Industry Groups Sue Nevada Over "Unprecedented" Drug Price Transparency Law

This month, the Pharmaceutical Research and Manufacturers of America (PhRMA) and the Biotechnology Innovation Organization (BIO), trade groups representing the biopharmaceutical and biotechnology industries, announced that they are challenging Nevada’s Senate Bill (SB) 539 in district court litigation.

Passed in June 2017 by constitutional majorities in both the Nevada Assembly and Senate, the bill was signed into law by Governor Brian Sandoval (R). Among other provisions, the law requires drug manufacturers to annually disclose list prices set for insulins, profits made, and discounts provided to pharmacy benefit managers (PBMs). It also requires drug makers to explain insulin price increases that are above the prior year’s inflation rate (or twice the inflation rate of the past 2 years).

Manufacturers could face daily fines if they fail to provide the required data. The bill also permits pharmacists to provide patients with information about lower-priced alternative prescription options.

According to the groups’ complaint, the “unprecedented and unconstitutional Nevada law… interferes with the federal patent and trade-secret laws, deprives manufacturers of their property interest in their trade secrets, and improperly overrides the regulatory choices of every other state.” PhRMA and BIO are seeking a declaration from the court that sections of SB 539 are preempted by federal law, and that they violate the US Constitution. They also seek a preliminary and permanent injunction prohibiting implementation or enforcement of the provisions at issue.

“While the purpose of the Act is to control prices for diabetes drugs, neither the Act nor its legislative history explain how transparency will lower prices apart from impermissibly burdening manufacturers’ lawful exercise of federal patent rights. The Constitution entrusts national economic policy to Congress precisely to avoid such outcomes,” according to the group’s complaint.

Governor Sandoval said that the suit did not come as a surprise to his office, and that the state’s attorney general would “vigorously defend this existing state law which was passed with bipartisan majorities of both houses.”

Nevada’s law is not the only state-based drug pricing initiative to find itself the target of a lawsuit this month; trade group the Association for Accessible Medicines has filed a suit in Maryland, claiming that the state’s House Bill (HB) 631 is unconstitutional.

HB 631, originally slated to take effect next month, would require the Maryland Medical Assistance Program to notify the state’s attorney general of increase in the prices of generic or off-patent treatments, and would authorize the attorney general to both demand drug makers’ records and impose penalties on manufacturers who violate the law.