Prescription Drug STAR Act, Intended to Increase Drug Price Transparency, Including Sample Transparency Unanimously Passes Committee

Recently, the House Ways & Means Committee unanimously passed the Prescription Drug Sunshine, Transparency, Accountability, and Reporting (“STAR”) Act, a bipartisan effort to increase transparency and public reporting of information in the “opaque” prescription drug market. The STAR Act is intended to address the high cost of prescription drugs, and to provide insight across the health care supply chain to ultimately reduce costs for families.

If passed into law, the STAR Act would:

Require manufacturers to justify large price increases and high launch prices, referred to as “triggered spike increases”: If an existing drug price increases by more than 10% or $10,000 over one year, or 25% or $25,000 over three years, or if the manufacturer launches a new drug at or above $26,000, a triggered spike increase has occurred. The manufacturer must then submit a “justification” to the Department of Health and Human Services (“HHS”), which will be posted to the HHS website. The justification must describe the individual factors that have contributed to the cost increase, and an explanation of the role each factor played in contributing to that increase. The justification must also include the manufacturer’s total expenditures for the drug on materials, manufacturing, acquiring patents or licenses, and the cost to purchase the drug from another company (if applicable), as well as research and development expenditures, revenue and net profit, and marketing and advertising costs. The STAR Act provides civil monetary penalties for failing to submit a timely justification of $10,000 per day, and for providing false information in the justification of up to $100,000 per false item.

Require manufacturers to report the monetary value and quantity of samples: Manufacturers must annually report to the Center for Medicare and Medicaid Services (“CMS”) the monetary value of samples, and the quantity of samples provided to covered recipients each year. This data will be posted in the Open Payments Database.

Require the HHS Secretary to conduct a study on inpatient drug costs: HHS will conduct a study and provide an analysis to Congress on the spending and volume of drugs that are administered in inpatient settings. The analysis will include data on inpatient hospital drug costs, Medicare spending, and volume and spending per admission. The analysis will also consider trends in inpatient hospital drug costs, such as trends by hospital size, as well as categorizations, such as whether the hospital is urban or rural, or is a teaching hospital. The analysis will also examine the impact of drug shortages on services that are provided in an inpatient hospital setting.

Require the HHS Secretary to disclose rebates, discounts and prices concessions achieved by pharmaceutical benefit managers: This will be disclosed on a public website.

Require all manufacturers to submit information on the average sales price (“ASP”) for physician-administered drugs under Medicare Part B:  Current law requires that most manufacturers report this information, but the STAR Act requires all manufacturers to submit. The STAR Act provides civil monetary penalties for failing to submit this information of $10,000 per day, for providing false information in the submission of up to $100,000 per false item, and for refusing the request for information of up to $100,000.