Nevada Scares Diabetes Drug Manufacturers With Halloween List of “Essential Diabetes Drugs”

In June, we reported on Nevada S.B 539, a new law that, among other things, requires manufacturers of “essential diabetes drugs” to report certain sensitive financial information concerning these drugs. On October 31, the Nevada Department of Health and Human Services took the first step to implement this requirement by issuing its list of “essential diabetes drugs.” The list contains over 35 insulin products and other drugs, both brand and generic, determined by DHHS to be those most often prescribed for diabetes. Beginning July 1, 2018, dozens of manufacturers and repackagers of these drugs will have to annually report the cost of production, marketing and advertising costs, profit, patient financial assistance costs, patient coupon costs, PBM rebates paid, and a history of WAC increases over the preceding five years with an explanation for each increase. A second list, containing the subset of drugs on the first list that have undergone an increase in wholesale acquisition cost (WAC) greater than inflation over a one-year or two-year look-back period (measured using a statutory methodology), has yet to be issued. Manufacturers of drugs on the latter list will have to submit a more detailed explanation for their WAC increases. Furthermore, because the new statute amends Nevada’s Uniform Trade Secrets Act so that information submitted in these reports is excluded from the definition of a trade secret, nothing prohibits DHHS from disclosing or publicizing confidential information included in these reports.

As we have also reported, PhRMA and BIO have challenged the Nevada statute in a lawsuit alleging constitutional infirmities stemming from its infringement on patent and trade secret protections. Their separate motions for a Temporary Restraining Order and a Preliminary Injunction have been denied, but the case is proceeding, and we are following it closely.