On April 27, 2021, Governor Doug Burgum of North Dakota signed House Bill 1032 into law, making North Dakota the latest state to enact drug price transparency measures. The North Dakota law has three main disclosure requirements applicable to drug manufacturers: (1) quarterly Wholesale Acquisition Cost (WAC) reporting, (2) disclosure of certain information upon a drug price increase, and (3) notification when introducing a new drug with a WAC that exceeds certain price thresholds.
The law defines drug manufacturer as an entity that holds the national drug code for a drug that is engaged in the production, preparation, propagation, compounding, conversion, or processing of the drug or which is engaged in the packaging, repackaging, labeling, relabeling, or distribution of the drug. Importantly, wholesale drug distributors or retail pharmacies licensed in North Dakota are not included in the definition.
Additionally, a “prescription drug” is defined as a drug which, under federal law is required, prior to being dispensed or delivered, to be labeled with one of the following: (i) “Caution: Federal law prohibits dispensing without prescription”; (ii) “Caution: Federal law restricts this drug to use by or on the order of a licensed veterinarian”; or (iii) Rx only; or a drug which is required by any applicable federal or North Dakota law or rule to be dispensed on prescription only or is restricted to use by practitioners only.
Quarterly WAC Reporting
For the quarterly WAC reports, drug manufacturers must submit quarterly reports to the North Dakota Insurance Commissioner no later than the 15th of January, April, July, and October. The report must disclose the current WAC for all prescription drugs sold in North Dakota by that manufacturer.
Price Increase Disclosure
A price increase that requires disclosure is one where: (1) the WAC increases by 40% or more over the preceding five years or (2) the price increases by at least 10% during the preceding 12 months for a prescription drug with a WAC of $70 or more for a manufacturer-packaged drug container.
Under either of those price increases, the drug manufacturer will need to report the below information to the Insurance Commissioner within 30 days of the price increase: (1) name of the drug; (2) whether the drug is a brand name or generic; (3) the effective date of the change in wholesale acquisition cost; (4) aggregate, company level research and development costs for the previous calendar year; (5) aggregate rebate amounts paid to each PBM for the previous calendar year; (6) the name of all drugs approved by the FDA for the affected manufacturer in the previous five calendar years; (7) the name of each of the manufacturer’s drugs that lost patent exclusivity in the United States in the previous five calendar years; and (8) a statement of rationale outlining the factor(s) that caused the WAC increase (i.e., raw ingredient shortage, increase in PBM rebates, etc).
New Drug Disclosure
Drug manufacturers are also responsible for informing the Insurance Commissioner within three days of a drug’s release if the WAC exceeds the threshold set for a specialty drug under the Medicare Part D program. Similar to the price increase disclosure, the new drug disclosure must also include a statement of rationale that outlines the factor(s) behind why the new drug exceeds the Medicare Part D program price.
Additional Disclosure Requirements
In addition to disclosure requirements for drug manufacturers, the law includes disclosure requirements for pharmacy benefit managers and health insurers.