North Dakota Becomes Latest State to Enact Drug Transparency Law

The Governor of North Dakota signed House Bill 1032 into law on April 27, 2021, making it the latest state to enact a law focused on drug price transparency. The law also contains disclosure requirements applicable to pharmacy benefit managers and health insurers.

Similar to the laws of several other states, the North Dakota law contains three main disclosure requirements that apply to “drug manufacturers”: (i) quarterly Wholesale Acquisition Cost (WAC) reporting, (ii) disclosure of certain information upon a drug price increase, and (iii) notification when introducing a new drug with a WAC that exceeds certain price thresholds.

The law specifically defines several terms that are important to any analysis of the obligations contained therein, most notably “drug manufacturer,” “manufacturer-packaged drug container,” and “prescription drug.”

• “Drug manufacturer” means the entity that holds the national drug code for a drug that is engaged in the production, preparation, propagation, compounding, conversion, or processing of the drug or which is engaged in the packaging, repackaging, labeling, relabeling, or distribution of the drug. The term does not include a wholesale drug distributor or retail pharmacy licensed in North Dakota.
• “Manufacturer-packaged drug container” means a drug manufacturer-prepared supply of medication packaged in a container with a unique product-identifying national drug code number.
• “Prescription drug” means a drug which, under federal law is required, prior to being dispensed or delivered, to be labeled with one of the following: (i) “Caution: Federal law prohibits dispensing without prescription”; (ii) “Caution: Federal law restricts this drug to use by or on the order of a licensed veterinarian”; or (iii) Rx only; or a drug which is required by any applicable federal or North Dakota law or rule to be dispensed on prescription only or is restricted to use by practitioners only.

Quarterly WAC Reporting

Drug manufacturers must submit a report to the North Dakota Insurance Commissioner no later than the 15 of January, April, July, and October disclosing the current WAC for all prescription drugs sold in North Dakota by that manufacturer.

Disclosures Upon a Price Increase

The following price increases will trigger the requirement for additional reporting to the Insurance Commissioner: (i) a WAC increase of 40% or more over the preceding five calendar years or (ii) 10% or more over the preceding twelve months for a prescription drug with a WAC of $70 or more for a manufacturer-packaged drug container.

Upon the occurrence of one of those events, the drug manufacturer must report the following information within 30 days of the price increase:

1. Name of the drug;
2. Whether the drug is a brand name or a generic;
3. The effective date of the change in wholesale acquisition cost;
4. Aggregate, company-level research and development costs for the previous calendar year;
5. Aggregate rebate amounts paid to each pharmacy benefits manager for the previous calendar year;
6. The name of each of the drug manufacturer’s drugs approved by the FDA in the previous five calendar years;
7. The name of each of the drug manufacturer’s drugs that lost patent exclusivity in the United States in the previous five calendar years; and
8. A concise statement of rationale regarding the factor or factors that caused the increase in the wholesale acquisition cost, such as raw ingredient shortage or increase in pharmacy benefits manager rebates.

Disclosures Related to New Drugs

Finally, drug manufacturers must notify the Insurance Commissioner within three days of the drug’s release if they introduce a new prescription drug to market at a WAC that exceeds the threshold set for a specialty drug under the Medicare part D program, which is currently $670 per month. The notice must include a concise statement of rationale regarding the factor or factors that caused the new drug to exceed the Medicare part D program price.

Disclosures To Be Publicly Available

The law indicates that the Insurance Commissioner will develop a public-facing website to publish all of the information received pursuant to the new law, but may not disclose a trade secret, proprietary, commercial, financial, or confidential information of any pharmacy, pharmacy benefits manager, drug wholesaler, or hospital. Most notably missing from this list? Drug manufacturers.