Transparency Is All The Rage In State Legislatures

April 16, 2018

Transparency with regard to several aspects of drug pricing is a popular subject in state legislatures.

Approximately 42 bills have been introduced in state legislatures in 2017-18 that deal with transparency. Many of the these bills are related to PBM related issues - such as requiring PBM’s to disclose discounts, etc

Others deal more directly with drug manufacturers. The primary topics involving transparency involve pricing, PBM discount disclosure, and anti-price gouging.

Some of the bills impose quite onerous requirements for companies that appear to raise prices beyond a reasonable threshold. For example NY A 2939, introduced in NY in 2017 includes a section that requires a manufacturer of a drug that has a cumulative price increase of more than three times the consumer price index in a three month period to file a report that includes:

(a) the total costs for the production of the drug including all of the following:

(1) the total research and development costs including but not limited to:

(i) the total costs of any study drug manufactured during this reporting period in support of the U.S. food and drug administration approved use of the drug;

(ii) the total costs of any preclinical studies conducted during this reporting period;

(iii) the total costs of any clinical trials conducted during this reporting period;

(iv) the total costs associated with the preparation and submission of any regulatory documents submitted to the U.S. food and drug administration during this reporting period;

(v) the total costs of post approval clinical studies mandated by the U.S. food and drug administration during this reporting period; and

(vi) the total costs of post approval studies earmarked for publication using external providers of data during this reporting period;

(2) the total costs for materials, manufacturing and administration attributable to the drug for this reporting period;

(3) the total costs paid by any entity other than the manufacturer or predecessor for research and development, including an itemized list of any amount from federal, state, or other governmental programs or any form of subsidies, grants, or other support for this reporting period; and

(4) any other costs to acquire the drug, including costs for the purchase of patents, licensing or acquisition of any corporate entity owning any rights to the drug while in development.

(b) The total administrative costs for the promotion of the drug, including but not limited to:

(i) marketing and advertising costs;

(ii) direct to consumer advertising costs;

(iii) prescriber education costs;

(iv) professional education costs;

(v) lobbying costs; and

(vi) financial assistance to patient groups, disease associations, or other consumer organizations.

(c) The total profit as represented in total dollars and a percentage of total company profit derived from the sale of the drug.

(d) The total amount of financial assistance the manufacturer has provided through patient prescription assistance programs if such programs are available, including but not limited to:

(i) costs associated with direct to consumer coupons and amount redeemed;

(ii) costs associated with copayment assistance programs; and

(iii) costs associated with sample doses, trial doses, or where the drug product is provided but not sold.

(e) The wholesale acquisition cost of the drug as publicly reported for each drug, including a five-year history of wholesale acquisition cost price increases, expressed as a percentage, and the month or months each increase took effect and any explanation for the price increase.

2017 TN S 1420 addresses generic drugs and “price gouging”. The bill calls for examining price changes for essential generic drugs to determine if legislation is needed to prevent price gouging.

While the focus is often on how federal laws can alter the pharmaceutical landscape state legislatures can also have a significant effect on the industry.


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