In early October 2019, the Nevada Department of Health and Human Services sent letters to and levied more than $17 million in fines on twenty-one diabetes drug manufacturers regarding non-compliance with the new price transparency law. The letters were sent to manufacturers who either failed to comply with, or were many months late in complying with, the drug pricing transparency law passed in 2017.
The law requires diabetes drug manufacturers to submit annual reports to the state on its production costs, administrative expenditures, profits, financial assistance, coupons, and other information. The law also requires manufacturers to provide additional information for drugs that had a significant price increase, including a list of factors that contributed to the increase and the percentage of the total increase attributable to each individual factor.
The fines, which can be charged at a rate of $5,000 per day, range from a $735,000 fine for one company that submitted the mandatory drug pricing data the same day it received a final notice from the state (147 days after the reporting deadline) to a $910,000 fine for eight companies that have yet to report the required information. According to the letters, the companies have thirty days to pay the fines in full, or ten days to request an informal dispute resolution meeting with the state. If the companies do not respond, the cases will be referred to the state attorney general’s office to seek a court order to collect the fines.
Companies Involved
According to an online PDF, the company with the $735,000 fine is Daiichi Sankyo, which had previously noted it submitted its required report on January 9. However, according to The Nevada Independent, “it is unclear whether the report submitted was the first annual report required by manufacturers in 2018 — which had its deadline extended to Jan. 15 — or the second report that was due April 1.” The company planned to follow up with the state.
The eight companies facing the highest amount of $910,000 in fines seem to be: Apotex Corp (submitted an incomplete report); Carlsbad Tech (did not submit a report); Epic Pharma, LLC (did not submit a report); Macleods Pharmaceuticals Ltd. (did not submit a report); Method Pharmaceuticals (did not submit a report); Nostrum Laboratories Inc. (did not submit a report); Strides Pharma (did not submit a report); and Time-Cap Labs (submitted an incomplete report). There are other companies who may also be facing large fines in the coming weeks, after allowing for a response from an initial notice letter.
Informal Dispute Resolution Process
According to Department of Health and Human Services Director Richard Whitley, companies that opt to go through the informal dispute resolution will have an opportunity to present information before an impartial hearing officer who will decide whether the company should have to pay the assessed penalty, pay a lesser penalty, or have the penalty waived entirely. Whitley said that the goal of the process, is compliance and obtaining more information to better grasp the costs of treating diabetes in the state, not to collect money.
The Department of Health and Human Services expects to use existing resources and staff for the informal dispute resolution meetings and any penalties collected will help to cover staff time spent.
Whitley mentioned the difficulty the department has had in getting compliance up to this point, including something as simple as trying to find the contact information for companies to notify them of the reporting requirement. “We’ve gone the extra mile to reach out where possible, but you go on some of these websites for some of these pharmaceutical companies and you see how hard they are to navigate,” Whitley said.