New Drug Price Reporting and Transparency Measures Included in U.S. Coronavirus Relief Legislation

The $900 billion U.S. coronavirus relief and government appropriations legislation (the Act) contains several important new drug price reporting and transparency measures, including certain provisions that were part of the Senate’s Prescription Drug Pricing Reduction Act of 2019 (S. 2543). Pharmaceutical manufacturers should take note of these new statutory provisions and monitor implementation.

Expanded Manufacturer ASP Reporting Requirements

Division CC, Section 401 of the Act amends Section 1847A of the Social Security Act (SSA) (42 U.S.C. § 1395w–3a) to expand average sales price (ASP) reporting. Under the amendment, starting in January 2022, even those manufacturers that do not have a rebate agreement in place under the Medicaid Drug Rebate Program (MDRP) must report to the Secretary of Health and Human Services (HHS) ASP for items, services, supplies, and products that are payable under Part B as a drug or biological. As with MDRP-participating manufacturers, under the Act, drug pricing information reported to the Secretary is subject to audit by the HHS Inspector General, and the Secretary may survey wholesalers and manufacturers that distribute a drug to verify manufacturer prices and ASP. There are penalties for manufacturers that do not comply with these requirements. The HHS Inspector General also is required to report to Congress by January 2023 the accuracy of ASP information submitted by manufacturers.

Medicare Part D Real-Time Benefit Tools

Division CC, Section 119 amends Section 1860D–4 of the SSA (42 U.S.C. § 1395w–104) to require prescription drug plan (PDP) sponsors and Medicare Advantage organizations (MAOs) to implement tools to display Medicare Part D prescription drug benefit information in real time with the stated goal of lowering beneficiary costs. These real-time benefit tools must be capable of integrating with provider electronic prescribing and electronic health record systems. The new tools must transmit to healthcare professionals enrollee-specific formulary and benefit information including, with respect to covered Medicare Part D drugs, the following:

• a list of any clinically appropriate alternatives to a drug included in the plan’s formulary
• cost-sharing information and the negotiated price for a drug and its alternatives at multiple pharmacy options, including the individual’s preferred pharmacy and, as applicable, other retail pharmacies and a mail-order pharmacy
• the formulary status of a drug and its alternatives and any prior authorization or other applicable utilization management requirements included in the plan’s formulary

The HHS Secretary must adopt a standard for electronic real-time benefit tools before the foregoing provisions will take effect.

Pharmacy Benefit and Drug Cost Reporting

Division BB, Section 204 amends Title XXVII of the Public Health Service Act (42 U.S.C. § 300gg et seq.) and corresponding provisions of the Employee Retirement Income Security Act and the Internal Revenue Code to require group health plans and health insurance issuers offering health insurance coverage to report information on certain pharmacy benefit and drug costs to the Secretaries of HHS, Labor, and the Treasury. Section 204 states that this reporting shall begin no later than one year after the date of enactment of the Act and continue annually thereafter (by no later than June 1 of each subsequent year). This provision also requires biannual publication of a report on the HHS website describing prescription drug pricing trends and the contribution of drug prices to health insurance premiums, excluding confidential or trade secret information. Among the information health plans must provide is the following:

• the 50 brand prescription drugs most frequently dispensed by pharmacies for claims paid by the plan and the total number of paid claims for each such drug
• the 50 most costly prescription drugs with respect to the plan by total annual spending and the annual amount spent by the plan for each such drug
• the 50 prescription drugs with the greatest increase in plan expenditures over the preceding year and, for each such drug, the change in amounts expended by the plan during that year
• total spending on healthcare services by such plan, including spending on prescription drugs
• any impact on premiums by rebates, fees, and any other remuneration paid by drug manufacturers to the plan, its administrators, or service providers with respect to prescription drugs prescribed to enrollees in the plan, including the amounts paid for each therapeutic class of drugs and the amounts paid for each of the 25 drugs that yielded the highest amount of rebates and other remuneration under the plan from drug manufacturers during the plan year; health plans must also explain whether there were any reductions in premiums and out-of-pocket costs associated with such rebates, fees, or other remuneration

MedPAC and MACPAC Access to Certain Drug Pricing and Payment Information

Division CC, Section 112 amends Section 1860D–15(f) of the SSA (42 U.S.C. § 1395w–115(f)) to authorize the Medicare Payment Advisory Commission (MedPAC) and the Medicaid and CHIP Payment and Access Commission (MACPAC) to access certain drug pricing information from PDP sponsors or MAOs. The Act grants the executive directors of MedPAC and MACPAC access to certain drug pricing and payment information, such as rebates, discounts, price concessions, or other forms of direct or indirect remuneration under prescription drug plans offered by PDP sponsors and MAOs for the purposes of program monitoring, analysis, and recommendations. The executive directors and individual Commissioners are prohibited, however, from further disclosing identifiable drug pricing information. The Commissioners may receive drug pricing data so long as it does not disclose the identity of a specific manufacturer or wholesaler or the prices those entities charge for drugs.

For more on other breaking drug pricing related news, visit Sidley’s Global Drug Pricing page.