State Drug Price Transparency Gains Momentum, Increasing Challenges for Manufacturers

Though not nearly over, this year has already seen a number of significant state drug price transparency developments, signaling states’ continued focus on drug prices and substantially increasing compliance burdens on pharmaceutical manufacturers. Developments include the passage of new laws, implementing regulations, and guidance documents.  

Major developments that have occurred since the beginning of the year include, but are not limited to, the following: 

1. New York: On January 21, 2021, Gov. Andrew Cuomo, a Democrat, announced the commencement of investigations pursuant to New York Insurance Law Section 111 into price increases for six generic drugs connected to the COVID-19 pandemic. Each manufacturer of the drugs subject to the investigation must provide a justification for the price increases identified. 
2. Virginia: On March 24, 2021,  Gov. Ralph Northam, a Democrat, signed into law the commonwealth’s first price transparency statute, HB 2007. It requires manufacturers to report information on brand-name and generic drugs that have increased in price beyond certain thresholds. Interestingly, showing a relatively new focus on biosimilars, it also mandates reporting on those products that have an initial wholesale acquisition cost (WAC) not at least 15% less than the WAC of the referenced biologic at launch. 
3. North Dakota: On April 27, 2021, Gov. Doug Burgum, a Republican, signed into law the state’s first price transparency statute, HB 1032. It imposes three separate reporting requirements on manufacturers: a quarterly WAC report, a price increase notice, and a new drug notice.
4. Texas: On May 18, 2021, Gov. Greg Abbott, a Republican, signed HB 1033 into law. This legislation contains new enforcement provisions that authorize the Texas Department of Health and Human Services (the Department) to assess an administrative penalty of up to $1,000 per day for each violation of the prescription drug reporting requirements. The legislation also authorizes the Department to assess a fee of up to $400 on manufacturers in connection with each report submitted under the statute.
5. Nevada: On June 10, 2021, Gov. Steve Sisolak, a Democrat, signed SB 380 into law. It significantly expanded the scope of products required to be included in transparency reports submitted to the state. While manufacturers’ prescription drugs were previously subject to reporting only if the Nevada Department of Health and Human Services (DHHS) determined that the products were “essential” for the treatment of asthma or diabetes, manufacturers are now required to submit reports for any products with a WAC exceeding $40 for a course of therapy that have increased in price by 10% or more during the immediately preceding year or 20% or more during the immediately preceding two years.
6. Colorado: On June 16, 2021, Gov. Jared Polis, a Democrat, signed SB 175 into law. It creates a Prescription Drug Affordability Board authorized to conduct cost reviews of select prescription drugs and set upper limits for prescription drug products purchased or paid for by the state or local government, among other requirements.
7. Maine: On June 21, 2021, Gov. Janet Mills,  a Democrat, signed S.B. 274 into law. The legislation authorizes the Maine Health Data Organization (MHDO) to (1) publicly post on its website a list of prescription drugs for which manufacturers have taken reportable actions and (2) collect pricing component data from manufacturers if they have products in the same “drug product family” as a product that triggers reporting requirements pursuant to 22 M.R.S.A. § 8732(1) or is included on certain lists of prescription drugs developed by the MHDO. The pricing component provision potentially requires manufacturers to submit data to the state not based on any action of their own but, instead, as a result of other companies’ pricing decisions. This legislation, in particular, will likely face legal challenges.

In the coming months, manufacturers will also need to carefully monitor reporting deadlines in a number of states that have yet to accept the first reports under previously passed legislation. These states include: 

1. New Jersey: Although New Jersey’s price transparency law was passed in early 2020, the state has yet to secure funding to implement the statutory reporting obligations. 
2. New Hampshire: Even though the first reports under New Hampshire’s HB 1280 were scheduled to be due on January 30, 2021, the state has not issued guidance clarifying the process manufacturers should follow to submit such reports and instead continues to discuss the law’s implementation during monthly meetings of the New Hampshire Prescription Drug Affordability Board.
3. Minnesota: In Minnesota, the state has signaled that the first reports under Minn. Stat. § 62J.84, which were to be due on October 1, 2021, may be delayed due to COVID-19-related issues.

State price reporting requirements reflect a patchwork of burdensome requirements that are evolving quickly, significantly complicating compliance efforts. We will continue to keep you updated on key developments in this important area of price reporting and compliance.