Nevada State Assembly 

401 South Carson Street

Carson City, Nevada  89701-4747

Dear Assembly Member,

AB 215, a so-called pharmaceutical price transparency bill, was introduced on February 13, 2017 and is currently being considered by the Assembly Committee on Health and Human Services.  It would require pharmaceutical companies to provide to the Division of Insurance an unprecedented amount of proprietary information that would severely weaken intellectual property rights and stifle future innovation in prescription drugs.  The legislation, should it become law, will ultimately hurt, not help, patients.  On behalf of the 13,445 members and supporters of the Council for Citizens Against Government Waste (CCAGW) in Nevada, I ask that you reject this ill-advised bill.

The bill would require a drug manufacturer that sells a prescription pharmaceutical in Nevada with a wholesale acquisition cost (WAC) of $10,000 or more annually, or sells a per course treatment of $10,000 or more, or had an increase in a drug’s price by more than 25 percent in a year, to provide a detailed report to the Division of Insurance of the Department of Business and Industry concerning the drug’s overall costs.  The report would include proprietary information, such as all research and development costs for the drug, either by the current manufacturer or a predecessor entity; clinical trials and regulatory costs; Food and Drug Administration (FDA) submission costs; materials, manufacturing, and administrative costs; acquisition costs, including patents and licensing; marketing and advertising costs; financial assistance costs the manufacture has provided through patient assistance programs and coupons; a cumulative annual history of WAC increases, along with information on the profits the manufacturer has earned from the drug and the percentage of the total manufacturer’s profits attributable to the drug.

The bill states that the Division of Insurance will consult with “an advisory group composed of representatives from the pharmaceutical industry, pharmacy benefit managers (PBMS), health insurance plans, relevant governmental agencies, and advocacy groups for consumers and physicians” to determine whether any information contained in a report “would cause competitive harm to the manufacturer that filed the report if made public.”  The bill attempts to reassure the industry that the state agency will be cautious in handling such data because “such information is confidential and must not be included in a report compiled” for display on the internet and given to the legislature.

Anyone with even a modest understanding of the nuances involved in research and development knows that much of the information requested in this bill is so sensitive that its exposure would gravely threaten innovation and stifle competition.  This legislation will only drive up costs for consumers, not lower them.

AB 215 is an unwarranted and unreasonable fishing expedition that will lead to confidential information being leaked.  Governments have proven time and again they are incapable of protecting sensitive information.  Inviting outside personnel, possibly including competitors and antagonists, into the decision-making process of what is proprietary and what is not only compounds the danger.

Furthermore, the bill builds its entire regime of gathering the information on a faulty premise.  Consumers rarely pay the list price for a drug as pharmaceutical companies, PBMs, pharmacists, insurers, and other payors negotiate extensively to obtain the best deal for their customers.

Research and development outlays can be found in annual reports and are also reported to the Securities and Exchange Commission.  It is also difficult to quantify exactly what was spent to create a drug.  Pharmaceutical companies spend tens of millions of dollars testing different compounds, many of which end up being discarded or shelved because they do not work or are unsafe.

Under current conditions, it takes between 10-12 years to get a new drug through the FDA approval process and it costs, on average $2.6 billion to do so.  The best way to lower drug costs is by speeding up the FDA approval process and encouraging competition.  In fact, the 21st Century Cures Act, which was signed into law on December 13, 2016, has proposed new ways to modernize and speed up clinical trials, such as utilizing biomarkers and real-world evidence.

In addition, Congress will be considering reauthorization of the Generic Drug User Fee Amendments (GDUFA II) in 2017.  One of the law’s primary goals is to expedite the availability of generic drugs to consumers.  Currently, with more than 4,000 pending generic drug applications in the pipeline, the FDA has a lot of work to do.

Therefore, rather than approving AB 215, members of the Nevada Legislature should instead prod their U.S. representatives and senators to hold the FDA’s feet to the fire to make sure the agency quickly adopts the new methods envisioned in the 21st Century Cures Act and to ensure that GDUFA II will force the FDA to focus like a laser beam on reducing the generic drug approval backlog.  That would be the most effective solution to any perceived, or imagined, problems with the price of pharmaceuticals.

On behalf of Nevada consumers and taxpayers, CCAGW urges you to oppose AB 215.

Sincerely,

Tom Schatz

President, CCAGW