Life Science Compliance Update

February 28, 2018

Checking In: Are Your State Legislators Concentrating on Drug-Price Transparency?


Price transparency is such a hot topic today that it is oftentimes hard to keep up with the different state legislatures that are reviewing different ideas on price transparency and price gouging when it comes to the pharmaceutical industry. Below are some of the states and the bills that are pending before the legislatures.


The state of Colorado has two bills pending – one in the House and one in the Senate – that each focus on different aspects of pricing. HB18-1009, the Diabetes Drug Pricing Transparency Act of 2018, has been introduced in the House and assigned to the Health, Insurance, and Environment subcommittee. The bill would require drug manufacturers and pharmacy benefit managers to submit annual reports to the state board regarding drugs used to treat diabetes that are subject to price increases of certain percentages. The state board would have the ability to impose penalties on drug manufacturers or pharmacy benefit managers who do not comply with the reporting requirements. Nonprofit organizations that advocate on behalf of patients with diabetes or funding diabetes medical research that receive contributions from certain diabetes drug manufacturers must annually report those contributions. In the Senate, SB18-152, Prohibit Price Gouging on Prescription Drugs, has been indefinitely postponed by the Senate Committee on State, Veterans & Military Affairs. The bill would have: (1) prohibited a pharmaceutical manufacturer or wholesaler from price gouging on sales of essential off-patent or generic drugs; (2) made the practice of price gouging a deceptive trade practice under the “Colorado Consumer Protection Act;” and (3) required the state board of pharmacy and executive director of the department of health care policy and financing to report suspected price gouging to the attorney general, who is then authorized to seek subpoenas and file lawsuits with the appropriate district courts.


In Hawaii, there is one bill pending that focuses on price transparency, HB2668, “Relating to Prescription Drugs.” The bill would require the Department of Health to compile, analyze, and report certain information on essential prescription drugs marketed in Hawaii for the treatment of diabetes. It would also require certain entities to provide information that justifies the cost increases in drug products. The bill has been referred to HHS, CPC, and FIN for further deliberations.  


In Illinois, HB4900, has been introduced and is currently in the Human Services Committee. The legislation creates the Illinois Generic Drug Pricing Fairness Act, which would provide in part that manufacturers and wholesale drug distributors shall not engage in price gouging in the sale of an essential off-patent or generic drug. It would also allow the Director of Healthcare and Family Services or Director of Central Management Services to notify the Attorney General of any increase in the price of any essential off-patent or generic drug under the Medical Assistance Program under the Illinois Public Aid Code or a State health plan that amounts to price gouging.


The Maine Legislature has introduced bills LD1406 and SP 484, An Act to Promote Prescription Drug Price Transparency, in each of its chambers. The bills are currently in committee.


The state of Maryland has three separate bills in motion right now that all deal with price transparency. The first bill, HB1194, Health – Drug Cost Review Commission, would establish the Drug Cost Review Commission; provide for the purpose and the membership of the Commission; provide for the election of the chair of the Commission and requiring the chair to hire certain staff; and requiring that the staff of the Commission receive a certain salary. This bill is cross-filed with SB1023, a Senate bill with the same ideal outcome.

SB0201, Public Health – Prescription Drug Manufacturers – Sales to Wholesale Distributors, would require a prescription drug or device manufacturer to submit certain average sales prices to the Maryland Department of Health for each calendar quarter within 30 days after the end of the quarter and require the Department to make the average sales price submitted by a manufacturer available on the Department's website not later than 10 days after it receives the average sales prices.


In Michigan, the Senate has introduced SB0825, Health; pharmaceuticals; annual report on the costs associated with prescription drugs; require manufacturers of prescription drugs to file in certain circumstances. Amends 1978 PA 368 (MCL 333.1101 - 333.25211) by adding secs. 17748e & 17748f. The bill would require an annual report on the costs associated with prescription drugs and would require manufacturers of prescription drugs to file in certain circumstances.


Mississippi legislators tried and failed to pass two bills relating to price transparency. HB 137, Prohibition on Price Gouging for Essential Drugs Act, would have created such an act and defined price gouging and then prohibited manufacturers and wholesale distributors from engaging in price gouging. HB 784, Prescription drugs; require Attorney General to compile certain lists of those essential for treating diabetes and costs of, would have required the Attorney General to compile certain lists of prescription drugs that are essential for treating diabetes and the wholesale acquisition cost of each such drug on the list and those drugs on the list that have been subject to an increase in WAC by a certain percentage during the preceding calendar year or years.


