2020 was another active year for State Transparency laws. At least 6 new bills were signed into law or became officially active in Maine, Minnesota, New Hampshire, New Jersey, Utah and West Virginia.
As with other state transparency laws, it is important to analyze the language of the enacted legislation particularly around the reporting thresholds. Some laws require the drug manufacturer to calculate the price increases over a prior calendar year (or multiple calendar years). Others focus on increases “over the previous 12 months” and are not tied to a particular calendar year. These threshold nuances can make transparency report modeling more complex, and simple Excel formulas can easily miss a threshold that was triggered.
It’s also important to maintain communication with state personnel to investigate new laws and verify your reporting responsibilities. Two new 2020 laws (NJ and WV) provide good case studies related to those transparency reporting requirements. Let’s look at the NJ law first.
NJ Senate Bill 2389 was from the 2018-2019 Regular Session but didn’t get signed into law until January 2020. The act was to take effect immediately and requires manufactures to report their WAC prices each quarter within 30 days of the beginning of the quarter (January 30, April 30, July 30 and October 30 of each year). However, the law requires that the NJ State Board of Pharmacy must create a website to collect and display that prescription drug price information, and that effort has not yet been completed. At Pharosity, we remain in contact with key personnel within the NJ Board of Pharmacy and will receive an update from them once the reporting website is ready to accept quarterly data. Until that time, the quarterly WAC reporting deadlines should be tracked in your transparency reporting model, but no WAC prices can be submitted to NJ.
The West Virginia law and some implications not readily evident in the new legislation make for a more convoluted case study. The law as written seems straightforward enough – the price increase reporting requirement is triggered when any drug costing $100 or more for a 30-day supply recognizes a wholesale acquisition cost increase of 40 percent or greater over the preceding three calendar years, or 15 percent or greater in the previous calendar year. In the legislation (West Virginia Code §33-54-3. Drug manufacturer reporting requirements) it clearly declares that the January 15 reporting only applies when these two conditions apply:
Generic, brand-name, or specialty drugs with a wholesale acquisition cost of at least $100 for a 30-day supply; and
A generic, brand-name, or specialty drug manufactured by a drug manufacturer that recognizes a wholesale acquisition cost increase of 40 percent or greater over the preceding three calendar years, or 15 percent or greater in the previous calendar year.
(The underline was added for emphasis to the word “and”.)
As written, this law is very similar to the Minnesota and Utah laws that were also signed into law in 2020. However, in December of 2020, the WV Deputy State Auditor’s office released reporting guidelines that appeared to break these reporting requirements up. Within those guidelines, the manufacturers are required to report WAC prices by January 15 for all drugs $100 or higher for a course of therapy, regardless of price increases over the previous one to three calendar years. Additional price increase reporting (with data requirements similar to other states’ price justification reporting) is then required when the one and/or three calendar year thresholds are breached.
Pharosity reached out to the Deputy State Auditor’s office after these new guidelines were published, and they confirmed several things:
They had received other questions regarding the December 2020 interpretation of the statute.
They are asking manufacturers to please treat these items as separate reporting requirements at this time.
Additionally, while the deadline for the 2021 annual WAC submissions was Friday, January 15, there are currently no fines, fees, or penalties for late reporting. They will accept reports filed after the January 15 deadline for manufacturers who need additional time to complete reporting (or didn’t know that the WAC reporting was required for all drugs above the $100 course of therapy threshold).
While the statute itself appeared unambiguous to many, and the Reporting Guidelines released in December created some confusion on the reporting requirement, Pharosity recommends that manufacturers follow the updated guidance from the Deputy State Auditor’s office.
Other than the West Virginia issue, the second half of 2020 was relatively quiet for state transparency legislation, likely due to the focus of most state legislatures being on the pandemic, the election, and other pressing concerns. The expectation is that 2021 will bring a considerable amount of new and revised transparency legislation for manufacturers to track and respond to. In an upcoming blog post, I’ll investigate new approaches states are taking to cover their transparency reporting costs and potentially even take back profits from manufacturers when price increases exceed CPI levels.