The Future of Pricing Transparency Legislation Promises More Complexity
Mark Scallon, Senior Principal, Commercial Compliance
Jun 04, 2019

The increase in regulatory activity around pricing transparency sends a strong message to the Life Sciences market that manufacturers dismiss at their own risk. Industry participants must adopt proactive strategies to address a wave of new regulations which are designed to limit drug costs by requiring transparency reporting on drug prices and drug price increases. This could be the precursor to more invasive regulatory measures such as government mandated pricing controls. In order to prepare for the additional complexity that is sure to come, manufacturers need a flexible, compliance-based framework that is robust enough to encompass the new regulations that are emerging from states, and scalable enough to accommodate the expectation of eventual Federal involvement in the manner of the CMS’s Open Payments program.

Several states now require some level of price reporting, and there are bills making their way through the legislative process in a number of others — and the only consistent factor is a lack of consistency between their legislative approaches. Some track wholesale acquisition cost (WAC) prices, while some mandate reporting around average manufacturer price (AMP). And a growing number of states have gone beyond these statutorily defined price types, crafting legislation that requires disclosure and reporting of considerably more detailed, granular and even proprietary metrics like product marketing costs, development and input costs.

Each state’s exact reporting requirements and timelines for compliance vary. Just a few examples: In Nevada, reporting of state price transparency and HCP transparency are covered in a single law, creating a dual compliance mandate. Starting this year in California, manufacturers are required to submit notification of price increases 60 days prior to the anticipated change. And in New York, manufacturers of “high spend drugs” are subject to additional requirements — and penalties for noncompliance.

If Federal regulators decide to return to the playbook they used when developing the CMS Open Payments platform, which is likely, that would mean yet another set of different instructions, mandates and procedures for companies to follow.

Although some states have committed to keeping pricing control and transparency data confidential, others have announced their intent to make this information public, just as the Centers for Medicare and Medicaid Open Payments website does at the Federal level. The key difference between spend transparency reporting requirements and price transparency reporting — and the key challenge — is that the marketplace is evolving so that not only government agencies, but competing manufacturers and even consumers could access price transparency reporting data.

Any errors in reporting, even if inadvertent, threaten to expose pharmaceutical companies to regulatory sanctions, penalties and increased oversight. Since drug prices are a sociopolitical issue on an ascendant trajectory, the industry also is vulnerable to public and media scrutiny. Focusing on data integrity and data quality to produce consistent, correct and compliance-focused price transparency reporting can help manufacturers avoid a potential P.R. nightmare.

There is a growing acknowledgement that the legislation in place today is just the tip of the iceberg. Manufacturers today need to proceed with the expectation that these regulatory protocols will only increase and broaden in scale and scope over time. The trajectory of this legislative imperative in the aggregate is very similar to the early stages of spend transparency reporting. As such, it is reasonable to expect the evolution to reflect that of spend transparency reporting, with concurrent activity by states followed by involvement at the federal, and then the global level.

It is still early enough to get out in front of the burgeoning demands around price transparency reporting, but the window to successfully do so is becoming small. Manufacturers need to implement a compliance-focused infrastructure to establish consistent processes and controls.

Being able to identify relevant pricing data across disparate systems is a challenge that needs a comprehensive, compliance-focused strategy. Companies need to commit to investing in this challenge, and work with partners capable of building out efficient processes to make this growing obligation to report price increases more seamless.

For more information about IQVIA Commercial Compliance, please e-mail or visit our webpage. Our experts leverage the industry’s leading technologies to deliver streamlined processes and improved efficiencies that solve your toughest engagement and transparency challenges. From automating and managing the entire HCP/O contracting lifecycle, to capturing, collecting, and reporting global spend; to planning efficient and compliant HCP meetings and engagements—discover how our solutions can make compliance easier for you.

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