Nearly 20 drug manufacturers and pharmacy benefit managers submitted reports to the state detailing the costs of manufacturing and distributing diabetes drugs in advance of a Tuesday deadline, and state officials continue to comb through others received this week as they prepare to undertake their first examination of the factors contributing to the costs of treating Nevadans with diabetes.
Division of Public and Behavioral Health Administrator Julie Kotchevar said that drug companies and pharmacy benefit managers, or PBMs, have been “really working hard to be compliant” with the new annual reporting requirements created as a result of legislation passed during the 2017 session. For the first time this week, drug companies and PBMs — third party administrators who are the go-between for manufacturers, insurers and pharmacies — were required to submit reports to the state explaining the costs associated with essential diabetes drugs and, for some, why the costs of those drugs increased significantly over the prior year.
Kotchevar said that state officials are reviewing and processing submissions they received from drug manufacturers and PBMs to be compared against a list of all companies required to submit reports to the state. Once the state identifies which companies have yet to report, it will contact them to ensure they are aware of the requirements and are working toward compliance before levying the $5,000 a day fine allowed by law for noncompliance, she said.
“We have had some hiccups. We’re all learning from them,” Kotchevar said. “But we haven’t had anyone who’s said, ‘No, we’re not going to do it. Fine us.’”
Processing the submitted reports has taken longer than expected, she said, because of a recent IT change to their email system, which sent some reports back to companies as undeliverable.
“We still have hundreds of emails we’re trying to go through,” Kotchevar said.
She added that the state is working on updating the list of companies required to report, which erroneously included some not subject to reporting requirements such as those that no longer make diabetes drugs or manufacture drugs that could be used to treat diabetes in other dosages but are only FDA-approved to treat other conditions. The state took those lessons into account when releasing its draft list this week for the next round of reporting later this year, she said.
“We were really trying on the new list to navigate some of these pitfalls,” Kotchevar said. ”Whoever is manufacturing this main drug, the NDC (national drug code), you have to comply. Just because we didn’t list your name at the beginning of the year doesn’t absolve you of the reporting requirements.”
In advance of the Tuesday deadline, the state had already received early reports from nine pharmaceutical manufacturers: Bayer, Breckenridge Pharmaceutical, Bristol-Myers Squibb, Ingenus Pharmaceuticals, Eli Lilly and Company, Novartis, Pfizer, Sandoz and Sun Pharmaceuticals.
It had also received early reports from 10 PBMs: CVS Health, OptumRx, OptumRx Administrative Services, OptumRx PBM of Maryland, OptumRx PBM of Wisconsin, Hometown Health, Cigna, Humana, Express Scripts and Navitus Health Solutions.
The state released the information after telling The Nevada Independent in early January that the names of the companies that had submitted early reports couldn’t be released because of regulations the state approved last year allowing drug companies and PBMs to mark information they submit to the state confidential in order to protect their trade secrets.
The specific issue in this case, Kotchevar said, was that one of the drug manufacturers had requested blanket confidentiality for all the information it submitted to the state, which included the name of the company. (Kotchevar said she did not recall the name of the company.)
“We spoke to them about the reasonableness of them trying to put a blanket of ‘everything we tell you, including our name, is confidential,’” Kotchevar said. “They conceded that was unreasonable.”
Although the new law exempts the information drug companies and PBMs are required to submit to the state as part of this reporting process from being considered a trade secret under state law, state officials approved a regulation last year allowing companies to try to protect that information from disclosure through the court system.
The regulation permits drug manufacturers and PBMs to request that information they report to the state be kept confidential if they believe its disclosure would constitute a misappropriation of a trade secret. Then, if the department receives a public records request to release that information, state officials will make an initial determination about whether the information constitutes a trade secret and should be released — but allow manufacturers 30 days to take action in court to prevent the disclosure of the information if they disagree.
Kotchevar said that manufacturers have taken varied approaches to how they’ve chosen to mark information they submit to the state as confidential.
“We have had some manufacturers submit really well reasoned statements about why individual fields they feel are confidential. Others have tried to do the ‘everything is’ method,” Kotchevar said.
The Nevada Independent submitted a public records request on Thursday for the reports submitted by the drug companies and manufacturers.
The new law additionally requires the state to compile an annual report analyzing the information it receives from drug companies and PBMs in aggregate to explain the factors contributing to the costs of treating diabetes.
Priscilla VanderVeer, a spokeswoman for the Pharmaceutical Research and Manufacturers of America (PhRMA), said that it remains to be seen how well the regulations protect manufacturers’ trade secret information. PhRMA, the national drug lobbying association, was one of the main opponents of the 2017 legislation and fought it in court.
“I think we’ll see what the report says. There’s a reason why we came to the agreement with the parties,” VanderVeer said. “… I think companies felt better about providing the information because they knew it wasn’t just going to be available to every single person.”
The state released an early version of the report in September, and Kotchevar said that state officials are working on putting together a supplemental report with the new information it has received by February.
“It’s still our goal to be able to provide that policy information so people can make good decisions,” Kotchevar said. “That’s really the goal of transparency… to lift that veil and say this is what actually appears to be contributing to the price of drugs or not so people can make choices about how we can move forward as a state.”