Revised Nevada Bill Targets Transparency for PBMs, Pharma

After Nevada Governor Brian Sandoval vetoed a drug-pricing bill that targeted diabetes drug makers on June 2, 2017, state lawmakers set about right away creating a new, bipartisan bill (SB 539) that also hones in on pharmaceutical companies and pharmacy benefit managers (PBMs). SB 539 passed both the state Assembly and Senate on June 5, 2017, and this time the governor is reported to be supportive of it.

When he vetoed the original bill, Sandoval said it posed serious risks of unintended and potentially detrimental consequences for patients and that it ignored the role PBMs play in drug pricing—an important issue because only 3 PBMs currently control 80% of the US market. SB 539 addresses the role of PBMs in drug price increases.

The new bill forces drug makers to justify price hikes on diabetes medications and requires PBMs to disclose rebate information. SB 539 also forbids PBMs from punishing pharmacists for selling a less expensive alternative drug to patients. Like the previous vetoed bill, the new bill requires pharma companies to provide diabetes drug pricing information for posting on a government website, in addition to a list of sales reps in the state. Patient groups will be forced to disclose industry contributions.

If SB 539 becomes law, drug makers will have to disclose manufacturing, marketing, and advertising costs for essential diabetes drugs and the profits they earn from sales of those medications. The drug companies would have to disclose pricing history and PBM rebates; PBMs would have to disclose their total rebates negotiated for drugs on the formulary and the amounts they retain.

PBMs have drawn fire for their practice of direct and indirect remuneration (DIR) fees, which can drive up prices for Medicare Part D beneficiaries and taxpayers. An investigation of DIR fees by the Community Oncology Alliance (COA) contends that of late, PBMs have turned DIR fees PBMs into an “abusive and overly broad back-door vehicle for clawing back additional monies and increasing their own profits.”

According to COA, PBMs charge performance-based DIR fees to pharmacies based on inappropriate quality metrics. These retroactive DIR charges “create a lack of transparency, as pharmacies cannot account for net prices of a drug claim until after the PBM takes back the DIR fee.” This price confusion is of special concern for community oncology practices because the high cost of specialty cancer drugs they dispense makes these medications an attractive target for PBMs. Rather than controlling drug costs, PBMs are actually driving them up, COA claims. The Pharmaceutical Care Management Association (PCMA), a trade group representing PBMs, strongly denied the report’s findings.

Pharmaceutical Research and Manufacturers of America, the pharma industry’s trade group, is urging the governor to veto the new bill, emphasizing that it will not help patients afford their medications or help patients get the same savings as their insurance company is getting—a reference to the large rebates and discounts insurance companies are receiving and “not passing on to patients at the pharmacy counter.”

PCMA, the trade group representing PBMs, is also lobbying against the bill, pointing out that its “costly fiduciary mandate” is similar to other bills that have been rejected by federal courts on constitutional grounds for conflicting with federal benefits laws. Furthermore, says PCMA, the bill would raise costs by giving drug companies inside information that would “empower them to collude with their competitors.”