Nevada Could Deal a Serious Blow to Insulin Manufacturers

A bill being voted on next week would lower prices on the essential drug.
April 21, 2017, 5:51pm

Even though insulin access can literally be a case of life or death, awareness about diabetes drug access is often limited among those who don't personally experience the disease or have a friend or family member who does. But the last five months have seen lawmakers taking notice, with Senator Bernie Sanders calling for a federal investigation into collusion in insulin pricing in November followed by a January class-action lawsuit against three insulin manufacturers who allegedly took part in an "organized scheme to drive up prices."


Most recently, in March, Senator Yvanna Cancela introduced bill SB265 to the Nevada legislature, which seeks to control and create transparency around the pricing of insulin and biguanides, essential drugs that treat diabetes. The bill, expected to be voted on in the coming week, has drawn criticism from drug companies and the patient advocacy organizations that receive funding from them.

The bill seeks to implement price controls on "essential" diabetes drugs, insulin and biguanides, triggering a refund and requiring manufacturers to give 90 days notice if the list price rises above the medical consumer price index. These drugs are considered essential because of the crucial roles they plan in the lives of those with diabetes. The human body requires insulin to live, but the bodies of type 1 diabetics cannot produce it, making access to affordable insulin a matter of survival for all type 1 diabetics, and in in some extreme cases, type 2 diabetics. Manufacturers would also be required to disclose the costs associated with creating these drugs, including everything from research to marketing. Medicaid and the state's public employee benefit program would be exempt from the bill since they can access rebates that private insurers and self-funded plans cannot.

"Diabetes is currently on track to be one of the greatest public health crises of our time," Cancela says. "Twelve percent of Nevadans have diabetes, 38 percent are pre-diabetic, and our diabetic population is poised to double by the year 2030. Those are just individuals who are currently diagnosed. When you look at the undiagnosed numbers coupled with the pre-diabetic numbers and the current diabetic numbers, it's over a million people in Nevada who are affected by this disease. And those numbers mirror what's happening across the country with diabetes. At the same time, insulin costs have gone up so much that people are being forced to make decisions about taking their insulin or paying their rent. What's being treated as a business opportunity should be treated as a public health crisis."


The bill is composed of three key pieces that aim to create transparency in the pharmaceutical industry and reduce the costs faced by diabetics. Though healthcare transparency and cost control measures have been attempted in other states, they all deal with pharmaceutical costs generally, making the Nevada bill unique in its specific focus on diabetes.

The other two components of the bill do apply to the entire industry, requiring pharmaceutical sales representatives to become licensed and healthcare nonprofits to disclose where they receive their funds. Cancela likens the licensing of pharmaceutical sales representatives to the process of licensing government lobbyists, modeling this part of the bill off of a provision approved by the Chicago City Council in November to combat the city's opioid crisis. By requiring disclosures about which doctors are visited by sales representatives and what promotions and incentives they give, Chicago lawmakers and Cancela seek to create transparency around the actions of drug companies.

A New England Journal of Medicine study demonstrated that 83 percent of the examined 104 patient advocacy organizations received money from pharmaceutical companies, presenting a potential conflict of interest. The bill would require these entities to disclose from where they receive their funds—not to discourage them from receiving money, but to create full transparency in the healthcare system so that patients can make informed decisions. Many organizations have responded negatively to the bill, with some claiming that it "will not save patients any money," with others threatening that "advance notice of price increases lead to stockpiling, [causing] shortages… which may threaten the health of those living with chronic conditions."

Other arguments against the bill have come from drug manufacturers. Lobbyist presence on behalf of pharmaceutical companies doubled in 2017 compared to the 2015 legislative session, with at least 11 of the total 67 registrations submitted after the introduction of SB265. In their statement, Johnson & Johnson argues that the bill "fails to put the diabetes patient first" and will "potentially limit future innovation," while in their statement, Novo Nordisk (one of the three companies named in the January class-action lawsuit) state that though they set the list price of drugs, that price is then negotiated with insurance companies and purchasers, meaning that the publicized high prices of medication don't match what manufacturers actually charge. Many manufacturers place the blame for high prices with insurers failing to discount the drugs even after negotiating deals with manufacturers.

By not selling medications at-cost, manufacturers fund research and development for future drugs, and this is a key argument against regulating drug pricing. That's why this bill targets a unique drug—one discovered 95 years ago that has remained largely the same except for steep price increases in recent decades. "While it is true there is diabetes innovation, that is very separate from insulin innovation," Cancela says, explaining that this piece of legislation does not target all diabetes-related medication. In creating this bill, she hopes to give her constituents better access to the drugs they need to survive, relating stories she's been told about people running up credit card debt to pay for insulin or telling her about family members who died from diabetic ketoacidosis.

If passed, this bill could have national implications and serve as model legislation for other states. After all, as Cancela notes, "Diabetes is not just a Nevada problem, it's a national problem."

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