A Nevada law designed to force pharmaceutical companies to justify any significant spikes in the price of diabetes drugs dodged a legal bullet earlier this month but still faces a court battle beginning next month.
A lawsuit brought by the Pharmaceutical Research and Manufacturers of America (PRMA) and the Biotechnology Innovation Organization (BIO) attempted to block enforcement of Nevada’s Senate Bill 539. But U.S. District Judge James Mahan rejected the industry’s call for a temporary restraining order on Sept. 14.
The defendants, Gov. Brian Sandoval and Director of the Nevada Department of Health and Human Services Richard Whitley, will still face a court hearing on the law’s validity on Oct. 17.
Both PRMA and BIO argue that the Nevada law violates federal patent and trade secrets laws, would end up penalizing diabetes patients and would become a drag on efforts to develop new drugs.
“We opposed [the law] and tried to make the case that it doesn’t do anything to help patients and doesn’t in any way reflect the reality of the drug-pricing market,” Priscilla VanderVeer, a PRMA spokeswoman, told Watchdog.org in an email.
In addition, the legislation does not reflect how insurers and pharmacy benefit managers have failed to pass on savings to patients, VanderVeer said.
“It was also unfortunate that the governor ultimately signed the legislation despite vetoing similar legislation just days earlier,” she said.
The Nevada law violates the takings clause of the Fifth Amendment, which bars the government from confiscating property without adequate compensation, the industry’s lawsuit says.
In addition, the law will create disincentives to invest in medical innovations in the future, industry officials said.
“Nevada’s law is, in actuality, an attempt to set de facto price controls on the few successful products that do make it to market,” said Tom DiLenge, BIO’s president for advocacy, law and public policy, in a prepared statement, “and in doing so, it will chill the massive private investment needed to spur our amazing biomedical innovation ecosystem that is providing hope to patients in Nevada and throughout the world.”
Some independent nonprofit groups involved in health policy and advocacy, however, have sided squarely with state efforts to restrain drug price increases. This year alone, more than 80 pharmaceutical pricing bills have been introduced in more than 30 states around the nation, according to a report released last month by the Yale Global Health Justice Partnership.
“States should target excessive pricing for both generic and brand-name drugs, both by prohibiting unfair launch prices and by capping annual price increases,” said the study, which found that the rising costs of prescription drugs is unsustainable.
Peter Maybarduk, the access to medicines director at the consumer advocacy group Public Citizen, also sees the increased interest in drug-pricing bills as positive.
“The pharmaceutical industry is tremendously opaque …” Maybarduk told Watchdog.org. “Research and development costs are not reported in the granular fashion that we really need, and efforts to fight that are welcome.”
The industry will spend $300 million on lobbying in 2017 – at a time when poll results show drug pricing is the No. 1 concern among Democrats and No. 5 among Republicans, he said.
“Drug pricing is an incredibly salient bipartisan issue,” Maybarduk said. He describes the insulin market serving diabetes patients as a cartel that is attempting to squeeze every last penny out of those suffering from the disease.
“With insulin, the rip-off is so bad that it’s understandable to focus on that issue,” he said.
Trish Riley, executive director of the National Academy for State Health Policy, agreed that the drug-pricing issue is producing a snowball effect. A comprehensive drug-pricing bill is now sitting on the governor’s desk in California, while Maryland has a law on the books designed to punish drug price gouging, and a Vermont law is aimed at requiring drug companies to explain large hikes in drug prices, Riley said.
“In each state, they’ve faced legal challenges,” she told Watchdog.org, adding that the academy has drafted model drug-pricing legislation aimed at protecting both the companies’ proprietary data and the public’s right to know.
Though the Nevada law is focused on diabetes drugs, it does contain significant transparency and disclosure elements, Riley said.
“The pharmaceutical industry has been funding different advocacy groups, and in Nevada they want that disclosed,” she said.
Diabetes drugs have been a high-cost product, so it’s appropriate for Nevada to target them, Riley said.
“And it’s also a disease that’s pretty prevalent in America,” she said.