Drug Price Transparency
Drug Price Transparency: What Pharmaceutical Companies Need to Know
Drug price transparency has been a target for regulators, both on the federal and state level. In October 2020, the Department of Health and Human Services (HHS) published the Transparency in Coverage final rule. It requires payers and health plans to disclose and post negotiated drug prices.
Although this new rule doesn’t place obligations on pharmaceutical companies, it does leave the door open for possible future regulations. However, HHS’s previous rule, the Wholesale Acquisition Costs (WAC) Disclosure Rule, mandating drug manufacturers disclose wholesale acquisition costs, wasstruck down in court.
That said, state legislation does put specific compliance regulations on pharmaceutical companies regarding price transparency. In this post, we’ll look at those state rules and what they mean for drug manufacturers.
What Are the State Drug Price Transparency Reporting Requirements?
While there were numerous executive orders during the Trump administration, they had little impact on drug pricing, nor did any regarding transparency by drugmakers reach final rules. States, on the other hand, do have their own drug price reporting laws.
California was one of the first states to enact drug manufacturer disclosure laws. At the start of 2019, pharmaceutical companies began reporting certain data and information on existing and new drugs related to WAC. The requirement is for existing prescriptions that exceed $40 for a course of the medication and had a WAC increase by more than 16%. If any new exceed the Medicare Part D specialty drug threshold ($670), the information must be reported.
There have been several legal challenges to the law, though none have been successful thus far. Most companies complied, and the state issued released reports. Since it became effective,California has fined multiple manufacturers, totaling over $28 million . Fines for non-compliance are calculated by the number of days late the manufacturer was in filing.
Connecticut has unique drug transparency rules, which went into effect on January 1, 2020. Drug manufacturers that file a drug application with the FDA must notify the Connecticut Office of Health Strategy (OHS) within 60 days of approval.
The manufacturer must submit a dossier of information, which the state will review. OHS then creates an annual list of 10 drugs of substantial cost with the drug’s WAC. The first report will publish in 2021.
In Louisiana, drug manufacturers must report WACs to the Louisiana Board of Pharmacy. Those submissions must come quarterly, and the organization created the Louisiana Pharmacy Drug Cost Transparency Database, available for public view.
Maine requires pharmaceutical companies to report the WAC for any brand-name drug that increases by more than 20% in one year and generic drugs with a price of more than $10 that experienced a 20% cost increase. New drugs that have a WAC over the Medicare Part D specialty drug limit must also be reported.
The Maine Health Data Organization (MHDO) then publishes annual reports for consumer consumption. Manufacturers will also have to provide data for drugs that land on MHDO’s yearly reports:
- The 25 Costliest Drugs
- The 25 Most Frequently Prescribed Drugs in the State
- The 25 Drugs with the Highest Year-Over-Year Cost Increases
Additionally, pharmaceutical companies must include data for any drugs in the same product family that had WAC increases, as defined above. The full slate of information for these drugs goes beyond WAC to include sales volume, acquisition volume, revenue, acquisition amount, and rebates.
Nevada dictates that manufacturers of “essential” drugs necessary to treat diabetes and asthma must report and justify any price increases. While the reporting doesn’t provide any concrete reasons for price increases and Nevadan lawmakers haven’t acted to improve drug pricing, the state has, however, imposed hefty fines on those who fail to report. It found that 21 drug manufacturers were non-compliant and issued a penalty of $17.4 million.
In 2018, the state began to require drug manufacturers to provide annual reports for any drug with a WAC exceeding $100 for a one-month supply or course of treatment with an annual 10% price increase.
Regarding new drugs, pharmaceutical companies must detail pricing and other information within 30 days of it being available for sale. This impacts any medication with a higher WAC than the Medicare Part D program specialty drug threshold.
The state expanded its regulations in 2019, requiring drugmakers to report price increases 60 days before if:
- A brand-name drug increases by over 10% in one year
- A generic drug increases by over 25% in one year
- Lawsuits challenging the law are currently pending
Texas requires that certain drug manufacturerssubmit reports to the Texas Health and Human Services Commission (HHSC). The reporting requirements include:
- Drugs with a WAC over at least $100 for a 30-day supply
- Drugs with a WAC that increases 15% in one year
- Drugs with a WAC that increases 30% over three years
The reports must include company research, development costs, and a statement on the reason behind the cost increase. The HHSC released two reports thus far, available on their website.
In August 2020, the state updated its Prescription Drug Price Transparency Act. It would require manufacturers to submit reports to the Utah Insurance Department. Templates for this are in the works, and it will become effective on January 1, 2022.
Pharmaceutical companies must report drug pricing information to the State Attorney General’s Office in Vermont. The requirements are:
- 10 prescription drugs (at least one brand-name and one generic) for which the state “spends significant health care dollars” and if WAC increased by more than 50% in the last five years or by 15% in one year
- 10 prescription drugs (at least one brand-name and one generic) for which the state “spends significant health care dollars” and the Department of Vermont Health Access net cost rose by 50% in the last five years or 15% in one year
Drugmakers must report the reason for the increase and include any supporting documentation.
For new drugs, manufacturers must report any prescription that exceeds the Medicare Part D specialty drug threshold to the Attorney General’s Office. The notification is due at least three days before the drug’s release. Within 30 days after, pharmaceutical companies must submit information regarding marketing, pricing, volume, if it’s a breakthrough therapy, and date and price of acquisition, if applicable.
Washington law requires manufacturer reporting in three drug categories:
- New Covered Drug: New drugs coming to market at a WAC of $10,000 or more for a course of treatment lasting less than one month or a 30-day supply, whichever is longer.
- Qualifying Price Increases: Existing drugs with a WAC of more than $100 for a course of treatment lasting less than one month or a 30-day supply that increased at least 20% over the previous year, or 50% over three years.
- New Drug Application: New drug applications or biologic license applications within 60 days of the FDA approval date.
The Washington Health Care Authority is the custodian of the data. The information required by Washington is the most thorough of its kind.
Are You Compliant with Drug Transparency Rules?
While state rules may have some overlap, each state has its own unique set of guidelines and different reporting deadlines, which means it can be challenging to ensure compliance. It’s imperative that pharmaceutical companies stay abreast of new or pending bills by states as well as any possible changes in federal government requirements.
Do you need support for your program? MedCompli can take the guesswork out and monitor these ever-changing requirements for you.Learn more about our compliance advisory services today.