Drug makers must justify to the state when large price increases

Lawmakers aim to slow the growth of prescription drug prices through a new law requiring drug manufacturers to alert the Health Department and give their rationale for large price increases on certain drugs.

Sponsored by Rep. Kelly Morrison (DFL-Deephaven) and Sen. Julie Rosen (R-Vernon Center), and effective July 1, 2020, the so-called “Prescription Drug Price Transparency Act” will require prescription drug makers to report, beginning Oct. 1, 2021, certain drug pricing information for existing drugs, new drugs and newly acquired drugs whose prices increase by specified amounts.

In addition to disclosing the cost of manufacturing, marketing and distributing those drugs, drug makers will report sales revenue; net profits; financial assistance through patient prescription assistance programs and agreements to delay generics.

For each prescription drug whose price was $100 or greater for a 30-day supply or for a course of treatment lasting less than 30 days manufacturers must report the specified drug pricing information for: (1) brand name drugs where the price increases by 10 percent or more within the previous 12-month period or an increase of at least 16 percent over the previous 24-month period; and (2) generic drugs where there is a price increase of at least 50 percent over the previous 12-month period.

The law also establishes manufacturer drug pricing reporting requirements for certain new prescription drugs and certain newly acquired drugs.

Price increases that meet the threshold will be posted on the state Department of Health website. A summary must annually be presented to the Legislature beginning Jan. 15, 2022.

Drug makers that fail to follow the law are subject to fines of up to $10,000 per day. money from these fines must be deposited in the Health Care Access Fund.

HF1246/SF1098*/CH78

SF1098* / HF1246 / CH78