Life Sciences, Healthcare, Medication, Prescriptions
Article

Important updates to state drug price transparency reporting requirements in 2022

Since 2016, several states have designed laws and enforcement mechanisms to bring transparency into the pharmaceutical manufacturers’ pricing processes. In the past five years, the industry has seen an amplification of these requirements across the country with 21 states that now have defined requirements to report on pricing, costs, product development and sales of prescription drugs within the state. Manufacturers will likely continue to see updates and expansions to state drug price transparency reporting requirements throughout the coming year.

At Baker Tilly, our life sciences consulting team carefully monitors updates for state drug price transparency reporting on a regular basis. To help life sciences companies as the new year begins, we have summarized recent updates effective in 2021 and early 2022. All developments noted below reflect changes to existing state laws.

Colorado

CO SB175 - Effective Jan. 1, 2022

The state will establish the Colorado prescription drug affordability review board. The board is tasked with identifying (1) any prescription brand-name drug or biological with a wholesale acquisition cost (WAC) of $30,000 or more for a yearly supply or a WAC increase of 10% or more over the past year; (2) any biosimilar with a WAC that is not at least 15% lower than its corresponding biological product; and (3) any generic drug with a WAC of $100 or more for up to a 30-day supply or single dose which has undergone a 200% WAC increase over the preceding year. The board will have jurisdiction to collect any information pertaining to the manufacturer’s selection of the introductory price increase and can set upper limits on drug prices. Manufacturers should note that information collected under SB175 is confidential.

Maine

ME LD686 - Effective Jan. 1, 2022

The new legislature authorizes the Maine Health Data Organization (MHDO) to post a list of prescription drugs for which the manufacturer has (1) increased the WAC of brand-name drugs by more than 20% per unit; (2) increased the WAC of generic drugs that cost at least $10 by more than 20% per unit; or (3) introduced a new drug to the state’s market which has a WAC greater than the Medicare Part D specialty drug threshold of $670 currently for a 30-day supply. This threshold may change in 2022 to $780. The MHDO will also post a list of drug families for which it may request pricing component data. Information collected under LD686 will be kept confidential except for the aggregate of collected data and information shared with the Maine Bureau of Insurance as necessary to carry out the bureau’s duties.

Nevada

NV SB380 - Effective Oct. 1, 2021

While Nevada’s price transparency reporting requirements previously pertained only to diabetes and asthma products, manufacturers must now report for all prescription drugs with a WAC over $40 that have undergone a 20% or greater WAC increase over the past two years, or 10% or greater over the past year. In addition, manufacturers must now also report the drug’s National Drug Code name, strength, dosage and package size as well as information pertaining to the drug’s acquisition, if its intellectual property was acquired over the past five years.

Oregon

OR SB844 - Effective Jan. 1, 2022

Generally understood to be the most scrutinous of existing price transparency laws, the Oregon bill establishes a Prescription Drug Affordability Board. The board is tasked with reviewing lists of prescription drug information collected by the State Drug Price Transparency program each quarter and, from this list, identifying nine drugs and at least one insulin product that the board determines may create high out-of-pocket costs for patients. The board has the authority to launch inquiries into the price of the listed drugs, set upper limits on prices and implement annual fees for manufacturers selling drugs in the state. Information collected for review will be kept confidential by the state agency.

Texas

TX 87(R) HB 1033 - Effective Sept. 1, 2021

The new legislation makes minor language changes to the current statute regarding disclosure of prescription drug prices. The Texas Department of Health and Human Services may now charge penalties of up to $1,000 per day for reporting violations and create fees of up to $400 for the submission of transparency reports to the state.

In addition to the five updates included above, five new states have pending legislation. (1) Two federal bills (2) have also been introduced in the U.S. House of Representatives, making 2021 another increasingly active year for state drug price transparency reporting. This uptick demonstrates that, similar to federal government pricing, state drug price transparency reporting is also constantly evolving and requires strong attention to detail and an effective reporting process in 2022.

For more information on this topic, or to learn how Baker Tilly’s Value Architects™ can help, contact our team.

1: Pending state legislation includes bills in the following states: Iowa (HSB46, HF464 and HF526), Massachusetts (HB1272, S736, S771 and H1254), New York (A00741), North Carolina (S411) and Pennsylvania (SB579, HB321 and HB209) 

2: Pending federal legislation includes HB4418 and HB5260 

Mark Scallon
Principal
Next up

FASB staff publishes 2022 financial reporting taxonomies