Life Science Compliance Update

September 18, 2017

PhRMA and Bio Sue Nevada

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On September 2, 2017, Pharmaceutical Research and Manufacturers of America (PhRMA) and the Biotechnology Innovation Organization (BIO) filed a lawsuit challenging the constitutionality of Nevada’s first-in-the-nation insulin transparency law. The two groups allege that implementing the law would violate patient rights and nullify trade secret protections. PhRMA and BIO are asking the U.S. District Court to declare that provisions of the Nevada law, passed during the 2017 legislative session, are preempted by federal law and violate the U.S. Constitution.

The complaint alleges that the law violates the Taking Clause of the Fifth Amendment – which prohibits the government from taking private property without just compensation – and the Commerce Clause – which bars the states from interfering with commerce in other states. For good measure, the complaint also alleges that the law violates federal patent law and trade secret law, stating the legislation removes trade secret protections for highly sensitive information and improperly infringes on federal authority over patent rules.

The groups said the new law also requires the state to publish company-specific reports of information disclosed on a public website. If that is done, then the trade secret is no longer secret and will lose its value – not only in Nevada but also throughout the nation.

The complaint also cites Gov. Brian Sandoval’s veto of the original version of the insulin transparency bill. Sandoval believed that Cancela’s bill too narrowly focused on the role that pharmaceutical manufacturers play in setting drug prices without requiring the same level of transparency from the middlemen in the drug pricing process, known as pharmacy benefit managers. PBMs, the go-between on drug costs for manufacturers, insurance companies and pharmacies, negotiate discounts with and receive rebates from manufacturers but aren’t required to disclose how much of those savings they pass along to insurers and how much they keep for themselves.

The complaint refers to Sandoval’s veto in which he noted that the original bill posed “serious risks of unintended and potentially detrimental consequences for Nevada’s consumer patients, not the least of which is the possibility that access to critical care will become more expensive, more restricted and less equitable.”

State officials have tried to emphasize to manufacturers during the implementation process that the goal of the law is to gather information to help policymakers make good health care policy decisions and so consumers can make good choices about their own health care. Since the end of the legislative session, officials with the state Department of Health and Human Services have been in active communication with PhRMA, BIO and individual pharmaceutical manufacturers, who the state characterized as “cooperative” earlier this week.

PhRMA and BIO Statements

“Nevada’s law is, in actuality, an attempt to set de facto price controls on the few successful products that do make it to market, and in doing so, it will chill the massive private investment needed to spur our amazing biomedical innovation ecosystem that is providing hope to patients in Nevada and throughout the world,” said Tom DiLenge, BIO’s president for advocacy, law, and public policy.

“If provisions of SB 539 go unchallenged, then Nevada’s law will conflict with and in many cases override federal law and the laws of 49 other states – laws that foster pharmaceutical innovation and protect intellectual property and trade secrets. For this reason and others, provisions of SB 539 are unconstitutional and should not be implemented,” said PhRMA Executive Vice President and General Counsel James Stansel.

Ohio Drug Distribution Verification: America’s Key Battleground State Shakes Up the Pharmaceutical Supply Chain

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The pharmaceutical industry faces monumental challenges in the age of globalization within the United States: state laws and regulations that are more stringent than their federal counterparts. This article provides the historical context and current overview of Ohio’s laws, regulations, and sub-regulatory guidance concerning the distribution of prescription drugs, including drug samples, into and within the state, the verification requirements when distributing product to terminal distributors of dangerous drugs and prescribers, record retention responsibilities, and penalties for noncompliance. The article then examines the industry’s response from a major manufacturer, a distributor/third-party logistics provider, verification vendor, and compliance advisory vendors. It concludes with a call to action to the industry to form a new coalition to address state legislative and regulatory actions that have the potential to disrupt the entire supply chain.

The pharmaceutical industry faces a major dilemma: active state legislatures, administrative agencies, and state attorney generals. There is a plethora of reasons why states have turned their attention towards the manufacturers and trading partners, such as wholesale distributors and third-party logistics providers (“3PLs”). There is an opioid crisis gripping the nation, an ever-growing increase in healthcare costs, unstoppable negative publicity aimed at the pharmaceutical industry, an emboldened citizenry demanding their legislatures to do something, hospital and insurance lobbies joining the fight. As a result, state politicians are using all of this to their advantage to pass laws aimed at the industry.

This article discusses a law that has been on the books for over forty years, and amended numerous times, including a 2017 revision that lead to Ohio becoming pharma’s “key battleground state.”

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September 11, 2017

Louisiana Price Transparency Measures Go into Effect…With An Interesting Twist

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According to LexisNexis State Net, during 2017, about half of the states and Congress collectively introduced almost 90 measures intended to address soaring prescription drug prices. Most would either cap drug prices or force drug makers to be more transparent with how they devise pricing for at least some medications.

A handful of states, including Maryland (HB 631), Louisiana (SB 59) and Nevada (HB 539), have adopted such measures this year, and New York adopted a law in April as part of the budget that imposes greater scrutiny on drug makers over their pricing.

There is also word that the Trump administration is planning action. Although the Food and Drug Administration has no direct control over drug prices, in a June blog post FDA Commissioner Scott Gottlieb said his agency plans to encourage the development of additional lower-cost generic drugs. The effort would likely have a limited impact, however, as the growth in drug prices is largely driven by newer drugs under patent and without generic competition.

In mid-June 2017, Governor John Bel Edwards of Louisiana signed two drug price transparency measures. HB 436 – unanimously passed by the legislature – requires manufacturers engaging in the marketing of prescription drugs in the state to make quarterly reports of the wholesale acquisition cost (WAC) prices to the Louisiana Board of Pharmacy.

SB 59 – also passed unanimously – requires the Louisiana Board of Pharmacy to post on a website those WAC prices, organized by therapeutic category. Health profession licensing boards that regulate Louisiana prescribers are required to annually remind/advise them as to the availability of the website. Interestingly, however, is the mandate that the Board obtains private grant funding to implement and operate the website.

HB 436 requires that, “Each drug manufacturer or pharmaceutical marketer who engages in any form of prescription drug marketing to a prescriber, his designee, or any member of his staff in Louisiana shall provide to the Louisiana Board of Pharmacy no later than January first, April first, July first, and October first of each calendar year the current wholesale acquisition cost information for the United States Food and Drug Administration approved drugs marketed in the state by that manufacturer.”

The Senate bill requires “the Louisiana Board of Pharmacy … develop a website to contain prescription drug price information to be made available to Louisiana prescribers on the board's website with a dedicated link that is prominently displayed on the board's home page, or by a separate easily identifiable internet address.” The website shall include, at a minimum, the following data elements, separated by therapeutic category: (a) Name of the product; (b) Whether the drug is a brand name or a generic; (c) Drug strength; (d) Per-unit wholesale acquisition cost of the drug; and (e) Any disclaimers deemed appropriate by the board.

With respect to the grant, the law states, “Implementation of this Section shall be contingent upon the Louisiana Board of Pharmacy's obtaining grant funds from private entities for the development, implementation, operation, and continued maintenance of the drug pricing disclosure website.” It is also mandated that the “board shall actively seek grant funding to implement the provisions of this Section. Within ten months of successful receipt of grant funds sufficient in amount to implement the provisions of this Section, the board shall make the drug pricing disclosure website available to prescribers.”

We were unable to find any news as to the success of the finding of the grant funding. The bill became effective June 14, 2017.

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