Earlier this month, the Nevada Department of Health and Human Services (DHHS) imposed $17.4 million in fines on 21 drug manufacturers for failing to comply with the state’s drug pricing transparency law related to essential diabetes drugs (EDD). This is the first public enforcement action by DHHS in connection with this law. Specifically, the diabetes drug manufacturers failed to submit, or timely submit, an annual report providing certain prescription drug pricing information to the DHHS. Penalties assessed against the manufacturers ranged from $735,000 to $910,000. Manufacturers have thirty days to pay the fines in full, or ten days to request an informal dispute resolution meeting with the state. In the event that a manufacturer fails to respond, the DHHS will refer the case to the state attorney general.

Enacted in 2017, Nevada’s drug pricing transparency law requires, in relevant part, for diabetes drug manufacturers to submit an annual report to the DHHS by April 1^st providing certain information for EDD, including production costs; administrative expenditures including marketing and advertising costs; profits; financial assistance provided through patient assistance programs; costs associated with coupons and copayment assistance programs; drug wholesale acquisition cost (WAC); historical WAC increases; and aggregate rebate amounts provided to pharmacy benefit managers. Manufacturers are also required to provide justification for significant drug price increases, including factors that contributed to the increase. Failing to comply with the law can subject manufacturers to administrative fines of up to $5,000 for each day of noncompliance.

Notably, Nevada enacted SB 262 in May 2019, a pricing transparency law imposing the same reporting obligations on manufacturers of asthma drugs. Similar to the 2019 Drug Transparency Report released in May 2019, the DHHS is expected to release a report identifying the drugs determined to be essential for the treatment of asthma. Manufacturers will be required to submit annual reports to the DHHS providing cost and profit information as it relates to asthma drugs. The law will follow the existing timeline established under the diabetes drug pricing transparency law with annual manufacturer reports due by April 1.

Numerous states have enacted drug pricing transparency laws to date with legislation currently being considered in additional states. Drug manufacturers should carefully evaluate applicable state laws to ensure they are meeting their reporting obligations. Cooley will continue to review and monitor pending state legislation. For further information regarding state drug pricing transparency laws, please contact your Cooley attorney.