February 28, 2022

Preparing Pharmaceutical Manufacturers: Prescription Drug Price Transparency Laws Update

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Key Takeaways

  • More than 20 states have already implemented drug transparency requirements and additional states have bills in their state legislatures.
  • Noncompliance triggers substantial statutory penalties and some states have already begun aggressive enforcement with delinquent companies expected to pay sanctions in the six or seven figure dollar range for late reporting or failure to report.
  • Learn more about the latest requirements and how to ensure your company remains compliant.

The first drug transparency law was passed nearly a decade ago in Vermont. Since then, over 20 other states have implemented their own drug price transparency requirements. These laws promote transparency by requiring pharmaceutical companies to report prescription drug prices and sometimes even provide advance notification to purchasers of planned drug price increases. Noncompliance triggers substantial statutory penalties and some states have already begun aggressive enforcement with delinquent companies expected to pay sanctions in the six or seven figure dollar range for late reporting or failure to report.

Today's snapshot of these state laws is just the beginning as more and more state legislatures have bills pending to mandate prescription drug price transparency.

For example in 2021, new state law requirements include:

North Dakota - HB 1032: enacted April 27, 2021

This law, among other things, imposes quarterly drug price reporting requirements and institutes unique reporting thresholds for reporting wholesale acquisition costs (WAC) increases: applicability to drugs with a WAC of $70 or more per manufacturer-packaged drug container (i.e. national drug code number) and increases of 40% or more over preceding five years or 10% or more over preceding 12 months. New drug notification is also due when a manufacturer introduces a prescription drug at a WAC that exceeds the threshold set for a specialty drug under the Medicare Part D program.

Virginia - HB2007: enacted March 24, 2021 and effective January 1, 2022

Under this new law, manufacturers with applicable drugs must report information regarding the drug's brand name or generic status, the effective date of any change in WAC, associated production costs, and other factors which caused the WAC increase. Manufacturers are also required to submit data about various categories of products including brand-name drugs and biologics with a WAC of $100 or more with 15% or more WAC increase over preceding calendar year, products recently subject to generic competition, as well as biosimilars and generic drugs meeting highly specific statutory triggers. Penalties for non-compliance may cost up to $2,500 per day from the date on which such reporting is required.  

In addition, some states expect companies to take additional steps beyond price reporting. For example, Oregon requires a special registration under its drug price transparency law and registering entities are expected to pay a $400 annual assessment invoice subject to late fees - even when no new drug or price increase reporting is triggered by that state's law. In 2019, the State of Maryland established the "MD Prescription Drug Affordability Board" to protect state residents, state and local governments, healthcare providers, etc., from the high cost of prescription drugs. In 2021, Maryland passed another law creating the "Prescription Drug Affordability Fund" and directing the MD Prescription Drug Affordability Board to assess fees ($1,000 annually) against manufacturers, distributors, carriers, and pharmacy benefits managers registered with the MD State Board of Pharmacy.

To ensure compliance in each state in which their products are sold, manufacturers will need to be attentive to the changes in the laws in every state. Keeping up with the updates from the various states, however, can be an arduous task. To assist pharmaceutical companies with this task, Buchanan's experienced FDA regulatory compliance team proactively monitors these updates to help companies not only comply with the state guidelines but also stay informed about state law updates.

It is important to note that these changes happen regularly. To help client navigate these changes, we've created the Buchanan Deadlines Chart, which compiles the relevant information and enables our clients to be proactive in monitoring the legal landscape. It does more than that, however. It also provides an analytical and practical approach anchored to the calendar year to enable your company to understand its state law obligations in an array of scenarios. Reach out to one of Buchanan's FDA professionals for more information on the Buchanan Deadlines Chart or how we can leverage our database of state law updates and provide you with the tools you need to facilitate your company's compliance with those legal requirements.

This article summarizes state law requirements at a high level. Companies are advised to consult the full text of each state's statute, and ancillary documents (such as implementing regulations or FAQs, if any), for full details on each state's drug price transparency requirements. 

ALM expressly disclaims any express or implied warranty regarding the OnPractice Content, including any implied warranty that the OnPractice Content is accurate, has been corrected or is otherwise free from errors.

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