging the constitutionality of the sections of the law, a hybrid bill formed out of two separate proposals from Democratic Sen. Yvanna Cancela and Republican Senate Leader Michael Roberson, in a lawsuit it filed in early September. The companies argue that the new law conflicts with federal patent law, is preempted by federal trade-secret law and violates the Fifth Amendment’s Takings Clause and the Commerce Clause.

Both the Legislature, which has stepped in to defend the law alongside the Attorney General’s Office, and the pharmaceutical companies have asked the court for summary judgment — that is, for the judge to rule on the issue without proceeding to a formal trial. It is unclear how soon the judge would rule on the case, though the pharmaceutical companies have proposed that all parties finish filing their briefs with the court before Thanksgiving.

Department officials have said that at some point after they release the list of diabetes drugs they will publish draft regulations related to the reporting of the required information and begin scheduling public workshops. It was not immediately clear on Wednesday how soon that process would begin.



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