On March 12, 2018, Oregon Gov. Kate Brown signed into law Oregon House Bill 4005 (HB 4005), joining the growing number of states that have implemented laws requiring transparency of prescription drug price increases. This bill has significant implications for pharmaceutical manufacturers by imposing burdensome reporting requirements of sensitive information related to drugs subject to certain price increases and for new products. This Sidley Update describes key aspects of the sections of HB 4005 that pertain to prescription drug manufacturers and their reporting deadlines. The law as a whole takes effect upon HB 4005’s passage into law; however, the manufacturer reporting provisions become operative on January 1, 2019.
Price Increase Reporting Requirement
Under HB 4005, manufacturers are required to report to the Oregon Department of Consumer and Business Services (the Department) each prescription drug for which wholesale acquisition cost (WAC) is $100 or more for a one-month supply or a course of treatment lasting less than one month and for which WAC increases by 10 percent or more over the course of the previous calendar year (referred herein as a “price increase report”).
Each price increase report must contain detailed information specified in HB 4005, including but not limited to the factors that contributed to the price increase; the direct marketing, manufacturing and distribution costs incurred by the manufacturer; the manufacturer’s profit attributable to the prescription drug during the previous year; and the 10 highest prices paid for the prescription drug in other countries in the previous calendar year.
The first price increase report is due July 1, 2019, with price increase reports in subsequent years due no later than March 15 of that year.
Patient Assistance Reporting Requirement
For drugs for which a price increase report is required, manufacturers must also file information regarding each “patient assistance program” the manufacturer offers to consumers residing in Oregon (referred herein as a “patient assistance program report”). Patient assistance program is defined broadly to include programs that “a manufacturer offers to the general public in which a consumer may reduce the consumer’s out-of-pocket costs for prescription drugs by using coupons or discount cards, receiving copayment assistance or by other means.”
Each patient assistance program report must contain detailed information specified in HB 4005, including the total value of coupons, discounts, copayment assistance and other reduction in costs provided to consumers in Oregon who participated in the patient assistance program; the eligibility criteria for the patient assistance program; and how eligibility for the patient assistance program is verified for accuracy.
The due dates for the patient assistance program reports are the same as those for the price increase reports.
New Drug Reporting Requirement
HB 4005 also requires manufacturers to notify the Department within 30 days of a new prescription drug’s introduction for sale in the U.S. with a WAC that exceeds the Medicare Part D specialty drug threshold (referred herein as a “new drug report”). The Medicare Part D specialty drug threshold for 2018 is $670. This new drug reporting requirement is similar to the new drug reporting requirement contained in the California prescription drug price transparency law that took effect on Jan. 1.
For prescription drugs subject to this requirement, manufacturers must report detailed information as specified in HB 4005, including but not limited to a description of the marketing used in the introduction of the new prescription drug, the methodology used to establish its price, and the research and development costs associated with it that were paid using public funds.
For 2019, the new drug reports are due, beginning March 15, 2019, 30 days or less after the new drug is introduced for sale in the U.S. In subsequent years, the reports are due no later than 30 days after the drug is introduced for sale to the U.S. market.
Public Disclosure of Information
The public disclosure of manufacturer information reported under HB 4005 differs from other state price reporting laws. Rather than identifying specific information that will be publicly reported, HB 4005 requires the Department to publish to a website all information reported to the Department in a price increase report, patient assistance report or new drug report unless (1) the information is conditionally exempt from disclosure under Oregon Revised Statute 192.345 as a trade secret and (2) public interest does not require disclosure of the information. HB 4005 requires the Department to post a report describing the nature of any information that it withholds from public disclosure and the state’s basis for withholding that information.
Enforcement and Penalties
HB 4005 sets out potential civil penalties of up to $10,000 per day of violation based on the severity of the violation for (i) failure to submit timely reports or notices under HB 4005, (ii) failure to provide information required under HB 4005, (iii) failure to respond in a timely manner to a written request by the Department for additional information, or (iv) the provision of inaccurate or incomplete information. Additionally, HB 4005 requires the Department to provide consumers an online and telephone process to notify the Department about an increase in the price of a prescription drug. Notably, the agency responsible for implementing the California prescription drug price transparency law has contracted with one of the major drug pricing compendia to monitor prescription drug price increases and manufacturers’ compliance with the reporting requirements. The Department may adopt such an approach to implement HB 4005.
An Emerging State Price Transparency Landscape
Oregon joins several other states that have recently passed laws targeting prescription drug manufacturers and their drug prices. These laws are part of an emerging patchwork of state laws that impose significant compliance burdens on prescription drug manufacturers. Manufacturers should consider the internal controls and processes that will be necessary to comply with these emerging requirements.
For more on other breaking drug pricing related news, visit Sidley’s Global Drug Pricing page.
Sidley Austin LLP provides this information as a service to clients and other friends for educational purposes only. It should not be construed or relied on as legal advice or to create a lawyer-client relationship. Readers should not act upon this information without seeking advice from professional advisers.
Attorney Advertising—Sidley Austin LLP, One South Dearborn, Chicago, IL 60603. +1 312 853 7000. Sidley and Sidley Austin refer to Sidley Austin LLP and affiliated partnerships, as explained at www.sidley.com/disclaimer.
© Sidley Austin LLP