Nevada Tells 21 Diabetes Drug Makers They Owe $17.4 Million for Violating Transparency Law

October 7, 2019

The state’s Department of Health and Human Services this week sent letters to firms that did not provide required information about production costs, marketing and advertising costs, patient assistance programs, wholesale acquisition costs, and historical increases, among other information.

Last week, Nevada told 21 diabetes drug manufacturers the state wants $17.4 million in penalties for noncompliance with a new price transparency law.

According to press reports, the state’s Department of Health and Human Services this week sent letters to firms that did not provide required information about production costs, marketing and advertising costs, patient assistance programs, wholesale acquisition costs, and historical increases, among other information.

Thirteen companies were assessed $910,000, followed by Daiichi Sankyo, which was assessed a $735,000, which was the smallest penalty.

According to a state drug transparency report released earlier this year, about 12.6% of adults in Nevada have diabetes, and 1 in 4 don’t know that they have the disease. Direct and indirect diabetes related expenses cost $2.7 billion in the state.

The transparency law requires that manufacturers divulge justifications for price increases; the most cited reason research and development investments, followed by claims that the drug has more competitive value, changes in marketplace dynamics, rebates provided to pharmacy benefit managers (PBMs), insurers, and others, and manufacturing investments.

The Nevada law requires that PBM managers report rebates in aggregate (but not for individual drugs).

A recent study said these laws are largely ineffective at revealing true transaction prices for drugs, though policy makers have hailed these legislative solutions as steps toward bringing down the high cost of drugs for US patients. The laws do not require the release of real price information, including discounts and rebates, by all players in the supply chain.

The Nevada Independent, a nonprofit news organization, reported that the companies have 30 days to either pay the fines in full or 10 days to request an informal dispute resolution meeting with the state. If the companies don’t respond at all, the department will refer the cases to the attorney general’s office to seek a court order to collect the penalty.