As of July 1, 2023, 22 states have pharmaceutical drug transparency laws on the books. On January 1, 2024, it will be 23, and legislation is pending in two more states. But ask again in six months because these numbers will almost certainly have grown.
What does this mean? Under price transparency rules, pharmaceutical companies must generate and send reports on triggering events, such as wholesale acquisition cost (WAC) price increases, annual price lists, new drug pricing, newly acquired products, and new drug applications. While designed to help states control pharmaceutical spending and better understand the rationale for price increases, these rules differ significantly from state to state, creating significant administrative challenges.
Although similar in content—they have the same goal, after all, which is to protect constituents from rising drug prices—each report has its own deadline, its own format, its own data requirements, its own submitting instructions, and its own way of processing and providing follow-up—or not.
In addition to all this, pharma companies are steeling themselves to deal with the potentially equally onerous requirements of the federal government’s Inflation Reduction Act (IRA), and the fact that several states are considering forming prescription drug affordability boards that may yet require additional reporting, discussion or negotiation is still all unknown.
The message is clear: Be alert, stay alert, and look to partner with a specialist in this area that can help you monitor and automate the complex operational and legal processes of drug pricing and stay compliant.
An operational time sink, not manageable by Excel
Today, managing state drug transparency laws might be feasible by a single employee, perhaps even requiring only a portion of their time, if a pharm company has just a single impacted product on the market. An Excel spreadsheet might suffice.
Perhaps.
However, it’s not just a question of complying with all 22 (and counting) different rules, requirements, deadlines, and formats for that one product. Your person must constantly monitor for new developments at the state and federal levels. At any given time, there can be more than 500 pieces of legislation under consideration. Not all of them will be brought to a vote, much less passed into law. But you must stay on top of them, just in case, monitoring current legislation for changes and all 50 states for potential new legislation. You also need to attend numerous state webinars and open hearings about legislation that are continuously being scheduled. You cannot miss a beat.
And if your company has multiple affected products, then Excel won’t cut it anymore. You need to deploy an automated system that is continually updated to always have the latest requirements embedded in it. It should alert you when deadlines approach and have the capability to produce reports in the right format for each state that contains correct data from the appropriate system of record.
Penalties for non-compliance are severe. For example, missing a single report deadline in Maine can cost you up to $30,000. In California, it’s $1,000 per product per day. If you have ten products, that’s $10,000 daily for every day you don’t turn that report in.
Seek a savvy partner
Navigating through the disparate pricing regulations on a state-by-state level can be challenging and time-consuming. You need a partner with the right balance of automation, flexibility, and diligence to ensure accurate price transparency reporting is delivered on time.
Your solution should be able to manage all the various legislation rules of all affected states. It should define state-specific report content and formats, auto-generate reports, and enable cross-departmental visibility and collaboration.
Seek a partner that:
- Enables compliance: Tracks and records all activity in a single application for simplified evidence collection in the event of an audit. Reproduces previously created reports for on-demand access.
- Provides report templates and generates them on-demand: Addresses unique reporting needs, including data fields, rules, and formats. Autogenerates reports based on each state’s special triggering events to ensure state-specific timelines are always met. Enables access to pricing, product, and other required data via integration with both cloud- and on-premises systems.
- Creates a legislation repository: Configures legislation rules based on state-specific regulations. Updates rules as regulations change or new states enact laws.
- Performs what-if analyses: Analyzes potential downstream impacts of future pricing or product events, such as price increases or new product launches.
How Model N can help
With the Model N State Price Transparency Management solution, pharmaceutical companies get the technology and expert services to manage and meet the unique reporting needs of the vast set of state price transparency regulations. Through visibility and automation, State Price Transparency Management helps ensure compliance with reporting rules, formats, and timelines.
Advantages of Model N State Price Transparency Management:
- Operationalize state-specific drug price transparency regulations.
- Reduce the potential risk of noncompliance with state price transparency requirements.
- Translate current and future legislative activity into tasks that can be configured and triggered based on each state’s requirements.
- Streamline cross-departmental visibility and collaboration with approval workflows and scheduled reports calendars.
It’s only going to get more complicated …
Keeping a spotlight on U.S. drug prices isn’t new. But over the last five years, we’ve seen a high increase in state transparency legislation into drug pricing, especially when it comes to launches and price increases. Addressing the barriers to operating profitably while staying compliant with all the relevant regulations will become more challenging. By teaming up with Model N, you’ll get a partner to ensure your revenue is optimized and you’re always compliant as the regulatory space continues evolving.
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