The Governor of Oregon signed into law this week House Bill 4005, the Prescription Drug Price Transparency Act (Act).

The Act requires manufacturers to report by March 31st each year information regarding each prescription drug for which: (i) the price was $100 or more for a one-month supply or for a course of treatment lasting less than one month; and (ii) there was a net increase of 10 percent or more in the price of such prescription drug over the course of the previous calendar year. The information that must reported for each drug includes:

  • name and price of the prescription drug and the net increase, expressed as a
    percentage, in the price of the drug over the course of the previous calendar year;
  • length of time the prescription drug has been on the market;
  • factors that contributed to the price increase;
  • name of any generic version of the prescription drug available on the market;
  • research and development costs (R&D) associated with the prescription drug that were paid using public funds;
  • direct costs incurred by the manufacturer to manufacture, market and distribute the prescription drug and for ongoing safety and effectiveness research associated with the prescription drug;
  • total sales revenue for the prescription drug during the previous calendar year;
  • manufacturer’s profit attributable to the prescription drug during the previous
    calendar year;
  • introductory price of the prescription drug when it was approved for marketing
    by the U.S. Food and Drug Administration (FDA) and the net yearly increase, by calendar year, in the price of the prescription drug during the previous five years;
  • 10 highest prices paid for the prescription drug during the previous calendar year
    in any country other than the United States;
  • any other information that the manufacturer deems relevant to the price increase; and
  • documentation necessary to support the information reported.

The manufacturer also must report information about each patient assistance program (PAP) offered by the manufacturer to consumers residing in Oregon regarding the reported prescription drugs, including (i) the number of consumers who participated in the PAP; (ii) the total value of the coupons, discounts, copayment assistance or other reduction in costs provided to consumers in this state who participated in the PAP; (iii) the number of refills that qualify for the PAP, if applicable; (iv) the period of time that the PAP is available to each consumer; and (e) the eligibility criteria for the PAP and how eligibility is verified for accuracy.

A manufacturer that introduces a new prescription drug for sale in the U.S. at a price that exceeds the threshold established by the Centers for Medicare & Medicaid Services (CMS) for specialty drugs in the Medicare Part D program must notify the department within 30 days, providing the following information: (i) a description of the marketing used in the introduction of the new prescription drug; (ii) the methodology used to establish the price of the new prescription drug; (iii) whether the FDA granted the new prescription drug a breakthrough therapy designation or a priority review; (iv) the date of and price paid for acquisition of the new prescription drug by the manufacturer, if applicable; (v) the manufacturer’s estimate of the average number of patients who will be prescribed the new prescription drug each month; and (vi) the R&D costs associated with the new prescription drug that were paid using public funds.

Manufacturers who fail to comply with the Act will be subject to civil penalties to be adopted by The Department of Consumer and Business Services, not to exceed $10,000 per day of violation based on the severity of each violation. Activities that will incur penalties include failing to submit timely reports or notices, failing to provide information required by the Act, failing to respond in a timely manner to a written request by the department for additional information, and providing inaccurate or incomplete information.

In addition, health insurers must report annually information regarding drugs reimbursed by the insurer under policies or certificates issued in Oregon, including the 25 most frequently prescribed drugs, the 25 most costly drugs as a portion of total annual spending, and the 25 drugs that have caused the greatest increase in total plan spending from one year to the next. Insurers also must describe how prescription drug costs impact premium rates.

We will continue to monitor this legislation and regulations or other regulatory guidance issued related to it, and update the blog accordingly.

Posted by Cooley