Perspectives

Maryland drug price transparency reporting

Drug price gouging is a main focus as state passes prescription drug price regulation

US states have been pushing for stricter and tougher requirements for the pharmaceutical industry to share information about their product prices and price increases. Maryland joins the list of states requiring pricing transparency with its passing of HB 0631 (Off-patent or Generic Prescription Drug Price Gouging).

Could your company be involved in drug price gouging?

Could your company's price increases be considered drug price gouging if analyzed by the Maryland Attorney General (Attorney General)? HB 0631 grants the Attorney General the authority to decide if price increases for generic and off-patent prescription drugs are "unconscionable." Maryland defines "unconscionable" price increases as "excessive and not justified" by the following three instances:

  1. The cost of producing the drug
  2. The cost of appropriate expansion of access to the drug
  3. A price increase that may result in harm to customers if there is insufficient market competition for the drug

If you think you fall into the above instances, some questions to consider include:

  • As a manufacturer, can your company justify your pricing strategy?
  • Do you have documented processes supporting initial pricing of products?
  • How do you document your decisions and approvals related to price increases?

A deep dive in drug price increases

Stay informed: The Maryland Medicaid Assistance Program (MMAP) may alert the Attorney General of a price increase that meets the following criteria:

  1. Increase of 50 percent or more in Wholesale Acquisition Cost (WAC) within the preceding one-year period, or
  2. Increase of 50 percent or more in the price paid by the MMAP for the drug in the preceding one-year period, and
  • A 30-day supply of the maximum recommended dosage of the drug for indications according to the approved label would cost more than $80 at the drug's WAC cost
  • A full course of treatment for the drug (according to the approved label) would cost more than $80 at the drug's WAC
  • If the drug is made available to consumers only in quantities that do not correspond to a 30-day supply, a full course of treatment or a single dose would cost more than $80 at the drug's WAC cost to obtain a 30-day supply or a full course of treatment

Investigation and enforcement of drug price gouging

If a price increase meets the criteria above, the Attorney General has the authority to send the manufacturer a "request" notifying the manufacturer that they are potentially in violation of the Act. The request requires the manufacturer to submit information justifying the price increase within 45 days of their request.

If after reviewing the information, the Attorney General believes that price gouging has occurred, the Attorney General may bring a lawsuit against the manufacturer which may include the following:

  • Requiring additional information from the manufacturer or wholesaler
  • Issuing an order restraining or enjoining forms of price gouging activities
  • Acquiring funds from consumers including third-party payers
  • Requiring refunds due to price gouging
  • Requiring manufacturers to make drugs available to Medicaid and other state health programs at a pre-joining price up to a year
  • Issuing a $10,000 civil penalty for each violation

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Expanding pricing transparency reporting requirements

On January 17, 2018, Maryland Senator James Brochin introduced a bill, SB0201 (Public Health—Prescription Drug Manufacturers—Sales to Wholesale Distributors), that would expand price reporting requirements and applicability beyond its current law that requires reporting of pharmaceutical product WAC.

Key points in the bill

  • Proposed effective date is October 1, 2018
  • Applies to pharmaceutical and medical device manufacturers unlike Maryland's existing law for WAC reporting (and other state laws in effect at the time of publication)
  • Requires reporting of Average Sales Price (ASP) within 30 days of the end of a calendar quarter
  • Maryland's Department of Health would be required to publish the prices on its website within 10 days of receipt

Investigation and enforcement

  • A civil penalty not to exceed $10,000 for each violation, and:
    • Requires a manufacturer in violation to make the drug available to the wholesale distributor for a period of up to one year at the manufacturer's ASP for the quarter immediately preceding the quarter in which the violation occurred; or
    • Requires a manufacturer or a wholesale distributor to produce any records or other documents that may be relevant to a determination of whether a violation has occurred.
  • In addition to any action by the Maryland Department of Health authorized by law, a wholesale distributor may bring an action to recover damages for injury or loss sustained as the result of a violation.

Key considerations

  • Are you prepared to respond to inquiries regarding your drug prices?
  • Can you justify your pricing strategy if requested by the Attorney General?
  • Do you have documented processes and procedures in place so that you can respond to the request within the required time period?
  • Are you prepared to design and implement processes to collect and submit pricing information within the required time frame at the end of each quarter?

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