In Nebraska, legislators are currently considering LB862, Adopt the Prescription Drug Cost Transparency Act.  This bill would require notice and disclose of the information relating to the cost and pricing of prescription drugs in order to provide accountability to the state for prescription drug pricing; allow a manufacturer of a prescription drug to voluntarily make pricing decisions regarding the prescription drug, including any price increases; and permit both public and private purchasers of prescription drugs to negotiate discounts and rebates for prescription drugs consistent with state and federal law.

New Hampshire

In New Hampshire, legislators are currently looking at HB1418, Relative to Transparency and Cost Control of Pharmaceutical Drug Prices. This bill would require the commissioner of the department of health and human services, in consultation with the insurance commissioner, to develop a list of certain critical prescription drugs for purposes of cost control and transparency.  Under this bill, the commissioner shall make an annual report on prescription drugs and their role in overall health care spending in the New Hampshire.

New Jersey

In New Jersey, there are currently three bills pending before the legislature. A583, introduced in the Assembly, and S983, introduced in the Senate, would establish the Prescription Drug Review Commission and require that production costs be reported for certain prescription drugs. S1590, introduced in the Senate, would prohibit excessive increases in prices that are charged for essential off-patent and generic prescription drugs and biological products.

New York

In New York, there are three bills pending before the two houses of the legislature. S02544 (in the Senate) and A05733 (in the Assembly), are entitled, “Prohibits price gouging by manufacturers of prescription drugs.” These bills would amend the public health law and general business law, in relation to price gouging on prescription drugs. Also introduced in the Assembly is A02939, Relates to prescription drug cost transparency. This bill would make information available to the public about the cost and utilization of pharmaceutical drugs. To fulfill this goal, the legislature finds that there should be annual reporting of drug costs and use that would be of use by policymakers, government agencies and others to understand pharmacy cost trends.


In Oregon, HB 4005 A, Relating to the price of prescription drugs, would require prescription drug manufacturers to report annually information to Department of Consumer and Business Services regarding prices of prescription drugs and costs associated with developing and marketing prescription drugs.

Rhode Island

In Rhode Island, there are two bills pending with the House. H7004, would direct the state board of pharmacy, in collaboration with the department of health, to annually identify up to fifteen (15) prescription drugs on which the state spends significant health care dollars due to increases in costs. This list would be provided to the attorney general's office, and the attorney general‘s office would require the drug's manufacturers to submit relevant information and documentation to justify these cost increases. The act would also direct the department of health to use the same dispensing fee in its reimbursement formula for 340B prescription drugs as it uses to pay for non-340B prescription drugs under the Medicaid, program, and to provide information to the general assembly and the governor about these programs. The act would also establish an advisory commission on out-of-pocket prescription drug costs who would study these costs and make reports and recommendations to the governor and the general assembly.

H7042, on the other hand, would direct the state board of pharmacy, in collaboration with the Rhode Island department of health, to annually develop a list of critical prescription drugs for which there is a substantial public interest in understanding the development of the drugs' price. The act would also authorize the board to obtain certain information from manufacturers of the critical prescription drugs. The act would also allow the commission to set the maximum allowable price that a manufacturer can charge for a prescription drug if the commission determines that the cost of a prescription drug is significantly high.

Both bills are currently in committee.

South Carolina

In South Carolina, H4490 has been introduced, which would require manufacturers of diabetes prescription drugs to provide certain cost information to the department of health and environmental control, and for the department of health and environmental control to post the reported information on its publicly accessible website.


In Utah, HB0163 has been introduced, which would create a program and reporting requirements relating to prescription drugs and the importation of prescription drugs, including specific instructions for the Department of Health and drug manufacturers.


