In what may be the start of a national trend, Nevada has become the first state to pass sweeping legislation requiring real transparency from key players involved in the convoluted insulin pricing scheme.
Both sides of the Nevada state legislature recently passed a bill that aims to shine sunlight on the insulin pricing process that’s often referred to as a black box, and Gov. Brian Sandoval signed it into law on June 15.
This is the first legislation of its kind in the country, but it likely won’t be the last. Half the states are considering some type of drug pricing reform, and ire over this issue has hit a new high. Meanwhile at the national level, Congress is tackling healthcare and insurance reform; a U.S. Senate committee will debate drug pricing at 10am ET today (June 13); the new FDA commissioner wants to use the agency to target medication costs; and a flurry of lawsuits are setting their sights on Pharma, PBMs and others involved in alleged price gouging.
This could very well be a tipping point… one that’s long overdue for us patients who’ve watched these trends worsening and impacting lives in horrible ways.
Nevada Fights for Transparency
In a state with a huge stake in tourism and hotel business thanks to Las Vegas, much of the focus on soaring insulin prices came from an unlikely coalition: Las Vegas casino and resort owners aimed at reigning in health insurance costs and their employees’ unions, made up of hundreds of cooks, waitstaff and other workers who’ve struggled to afford and get access to their insulin and other medications. Freshman state Senator Yvanna Cancela, a Democrat who’d worked as political director for the powerful Culinary Workers Union until joining the state Senate last Fall, knew those stories well, and that led her to sponsor legislation tackling that issue.
She introduced Senate Bill 265 in March 2017, aimed at shining sunlight on the process in hopes of helping the 12% of Nevadans who have diabetes and the even larger 38% of the population with prediabetes.
Both the Senate and Assembly passed the bill and sent it to the governor, but he vetoed the enrolled act, specifically calling out two main concerns: 1) the middle-men known as Pharmacy Benefit Managers (PBMs) were not addressed in the legislation; and 2) Pharma would have to give public notice 90 days before raising drug prices, something the governor believes could create a perverse incentive for some companies to manipulate insulin supplies or even an unintended “black market” prior to those price hikes.
In a surprise twist that gave the legislation a second life, Cancela didn’t give up and in the final day of the legislative session, worked with a Republican colleague to weave key provisions of her bill into one demanding transparency from Pharmacy Benefit Managers (PBMs) — the controversial middle-men in the drug pricing scheme and arguably one of the biggest culprits on out-of-control costs, depending on whom you ask.
That hybrid bill was SB 359, addressing the PBM component and removing the 90-day notice on planned price hikes by insulin makers. That gave Gov. Sandoval what he needed to sign off for it to become law — something he vowed to do and eventually did more than a week after the legislative session ended.
Here’s a snapshot of what the 21-page SB/Enrolled Act 539 says:
- Manufacturers must explain any diabetes drug price increases.
- PBMs must act in insurers’ best interests, which it describes as basically not taking actions or maintaining policies that conflict with its duty to its clients (such as employers, trying to provide the best access and affordability).
- PBMs are banned from placing gag orders on pharmacists preventing them from discussing lower-cost alternatives with patients.
- Pharma sales reps who meet with healthcare professionals and market/sell/give out samples of diabetes drugs in the state must be licensed to do so. This requirement is modeled after a Chicago ordinance that takes effect in July and will require Pharma reps to get a special license each year before working there, and it mirrors what Washington D.C. has been requiring of reps for nearly a decade.
- As part of that Pharma rep licensing, the drug manufacturer must provide a list of all sales reps in the state each year; each rep must also annually report details of their interactions with healthcare providers, including who they met with and what samples or gifts were handed out.
- Clinicians must detail any perks they receive valued above $10 (including meals), or total compensation that exceeds $100.
- Non-profit organizations must disclose contributions they receive from pharmaceutical companies, PBMs and insurers.
