New Prescription Drug Price Transparency Law in VirginiaApril 1, 2021
On March 24, 2021, Virginia became the latest state to enact a prescription drug price transparency law. Similar to other state drug price transparency laws (see, for example, our coverage here and here), HB 2007 sets forth reporting requirements applicable to health carriers, pharmacy benefit managers (PBMs), wholesale distributors, and manufacturers.
Under the new law, health carriers are required to submit annual reports with information about the carrier’s spending on prescription drugs, including identifying the 25 most frequently prescribed outpatient prescription drugs, the 25 outpatient prescription drugs covered at the greatest cost, and the 25 outpatient drugs that experienced the greatest year-over-year increase in cost. PBMs are required to submit an annual report with information about the manufacturer rebates received by the PBM, the rebates distributed to health benefit plans, and the rebates passed on to enrollees of health benefit plans.
Manufacturers are required to submit annual reports for each (i) brand-name drug and biologic with a wholesale acquisition cost (WAC) of $100 or more for a 30-day supply or a single course of treatment and an increase of 15% or more in the WAC over the preceding calendar year; (ii) biosimilar with an initial WAC that is not at least 15% less than the WAC of the referenced brand biologic at the time the biosimilar is launched; and (iii) generic drug with a price increase that results in a WAC increase that is equal to 200% or more during the preceding 12-month period, when the WAC of that generic drug is equal to or greater than $100 for a 30-day supply. A price increase for a generic drug is defined as the difference between the WAC of the generic drug following an increase and the average WAC of the generic drug during the previous 12 months. For each reportable drug, manufacturers must provide the following:
- Name of prescription drug;
- Identify whether brand name or generic;
- Effective date of the change in WAC;
- Aggregate, company-level research and development costs for the most recent year for which final audit data is available;
- Name of each new prescription drug approved by the FDA within the previous 3 calendar years;
- Name of each prescription drug that, within the previous 3 calendar years, became subject to generic competition and for which there is a therapeutically equivalent generic version; and
- A statement regarding the factor(s) that cause the WAC increase.
Upon a determination that the data received from the health carriers, PBMs, and manufacturers is insufficient, the law allows the Virginia Department of Health to request reports from wholesale distributors with information on WACs, rebates, discounts, price concessions, and other fees related to the 25 costliest drugs.
The law states that the Virginia Department of Health shall engage a nonprofit data services organization to collect, compile, and make information submitted by the health carriers, PBMs, wholesale distributors, and manufacturers available on a public website. The data and information will be made available in aggregate in a form and manner that does not disclose proprietary or confidential information of the reporting entities. The law provides that information submitted pursuant to the new prescription drug price transparency requirements is excluded from disclosure under the Virginia Freedom of Information Act, and also specifies that a manufacturer’s reporting obligations shall be fully satisfied if the manufacturer reports the information and data that would be included in reports to the Securities and Exchange Commission or any other public disclosure.
The law specifies that regulations must be promulgated within 280 days of enactment – which would be December 29, 2021. The Virginia prescription drug price transparency law will become effective on January 1, 2022, so the first annual reports will be due by April 1, 2022. Entities that do not comply with the new reporting requirements may be subject to a civil penalty of up to $2,500 per day from the date that any such reporting was due.