We have been keeping up with proposed and passed legislation in several states that affect the pharmaceutical industry, especially those relating to drug price transparency. Many states over the past couple of years have been tweaking their rules regarding industry requirements for pricing transparency, largely in response to public outcry. The two most recent states to enter the transparency fray are Maine and Colorado, with each state introducing legislation that aims to regulate prescription drug price transparency.
Maine
In Maine, state Senator Eloise Vitelli introduced LD 1406 (SP 484), An Act to Promote Prescription Drug Price Transparency. On April 17, 2018, the bill passed the House and the next day, April 18, 2018, the bill passed the Senate to be enacted.
Under the legislation, organizations will be required to provide reports containing the following information about brand name and generic drugs by December 1, 2018, and annually thereafter: the 25 most frequently prescribed drugs in Maine; the 25 costliest drugs as determined by the total amount spent on those drugs in the state; and the 25 drugs with the highest year-over-year cost increases as determined by the total amount spent on those drugs by the state.
Each manufacturer of drugs identified using the aforementioned criteria will need to submit reports on the drugs, including: the total cost of production and total cost per dose of the drugs; the research and development costs of the drug; the marketing and advertising costs of the drugs; the retail prices of the drug charged to purchasers from outside the United States; retail prices of the drug typically charged to purchasers within Maine; and true net typical prices charged to pharmacy benefits managers for distribution in Maine.
The Maine Health Data Organization shall develop a plan to collect data from manufacturers related to the cost and pricing of prescription drugs in order to provide transparency in and accountability for prescription drug pricing. The organization shall consult with other state and national agencies and organizations to determine how to institute such data collection. The organization shall submit the plan, its findings and any recommendations for suggested legislation to the Legislature no later than April 1, 2019.
Colorado
In Colorado, Representative Dylan Roberts and Senator Kerry Donovan each sponsored legislation in their respective chambers, known as the Diabetes Drug Pricing Transparency Act 2018. The legislation has passed the House and now waits an uncertain fate in the Senate.
If passed in the Senate, the bill would create the requirement of drug manufacturers, pharmacy benefit managers, insurers, and pharmacies, to submit annual reports to the state board of health regarding prescription insulin drugs used to treat diabetes. The state board of health would then analyze the submitted information and publish a report listing all the prescription insulin drugs that the state board determines to be essential for treating diabetes and that are made available in the state, along with the wholesale acquisition cost of each drug on the list.
Starting on February 1, 2019, the state board shall prepare a report form to be completed by drug manufacturers of prescription drugs that appear on the list. The report must include the following information: the total cost to produce the drug; the total administrative expenditures directly related to the drug, including expenditures to market or advertise the drug to Colorado residents; the total annual profit the drug manufacturer earned from the drug, identified by year; the percentage of the manufacturer’s total profit attributable to the profit from the drug; the total amount of financial assistance the manufacturer provided through any patient prescription assistance program for the drug; the total cost associated with coupons or rebates provided directly to consumers and the total cost of programs assisting consumers in paying copayments attributable to the drug; the wholesale acquisition cost of the drug; a record of each increase in the wholesale acquisition cost of the drug over the preceding five years; the aggregate amount of all rebates, and separately, the aggregate amount of all administrative fees that the manufacturer provided to pharmacy benefit managers for sales of the drug within the state; the aggregate amount of all research and development costs attributable to diabetes prescription drugs; and any additional information deemed required.
Further, nonprofit organizations advocating for patients with diabetes or funding diabetes medical research that receive contributions from certain diabetes drug manufacturers must annually report those contributions.
The state board will be given authority to impose penalties on drug manufacturers or pharmacy benefit managers who do not comply with reporting requirements.