- Insurers must report to state officials during open enrollment periods information about any essential diabetes drugs that are being removed from formularies.
- Administrative penalties can be demanded from any manufacturer, PBM, insurer or nonprofit that fails to disclose this required information. The penalty fees range from $500 to $5,000 per day(!), and the money assessed is earmarked for diabetes education programs in Nevada.
- On private schools and medication use: students must be allowed to self-administer drugs like insulin, glucagon, asthma and other emergency medications with written permission when they’re in school, at school functions or on the bus. This is already existing law for public schools, and it puts the same in place for private. It requires schools to adopt protocols for all of this, including what type of written physician permission is needed and how the educational facility will deal with used needles or supplies.
It’s always interesting to look at how legislation changes as it moves through the process, and there were some key revisions made here.
When Cancela first introduced her measure, she included a clause that would have effectively capped insulin price increases at the rate of inflation. It also would have required Pharma to reimburse any amounts over that cap, giving the money back to insurers and patients. However, that part was later removed in an amendment and all that remained was the requirement for drugmakers to notify state officials and insurers 90 days before raising insulin prices. As noted, that was also removed in the final hybrid bill.
Cancela had also crafted a requirement that drugmakers disclose how they set their prices, along with information about how much is spent on marketing and R&D for insulin.
As expected, the pushback on this legislation began as soon as it was introduced and it brought an incredible amount of lobbyists out of the woodwork to fight it.
Opposition and Silence
It’s no surprise that pharmaceutical companies — particularly the big insulin makers Lilly, Novo and Sanofi — opposed this, citing concerns that it does nothing to actually lower cost and instead just adds unnecessary requirements in reporting and disclosure (some claim the requirements could even be illegal, given trade secrets and collusion prohibitions). PBMs argued much of the same, pointing out that their rebates aren’t the problem and can’t be shared for proprietary reasons.
(Strumming the world’s smallest violin here, while reading this great insight from a Nevada legislative expert who found no issues with what’s been proposed.)
Even before the law passed, the Pharma and PBM industries hinted that they’d take this fight to court — potentially challenging the provisions that require disclosure of “proprietary” negotiation secrets, such as the rebates. Whether that happens is TBD, and how the judiciary views it based on contract and trade secret law is anyone’s guess, but we’re hoping Nevada’s law remains entact.
Most interesting (troubling?), has been the non-profit response to this legislation. Notably the JDRF, American Diabetes Association (ADA), and American Association of Diabetes Educators (AADE) were among the big name D-organizations absent from the discussion in Nevada. But it wasn’t limited to diabetes, as other groups like the National Organization for Rare Disorders, Caregiver Voices United, the Myositis Association, the International Pain Foundation, RetireSafe, and the Epilepsy Foundation.
Many of those groups’ concerns, as well as from industry and those supporting the legislation, can be found here at the Nevada legislative site.
After the law passed the legislature, US News ran a story highlighting responses from several key diabetes orgs including Beyond Type 1, Diabetes Hands Foundation, T1International, as well as some DOC advocates passionate about the #insulin4all effort. That’s definitely worth checking out. We also contacted the big three orgs — ADA, AADE, JDRF — to find out more about their positions.
ADA: While the ADA didn’t respond directly to us in the days following the legislation’s passage and leading up to its big Scientific Sessions conference, they did find time for a response to US News about this Nevada legislation. “The American Diabetes Association believes that no individual in need of lifesaving medications such as insulin should ever go without due to prohibitive costs,” spokeswoman Michelle Kirkwood says in the story, which also points out she would not say whether the ADA supported the bill.
AADE:The educators’ group had submitted comments to the Nevada Senate’s Health and Human Services Committee when it was first being heard, and the AADE’s state and federal advocacy director Kurt Anderson echoed those concerns to us while emphasizing the org understands the importance of access to affordable and quality diabetes meds and supplies.
