Nevada Governor Signs Insulin Price Transparency Bill, Strictest in Nation

Republican Nevada Governor Brian Sandoval yesterday signed into law the country’s strictest requirements for drug companies to show how they set prices for certain prescription drugs, with a specific focus on insulin as well as on biguanides.

The bill, SB539, was originally introduced in March by state Senator Yvanna Cancela, D-Las Vegas, and passed both the state Assembly and Senate. That version of SB539 was vetoed by the governor because of his concerns that it posed serious risks of unintended and potentially detrimental consequences for patients and that it ignored the role of pharmacy benefit managers (PBMs) in price escalations. After the veto, Cancela joined forces with state Senator Michael Robertson, R-Henderson, so that the final bill refocused on PBMs and dropped requirement for a 90-day public disclosure period for price increases. Removing that from the bill, the governor said, made it less likely that legal action against the bill would go forth. Most aspects of the law will take effect in October, but the first disclosures will be due on April 1, 2018.

Insulin prices have risen 300% over the last decade. In 2017, Eli Lilly and Novo Nordisk, 2 of the biggest insulin makers, raised the list price of their insulins further, despite charges and lawsuits accusing the companies of price fixing.

The new Nevada law requires drug makers to annually disclose the list prices they set for insulin, as well as the profits they make and discounts they give to PBMs. They must also give state officials written explanations of any insulin price hikes that are above the previous year’s inflation rate, or are higher than twice the inflation rate of the previous 2 years. The 3 US insulin manufacturers will face fines of $5000 per day if they fail to provide the data minus an explanation. It also outlaws gag rules that prevent pharmacists from suggesting alternative, less-expensive prescription options.

SB539 forces drug makers to register sales representatives who market prescription drugs in Nevada. Further, nonprofit organizations that advocate on behalf of patients or that fund medical research in the state will be required to disclose donations they receive from drug companies.

It is not yet known if the law will be challenged in court. The Pharmaceutical Care Management Association, the organization representing PBMs, said in a statement that the law’s “costly fiduciary mandate” resembles laws that federal courts have previously rejected based on violations of federal benefits laws, and that the law could raise their costs rather than lower them because the “inside information” provided to competitors will allow them to collude.

Signing the bill, Sandoval said he was pleased to sign one of the most important bills of the session and one that was a model for other states.