Life Science Compliance Update

October 03, 2017

California Bans Prescription Discounts with Generic Equivalents


The California Assembly and Senate recently passed AB265, focused on amending price discounts permitted on prescription drugs. The legislation was initially offered by Assembly Members Wood and Chiu on January 31, 2017. The legislation passed the Assembly on May 31, 2017, followed by the California Senate on September 12, 2017.

Governor Jerry Brown has twelve days from the day the bills are presented to him to decide whether to sign or veto the bills before they automatically become law. AB265 was presented to the Governor on September 20, 2017, at 4:30 pm, meaning the twelve days are up and the bill automatically became law yesterday, October 2, 2017.

The bill prohibits prescription drug manufacturers from offering discounts or other reductions in an individual’s out-of-pocket costs associated with his or her insurance coverage, if a lower cost generic equivalent is available.

The legislation also specifies exceptions where discounts will be permitted, even if a lower cost generic is available. Those exceptions include:

  • Discounts for a prescription drug required under a United States Food and Drug Administration (FDA) Risk Evaluation and Mitigation Strategy (REMS) to monitor the use of that prescription drug in a manner consistent with the approved labeling;
  • A single-tablet drug regimen for treatment or prevention of human immunodeficiency virus (HIV) or acquired immune deficiency syndrome (AIDS) that is as effective as a multi-tablet regimen;
  • If the individual has completed step therapy or prior authorization requirements for the branded prescription drug as mandated by the individual’s health insurer, health care service plan, or other health coverage; or
  • Rebates received by a state agency.

The bill was introduced by the authors because “in recent years there has been a proliferation of coupons offered by drug manufacturers that sound great, but two recent studies show that most of these coupons are a classic bait and switch.”

According to Analysis prepared by the Senate,

The number of pharmaceutical coupon offers has increased in recent years, with manufacturers tendering coupons for more than 500 prescription drugs in 2014, compared with fewer than 100 in 2011. According to one study, coupons were used for about 8% of brand-name prescriptions in 2014, up from 3% in 2011. While manufacturer coupons may reduce or eliminate a consumer's out-of-pocket spending requirement, generally they do not reduce the price an insurer or government program is charged for a drug. Health care payers, such as commercial insurers, unions and employers, and government officials have complained that drug coupons mask the actual price of drugs and may prompt beneficiaries to choose more expensive drugs, even if cheaper, equally effective drugs are available, which drives up health care spending.

Unfortunately, the entering of this bill into law has the propensity to raise the out of pocket cost of prescriptions for the citizens of California.

October 02, 2017

California Enacts Legislation on Reporting of Prescription Drug Costs


California’s Senate and Assembly have both passed legislation on publishing prescription drug prices (SB-17) and presented the legislation to California Governor Jerry Brown on September 19, 2017. Under California law, the Governor has twelve days to sign or veto the legislation before it becomes law automatically. For SB-17, those twelve days were up yesterday, October 1, 2017, and the legislation automatically became law.

What does the new legislation mean for pharmaceutical companies with sales in California? The law requires health plans and insurers that report rate information through the existing large and small group rate review process to also report specified information related to prescription drug pricing to Department of Managed Health Care (DMHC) and California Department of Insurance (CDI). DHMC and CDI must then compile specified information into a consumer-friendly report that demonstrates the overall impact of drug costs on health care premiums.

The law also requires drug manufacturers to notify specified purchasers (in writing at least ninety days prior to the planned effective date) if it is increasing the wholesale acquisition cost (WAC) of a prescription drug by specified amounts. This bill requires drug manufacturers to notify Office of Statewide Health Planning and Development (OSHPD) three days after federal Food and Drug Administration (FDA) approval when introducing a new drug to market at a WAC that exceeds the Medicare Part D specialty drug threshold.

The new law will require health plans and insurers that report rate information in the small and large group markets to annually report to regulators the following information about all covered drugs (categorized by generic drugs, brand name drugs, and specialty drugs):

  • The 25 most frequently prescribed drugs;
  • The 25 most costly drugs by total annual spending; and,
  • The 25 drugs with the highest year-over-year increase in total annual spending.