In Virginia, HB 1436, “Prescription drugs; price transparency,” has been introduced and is in Committee. The bill requires every manufacturer of a prescription drug that is made available in the Commonwealth and has a wholesale acquisition price of $10,000 or more for a single course of treatment to report to the State Health Commissioner no later than July 1 of each year information related to the cost of developing, manufacturing, and marketing the prescription drug; any changes in the average wholesale price and average wholesale acquisition cost of the prescription drug; the amount of profits derived from sale of the prescription drug; and the total amount of financial assistance provided to consumers of the prescription drug. The bill adds this reported data to the list of reports that the Commissioner causes to be published on a website maintained by a nonprofit entity with which the Commissioner has entered into a contract for such purpose and requires the Commissioner to annually report on such information, in aggregate form, to the Chairmen of the House Committees on Appropriations and on Health, Welfare and Institutions and the Senate Committees on Finance and on Education and Health.


In Vermont, there are two bills relating to price transparency and gouging pending. H713, An act relating to prohibiting price gouging for essential off-patent or generic drugs, which proposes to prohibit prescription drug manufacturers and wholesale distributors from engaging in price gouging in the sale of essential off-patent or generic drugs. S175, An act relating to the wholesale importation of prescription drugs into Vermont, bulk purchasing, and the impact of prescription drug costs on health insurance premiums, proposes to establish a program to allow wholesale importation of prescription drugs from Canada into Vermont. It would create a bulk purchasing program for prescription drugs through the Department of Health and require prescription drug manufacturers to provide notice before introducing new, high-cost drugs to the market. The bill would also require health insurers to provide information about the impact of prescription drug spending on premium rates as part of the Green Mountain Care Board’s rate review process and direct the Board to publish an annual report demonstrating the overall impact of drug costs on health insurance premiums.


In Washington, there are seven bills pending (three bills with components in the House and Senate, with one extra bill in the Senate). SB5401 and HB1541 both entitled, “Addressing prescription drug cost transparency,” would: (1) require the office of financial management to use a competitive procurement process to select a data organization to collect, verify, and summarize the prescription drug pricing data provided by issuers and manufacturers; (2) require an issuer to submit certain prescription drug cost and utilization data to the data organization for the previous calendar year; (3) require a covered manufacturer to report certain data for each covered drug to the data organization; and (4) require the data organization to compile the data submitted by issuers and manufacturers, prepare an annual report for the public and the legislature summarizing the data, and provide the report to the office of financial management and the joint select committee on health care oversight.

HB 2299 and SB 6032, “Making supplemental operating appropriations,” both make 2018 supplemental operating appropriations.

HB2556 and SB5995, “Protecting consumers and purchasers from excessive increases in generic prescription drug prices,” would both require the state institute for public policy to: (1) Review and study policy recommendations for protecting consumers against excessive prescription drug price increases, including a two-year look back of increases where the wholesale acquisition cost increased by a percentage equal to or greater than one hundred percent at any one time or in the aggregate in any twelve-month period; and (2) Report the findings to the legislature.

SB 5586-S2 would provide notice and disclosure of information regarding the cost and pricing of prescription drugs to provide accountability to the state for prescription drug pricing.

February 07, 2018

New Jersey "Gift" Ban Revision?


During his last few days as Governor of New Jersey, Chris Christie’s administration enacted an aggressive regulation in an stated attempt to combat the opioid epidemic. The regulation was finalized in late December 2017 and required that beginning January 15, 2018, any contracts and payments entered into by prescribers directly with the pharmaceutical industry will be subject to a $10,000 annual cap. This cap includes payments from industry for consulting and speaking and includes a $15 per meal cap, but exempts research and education-related payments.

Current New Jersey Governor Phil Murphy may now be trying to modify that rule, according to a source who spoke with ROI-NJ recently. The source, familiar with the thinking behind a potential modification but not permitted to speak publicly on the discussion, said the Administration is considering increasing the limit or even rolling back the rule altogether.

The source made sure to note that this consideration should not be viewed as Governor Murphy having less concern about any problems surrounding potential opioid use and abuse as much as the concerns for the unintended consequences of the Christie rule which applies to prescribers for payments from all manufacturers.

Evidently, the rule is having a detrimental effect on the hospitality industry – specifically the restaurant industry. Marilou Halvorsen, CEO and president of the New Jersey Restaurant & Hospitality Association (NJRHA), said restaurants are already estimating losses of at least $4.5 million this year. According to Halvorsen a survey of NJRHA members cites respondents as having estimated losses ranging from $5,000 to as much as $300,000 for this year. “Restaurants do garner a lot of business. It’s predictable, it’s a good source of business,” she said. “The servers love it because they get good tips and get banquet pay quite often.” Halvorsen has been sharing her findings with the Murphy administration.

