Health Law Scan

Legal Insights and Perspectives for the Healthcare Industry

Clearing the way for consideration by the US House of Representatives, the Ways and Means Committee has unanimously approved bipartisan legislation aimed at increasing drug price transparency by manufacturers and pharmacy benefit managers through enhanced reporting and accountability requirements.

In a rare show of bipartisanship, the House Ways and Means Committee recently approved HR 2113, the Prescription Drug Sunshine, Transparency, Accountability and Reporting Act of 2019 (STAR Act) by a 40-0 vote. The STAR Act is the consolidated product of four House bills aimed at bringing transparency to drug price hikes and high launch prices, required reporting of product samples under the Physician Payments Sunshine Act (Sunshine Act), accountability by pharmaceutical benefits managers (PBMs), and accurate drug price reporting to the Medicare program. Key highlights of the legislative proposal follow below.

Drug Manufacturer Price Transparency - The STAR Act provides that if the price of a drug increases by more than 10% or $10,000 over one year, or 25% or $25,000 over three years, or if the manufacturer launches a new drug at or above $26,000, the manufacturer must submit a “justification” to HHS with cost information beginning in 2021. HR 2113 also requires manufacturers to provide a summary of the justification, exclusive of proprietary information, for posting to the HHS website. Significantly, the STAR Act authorizes civil monetary penalties to be imposed for failing to submit a timely justification ($10,000 per day) and/or providing false information in the justification (not to exceed $100,000 per false item).

Required Reporting of Product Samples Under Sunshine Act - HR 2113 proposes to amend the Sunshine Act by requiring manufacturers annually to report to CMS the aggregate monetary value and quantity of samples provided to covered recipients each year. Beginning in 2023, such data would be posted by CMS to the Open Payments Database along with the other data on payments to US-licensed physicians and teaching hospitals.

Study on Medicare Part A Drug Costs - HHS is to provide an analysis to Congress by January 1, 2021, on the spending and volume of drugs that are furnished in an inpatient setting by hospital type and size as well as the impact of drugs shortages on inpatient hospital services.

Public Disclosure of Drug Discounts by PBMs - Beginning January 1, 2020, aggregate rebates, discounts, and other price concessions by PBMs reported under current law would be posted to the HHS website for public access.

Reporting of ASPs Under Medicare Part B - Current law requires that most but not all manufacturers report the average sales price (ASP) for physician-administered drugs covered under Medicare Part B to HHS. HR 2113 would require that all manufacturers submit this information to HHS beginning on or after January 1, 2020. Civil monetary penalties may be imposed for failing to submit this information ($10,000 per day) and/or providing false information in the submission (up to $100,000 per false item). HR 2113 also directs the Inspector General of HHS to assess the accuracy of the ASP information submitted by manufacturers in a report to Congress by January 1, 2021.