Lawsuits Are the Latest Tactic Against State Drug Price Laws
Earlier this year Nevada passed a law to promote transparency regarding drugs used to treat diabetes. The law, sponsored by State Senator Yvanna Cancela, requires manufacturers of drugs used to treat diabetes to provide information about their price increases. They will also have to disclose contributions they give to nonprofits and other organizations. The bill also requires PBMs to disclose rebate information and prohibits them from punishing pharmacists if the pharmacists sell less expensive drugs to patients. However, a recent lawsuit could render all these benefits null anv void.
Two drug lobbying groups, the Pharmaceutical Research and Manufacturers of America (PhRMA) and the Biotechnology Innovation Organization (BIO) have filed a lawsuit, petitioning the U.S. District Court to declare that sections of the law are preempted by federal law and therefore unconstitutional. Using the same arguments they used during the debate on the bill, PhRMA claims that the transparency provision in the law is an "effective cap". They argue requiring disclosures of price information when diabetes drug prices increase more than the Consumer Price Index will essentially cap the prices of the drugs and cripple businesses. Nevada Governor Brian Sandoval is not impressed and has vowed to vigorously defend the law.
This is not the first time companies have filed lawsuits to block drug price bills. In July 2017, the Pharmaceutical Care Management Association (PCMA), the main lobbying group for pharmacy benefit managers (PBMs) filed a lawsuit challenging two news laws regulating PBMs. The state legislature passed both laws earlier this year; one of them requires greater price transparency from PBMs, defines specialty drugs, and requires PBMs to establish a wall between their administrative functions and any mail-order pharmacies they might run. The other law bans PBMs from charging patients co-pays that exceed the cost of their medication and also bans PBMs from automatically clawing back from the pharmacy the portions of co-pays that have been paid by patients.
PCMA and PhRMA are using similar arguments. PCMA is also asking a federal judge to declare both bills are preempted by federal law and unconstitutional. The laws were supposed to go into effect on August 1st, but North Dakota state officials have told PCMA they will not enforce them until the court rules on PCMA's request for a preliminary injunction.
Skyrocketing prescription drug prices are a major problem, and while both of these price transparency laws are not enough, they are an excellent first step toward curbing drug costs. Sunlight is the best disinfectant, and transparency will help policymakers and the public make informed decisions and tackle this crisis. But both associations are fighting these laws tooth and nail. They lobbied state legislatures not to pass them and now they are attempting to win in court what they could not win at the ballot box or on the legislative floor. And their arguments have no basis in reality. There is no evidence that increased transparency will lead to higher drug prices--it is far more likely to lower them.
We hope that in both cases courts will recognize that these bills are constitutional and appropriate, and allow them to stand.