Federal Drug Price Transparency Legislation Introduced in U.S. Senate

On June 13, Sen. Ron Wyden (D-OR) introduced price transparency legislation that has similarities to the many state bills that have been introduced on the issue in recent years.  S. 1348, entitled the Stopping the Pharmaceutical Industry from Keeping Drugs Expensive (SPIKE) Act of 2017, would impose price reporting requirements on drugs that, per dose 1) have a WAC of at least $10 and have experienced a 100% 12-month WAC increase; or 2) were in the top 50th percentile in drug spending in Medicare or Medicaid in at least 1 of the preceding 5 years and experienced a 15% 12-month WAC increase.  In both of these categories, multi-year per-dose WAC increases can also trigger reporting requirements, with the triggering amounts phased in from 2018 until 2023.  Importantly, HHS has discretion to lower the triggering amounts so long as the change is only “de minimis.”  But the legislation does not define “de minimis.”

Manufacturers of selected drugs are required to submit a justification of price hikes to HHS within 180 days.  Unlike most state bills, SPIKE does not specify what information must be included in the justification, but provides that the manufacturer may include information about R & D costs, advertising and marketing costs, profits attributable to the drug, and metrics used to determine executive compensation, among other factors.  Manufacturers may avoid the reporting requirements by agreeing to lower the drug’s WAC so that it is below the reporting threshold.  CMS must publish the submitted price justifications, along with easily understandable summaries of those submissions, on its website and must provide a process by which manufacturers can request the exclusions of proprietary information.  Manufacturers face fines of $10,000 per day for failing to report.

At present, this legislation lacks Republican co-sponsors, and has been referred to the Senate Finance Committee.

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