“Nevada has an excellent opportunity to examine this very important issue and to set a national standard for drug pricing legislation. However, AADE had concerns and questions regarding, then-SB 265, and the bill’s approach to addressing the matter of rising drug costs,” he wrote us.
The AADE applauded the addition of PBM transparency language, but questioned the reasoning behind mandating that non-profits publicize their financial relationships with pharmaceutical companies. There was never any clear indication of what this disclosure was supposed to accomplish, and more importantly, how this would lower the cost of diabetes medication, Anderson said.
JDRF: Cynthia Rice, JDRF’s senior VP of Advocacy and Policy, told us, “JDRF is not registered to lobby on state legislation, so we haven’t taken an official position on the bill. However, we can say that we believe change will be best achieved at the national level, rather than at the state level. Our primary advocacy focus is on ensuring people have the coverage they need to have reasonable and predictable out-of-pocket costs for insulin and other diabetes management tools, and is the premise for our new campaign, Coverage2Control, which calls on insurance companies to provide coverage that works for people with type 1 diabetes.”
The Nevada Diabetes Association: Describing itself as “neutral” on the insulin pricing transparency legislation, this local organization specifically called out parts of the bills that it didn’t care for.
According to an email statement from Executive Director Sarah Gleich, “The Nevada Diabetes Association is always in support of accessibility for diabetes medications such as insulin, (but) Senate Bill 265 had too many add-ons to have this happen. If the bill just wanted to regulate insulin and nothing else we would be in support. The Nevada Diabetes Association is neutral on (these two bills) for these same reasons.”
Specifically, the “add-ons” that Gleich listed as concerning the NDA include: private school protocols such as dosing and administration and how students carry medications at school; regulations relating to Pharma licensing and Pharmacy Benefit Managers (PBMs); pharma acquisitions’ wholesale prices; non-profit reporting, Pharma reporting, Pharma trade secrets, insurance coverage formularies, and reimbursements for insurers and Pharma.
As disagreement on this legislation mounts, some are quick to make assertions of “Pharma bribery” and corruption on the political side as well as the sponsorship-embracing non-profit orgs. We’re not jumping to those conclusions without first seeing actual proof. And we do believe that politicians and effected entities are allowed to have legitimate concerns with particular pieces of legislation.
Whatever the reason for opposition or silence, what’s clear is that this likely isn’t stopping at just Nevada.
What Happens in Vegas… May Not Stay There
Many other states are weighing their own related legislative options, with bills aimed at controlling drug prices proposed in roughly half the 50 states this year alone — including Oregon, Washington, Maryland, Illinois, Massachusetts, Indiana and Montana, and even New York where the governor plugged drug price controls into his executive budget plan. Last year, Vermont passed a law requiring drugmakers to justify any price increases 15% or higher, and California legislators are now seeking notification of price hikes above 10%.
And today, the U.S. Senate’s Committee on Health, Education, Labor & Pensions has a 10am ET hearing to discuss “The Cost of Prescription Drugs: How the Drug Delivery System Affects What Patients Pay.” You can watch that hearing live, and it will be archived on the committee site afterward.
No doubt, this is a hot topic and its burn will be felt across the country.
Some argue that these measures may cause unintended negative consequences, but the details are unclear. Meanwhile, with the Insulin Affordability and Access Crisis getting worse, doing something seems far better than doing nothing and maintaining the status quo.
Sure, we’d all prefer federal-level blanket legislation on this issue, and our Diabetes Community will continue to push for that. But let’s face it, Congress isn’t known for efficiency, or clarity, or even listening to what many in this country scream for.
It comes down to state action, like this one in Nevada and many others across the country — along with the litigation pushing for transparency, the patient voices clamoring for the same, and the grassroots and professional advocacy and lobbying efforts echoing this key message to all who will listen.
Here’s to pushing for transparency far and wide, and hopefully making a dent in that black box of insulin pricing in a way that actually moves the needle.