Nicholas Vasilakis, the owner of audiovisual company Event Solutions Corp. in Bayonne, New Jersey, said he already is seeing a dramatic drop in his business. He estimates that his company will lose roughly $100,000 this year from cancelations or non-bookings of the roughly 200 events he works on annually in the state. On Monday, Vasilakis told ROI-NJ that he has one event booked in February, compared with 20 events booked in February 2017. Interestingly, he noted that “After January 16, [the date the legislation went into effect] it all just stopped,” he said, adding that some prebooked events are still on the calendar.

It’s too early to tell what impact the rule is having or will have on the opioid issue, but it’s clear the rule has many perplexed. Lani Dornfeld, an attorney in New Jersey, discussed the confusion the rule creates with respect to manufacturer’s gift giving. In reality, it only regulates New Jersey prescribers acting as receivers. But – Dornfield said – the rule has an effect on all those who practice in New Jersey, even if their offices are in another state because penalties for not following the rule could result in the revocation of a practitioner’s New Jersey medical license, which could lead to that prescriber losing his or her license in other states as well. Such wide-ranging ramifications have made it so prescribers are hesitant to even attend events in New Jersey.

Dornfield also said there is confusion over whether this affects New Jersey-licensed doctors who attend events in other states, but did confirm that the rule applies to events in all states and that doctors from New Jersey traveling outside the state are still held accountable to the payment limits.   

These type of rules have been modified over the years.  In one instance, Massachusetts passed a similar meal restriction only to modify it a few years later to allow for modest meals but left the definition up to the manufacturer, so far that has worked fine for that state.   

January 31, 2018

Transparency Bill Reintroduced in Oregon


During the 2017 Oregon Legislature session, Senator Steiner Hayward and Representative Rob Nosse introduced legislation on prescription drug advertising that would have required manufacturers to disclose prices in any advertisement for prescription drugs in Oregon. The bill was introduced on February 14, 2017 and was referred to the Health Care Committee. On March 9, 2017, the Health Care Committee held a public hearing, but when the legislature adjourned on July 7, 2017, the bill remained in Committee, and therefore, it died on the vine.

On January 22, 2018, Representative Nosse introduced HB 4005, “Prescription Drug Price Transparency Act,” a supposedly simplified version of the 2017 price transparency bill. The bill, which is expected to be officially introduced on February 5, 2018, requires prescription drug manufacturers to annually report information to the Department of Consumer and Business Services regarding the prices of prescription drugs and the costs associated with developing and marketing prescription drugs. It also authorizes the Department to impose civil penalties on manufacturers that fail to comply with reporting requirements.

Under the language of the bill, manufacturers would have to justify the price of any prescription drug that goes up ten percent or more over a calendar year if the monthly cost is over $100.

The proposal would also require manufacturers to report on new specialty drugs that have price tags of $600 or more per month/dosage and to give detailed information on patient assistance programs.

Health insurers would need to report to the Department of Consumer and Business Services the 25 most frequently prescribed drugs, 25 most costly drugs and 25 drugs with highest year-over-year increases and impact of prescription drug prices on premiums.

Some required reporting items in the bill are:

  • The drug’s price history
  • Factors and justification that contributed to the increase
  • The name of any generic version
  • The research and development costs paid with public funds
  • Costs associated with manufacturing, advertising, distributing and ongoing safety-effectiveness research of the drug
  • The ten highest prices paid for the drug in other countries
  • Total sales and profits from the drug in the previous year

Interestingly, there is bipartisan support for the bill; Representative Ron Noble, a Republican, plans to co-sponsor it in the House and Senator Dennis Linthicum, a Republican, plans to co-sponsor the legislation in the Senate with Senator Lee Beyer, a Democrat.

"This is more of a first step, instead of a very aggressive, comprehensive approach," Nosse said. "We're trying to move in a fashion where members of the other party are also comfortable."

This bill resembles the California bill that California Governor Jerry Brown signed into law in October 2017. The California bill is considered to be the most comprehensive bill centered around pharmaceutical pricing in the nation.

Unfortunately, we are continuing to see more of these transparency bills that are more focused on shaming the market on drug pricing than actually helping to resolve any pricing issues.  


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