The regulators must then put the information into a report that is posted online starting January 1, 2019, demonstrating the overall impact of drug costs on healthcare premiums. Interestingly, the legislation also requires the regulators to keep the information confidential that was provided to them, and that the information also be protected from public disclosure.

The new law also requires manufacturers to notify the office in writing if it is introducing a new prescription drug to market at a wholesale acquisition cost that exceeds the threshold set for a specialty drug under the Medicare Part D program. The notice shall be provided in writing within three days after the release of the drug in the commercial market. A manufacturer may make this notification pending approval by the federal Food and Drug Administration, if commercial availability is expected within three days of approval.

The information that shall be reported by the manufacturer includes the following:

  • A description of the marketing and pricing plans used in the launch of the new drug in the United States and internationally.
  • The estimated volume of patients that may be prescribed the drug.
  • If the drug was granted breakthrough therapy designation or priority review by the federal Food and Drug Administration prior to final approval.
  • The date and price of acquisition if the drug was not developed by the manufacturer.

Any manufacturers that do not report the information required pursuant to this section is liable for a civil penalty of one thousand dollars per day for every day after the notification period described in this section that the required information is not reported.

September 11, 2017

Louisiana Price Transparency Measures Go into Effect…With An Interesting Twist


According to LexisNexis State Net, during 2017, about half of the states and Congress collectively introduced almost 90 measures intended to address soaring prescription drug prices. Most would either cap drug prices or force drug makers to be more transparent with how they devise pricing for at least some medications.

A handful of states, including Maryland (HB 631), Louisiana (SB 59) and Nevada (HB 539), have adopted such measures this year, and New York adopted a law in April as part of the budget that imposes greater scrutiny on drug makers over their pricing.

There is also word that the Trump administration is planning action. Although the Food and Drug Administration has no direct control over drug prices, in a June blog post FDA Commissioner Scott Gottlieb said his agency plans to encourage the development of additional lower-cost generic drugs. The effort would likely have a limited impact, however, as the growth in drug prices is largely driven by newer drugs under patent and without generic competition.

In mid-June 2017, Governor John Bel Edwards of Louisiana signed two drug price transparency measures. HB 436 – unanimously passed by the legislature – requires manufacturers engaging in the marketing of prescription drugs in the state to make quarterly reports of the wholesale acquisition cost (WAC) prices to the Louisiana Board of Pharmacy.

SB 59 – also passed unanimously – requires the Louisiana Board of Pharmacy to post on a website those WAC prices, organized by therapeutic category. Health profession licensing boards that regulate Louisiana prescribers are required to annually remind/advise them as to the availability of the website. Interestingly, however, is the mandate that the Board obtains private grant funding to implement and operate the website.

HB 436 requires that, “Each drug manufacturer or pharmaceutical marketer who engages in any form of prescription drug marketing to a prescriber, his designee, or any member of his staff in Louisiana shall provide to the Louisiana Board of Pharmacy no later than January first, April first, July first, and October first of each calendar year the current wholesale acquisition cost information for the United States Food and Drug Administration approved drugs marketed in the state by that manufacturer.”

The Senate bill requires “the Louisiana Board of Pharmacy … develop a website to contain prescription drug price information to be made available to Louisiana prescribers on the board's website with a dedicated link that is prominently displayed on the board's home page, or by a separate easily identifiable internet address.” The website shall include, at a minimum, the following data elements, separated by therapeutic category: (a) Name of the product; (b) Whether the drug is a brand name or a generic; (c) Drug strength; (d) Per-unit wholesale acquisition cost of the drug; and (e) Any disclaimers deemed appropriate by the board.

With respect to the grant, the law states, “Implementation of this Section shall be contingent upon the Louisiana Board of Pharmacy's obtaining grant funds from private entities for the development, implementation, operation, and continued maintenance of the drug pricing disclosure website.” It is also mandated that the “board shall actively seek grant funding to implement the provisions of this Section. Within ten months of successful receipt of grant funds sufficient in amount to implement the provisions of this Section, the board shall make the drug pricing disclosure website available to prescribers.”

We were unable to find any news as to the success of the finding of the grant funding. The bill became effective June 14, 2017.


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