Nevada Fines Rx Manufacturers $17.4 Million for Failing to Explain Diabetes Medications’ Price Hikes

Last week, Nevada fined 21 pharmaceutical companies $17.4 million for failing to submit a report explaining recent, significant price hikes to essential diabetes drugs, as required by the state’s drug cost transparency law.

Faced with drug price increases far outpacing rates of inflation, states across the country are enacting transparency laws designed to shed light on what’s driving drug price hikes. Nevada’s 2017 transparency law is unique among these laws in its specific focus on public health. Initially, the law required manufacturers to report only on essential diabetes medications, with an additional requirement mandating reporting on asthma medication prices scheduled to go into effect next year.  

The law gives Nevada the authority to levy fines of $5,000 a day for failure to report by the April 1 deadline. After warning letters to non-reporting companies generated a sizable uptick in reporting, last week the state sent notice of fines totaling $17.4 million to 21 non-compliant companies. The companies have 30 days to pay the fines or request a dispute resolution meeting with the state within 10 days. Companies have cited a range of reasons for their failure to comply with the transparency law, ranging from a lack of awareness of the new law to personnel transitions.

Other states’ transparency laws also include fines for failure to report information explaining high drug prices, ranging from fines of $1,000 a day in California, Vermont, and Washington State, to a high of $30,000 a day in Maine. Nevada may or may not receive the entire amount assessed in its proposed fines, pending outcomes of resolution meetings with manufacturers. If necessary, the state’s attorney general may seek a court order requiring payment.

While $17.4 million is a notable amount to cash-strapped states, that number pales in comparison to the estimated $2.7 billion that diabetes costs Nevada each year. The state reports that 12.6 percent of its adult population has diabetes, and this group incurs 2.3-times the medical expenses than those without diabetes. 

Ensuring compliance with a law that has the potential to help the state monitor the extent, impact, and causes of price increases for essential diabetes medication remains a focus for Nevada’s Department of Health and Human Services drug transparency program.