Anyone who deals with State Price Transparency on a daily basis knows how difficult navigating the myriad of individual state rules and regulations can be. With more than 20 individual states to manage (and likely more on the way), several of which have more than one Price Transparency bill–many of which can contain more than one report in and of itself–reporting has become more complex to manage with each passing year. Each law is extremely nuanced, and if manufacturers don’t adhere to the legislation within the defined time frame, they can face severe financial penalties. 

Unfortunately, due to rising drug costs, these individual regulations set up by state agencies are becoming increasingly necessary. Because of this lack of prescription drug reform from the federal level, states want to give more transparency to the realm of price increase of pharma drugs to give more visibility into how products are being priced at launch and over time.  

 

Reporting Challenges

Manufacturers struggle to manage the myriad of reporting requirements. One particular challenge is assessing a course of therapy/30 days supply for a drug such that a manufacturer is properly measuring whether the launch price/price increase threshold is met or triggered. While the course of therapy for a pill you take once a day may be obvious, it’s muddy for intravenous and injectable products and especially for hospital use products where the course of therapy may vary from patient to patient depending on weight and underlying condition. In addition, manufacturers struggle with the reporting requirements particularly the “one size fits all” approach to the reporting elements required by various states. For instance, reporting elements such as research and development or marketing do not generally apply to generic drugs. In addition, smaller manufacturers may not have patient assistance or marketing budgets or expenses either or may not track expenses by product. Lastly, manufacturers struggle to balance thorough reporting while protecting trade secrets/confidential information, particularly in states that make the reports public. There is no uniform standard for marking a reported item as confidential/trade secret nor a universal definition of such. 

 

The Importance of Timely Transparency Reporting

At the recent Drug Pricing Transparency Congress, experts shared their perspectives on the current penalties and repercussions of not filing timely reports. They agreed that while it is rather unlikely for states to reach out for historical reports prior to 2018, it is certainly best practice to review with counsel or consulting groups before determining your retroactive reporting strategy.

This seems simple enough but exposes an underlying problem that many manufacturers often face. Often Price Transparency reporting transcends multiple departments within a manufacturer, and manufacturers might not have a clear structure around who in the company owns the reporting process, which bills pertain to each individual manufacturer, which formatting and templates to populate, and if manufacturers plan to retroactively report, how will they know what years have been missed and if daily penalties have accrued?

 

What Does Remediation Look Like for Missed Reports? 

When dealing with late reports, it is best practice to ensure counsel is involved and understands the total scope of any missed reports before proactively submitting the reports to the state. Most states are willing to work with manufacturers in the event of non-compliance before assessing the maximum penalty, especially if the law was recently enacted or implemented. If the report is three years old, states are going to be much more strict in enforcing the penalties than they would for a more recent infraction. It’s important to devise a strategy for negotiating with the states to eliminate or reduce untimely filing penalties including presenting to the state new processes and safeguards to ensure timely compliance in the future.

It’s important to keep an eye on new regulations and updates from states that already have some sort of State Price Transparency system, as they are often the bellwether for states to follow. For example, a number of states are not just passing one bill and calling it a day. Rather, they are proposing and passing multiple bills with multiple reporting requirements, many of which include Prescription Drug Affordability Boards that can request reports and set maximum reimbursement for drugs in the state. It’s safe to assume this trend will continue but with state-specific variations. Often, states are borrowing language from existing bills and refinishing their own bills to have slight changes but overall staying within the same realm of what’s been done before. This bill language reuse and repurpose between states also creates a strong need to ensure manufacturer’s reports are factually correct and consistent.

 

Listen to the Experts

At the recent Drug Price Transparency Congress, experts agreed that the industry is likely to see some federal level of reporting in the future. From a global perspective, they also expect the state price transparency program to grow, with a push toward reporting related to U.S. prices compared to international prices and/or pegging reimbursement to some sort of international price in the near future.

At the state level, agencies are increasingly imposing annual registration fees to help cover the cost of establishing technical web portals and state processes for report collection and to subsidize Prescription Drug Affordability Board costs. Pay attention, consult counsel as to the legality of such fees and pay timely to avoid additional untimely payment penalties.  

 

Managing State Price Transparency Reporting Today and in the Future

To keep up with the growing complexity, manufacturers should prepare to have teams built internally or outsourced to manage State Price Transparency Reporting, as relying on piecemeal processes internally is not sustainable for managing reporting obligations in the long run. There needs to be someone in-house who understands the laws and regulations and can develop a filing schedule to maintain compliance.

 

Learn more about how you can proactively manage state price transparency in your organization:

Blog: Updates to State Price Transparency Laws

Data Sheet: State Price Transparency Reporting

Blog: The Current State of Drug Price Transparency Reporting

About the Author

Stephanie Trunk

Stephanie Trunk

Partner at ArentFox Schiff

Stephanie is a partner in the Health Care practice at Arent Fox LLP. She focuses her practice on counseling pharmaceutical and device manufacturers, distributors, and their customers, including pharmacy benefit managers, on regulatory, reimbursement, and compliance matters. Her practice extends to counseling on drug pricing and government price reporting, HIPAA and privacy matters, counseling on Medicare Part D, developing corporate compliance programs, representing clients in contract negotiations, and providing transactional support to her clients.

About the Author

John Whitridge

John Whitridge

Senior Manager, Operational Consulting

John Whitridge has spent many years working with manufacturers in a consulting role before shifting his attention to growing his expertise in State Price Transparency Reporting at IntegriChain. His background includes successful project execution in many areas such as system implementation, managed care contracting, chargeback validation, and government pricing. He is currently overseeing a dedicated team of SPTR resources. John looks to expand the offering and opportunities to support manufacturers in the complex waters of compliance.