In response to the ever-increasing cost of prescription drugs, the 2021 Consolidated Appropriations Act (Public Law 116-260) introduced a new prescription drug reporting mandate intended to make prescription drug pricing more transparent and to assist the Departments of Labor, Treasury, and Health and Human Services with preparing a biannual, publicly available report on prescription drug pricing. The first of these extensive reports is due on December 27, 2022.

Among its requirements, the mandate requires group health plans and health insurers to report the following information:

  • the 50 most frequently dispensed brand prescription drugs, and the total number of paid claims for each such drug;
  • the 50 most costly prescription drugs by total annual spending, and the annual amount spent by the plan or coverage for each such drug;
  • the 50 prescription drugs with the greatest increase in plan expenditures over the plan year preceding the plan year that is the subject of the report, and, for each such drug, the change in amounts expended by the plan or coverage in each such plan year;
  • the total spending by the plan or coverage broken down by the type of costs, including hospital costs and provider and clinical service costs, for primary care and specialty care separately;
  • spending on prescription drugs by the plan or coverage as well as by participants, beneficiaries, and enrollees, as applicable;
  • the average monthly premiums paid by participants, beneficiaries, and enrollees and paid by employers on behalf of participants, beneficiaries, and enrollees;
  • the impact on premiums of rebates, fees, and any other remuneration paid by drug manufacturers to the plan or coverage or its administrators or service providers with respect to prescription drugs prescribed to participants, beneficiaries, or enrollees in the plan or coverage, including the amount paid with respect to each therapeutic class of drugs and for each of the 25 drugs that yielded the highest amount of rebates and other remuneration under the plan or coverage from drug manufacturers during the plan year; and
  • any reduction in premiums and out-of-pocket costs associated with these rebates, fees, or other remuneration.

The first deadline under the new rules was originally set for December 27, 2021, but was delayed until December 27, 2022 in part due to the significant operational challenges that plans and issuers encountered in complying with these reporting requirements, including modifying contractual agreements to enable disclosure, transferring the required data between various entities, developing internal processes and procedures, and identifying, compiling, preparing, and validating the required data.

The relevant departments have now issued interim final rules detailing the data to report and recently updated submission instructions describing the reporting process.

As detailed in the updated submission instructions, the new mandate requires only that group health plans (plans) and health insurance issuers (issuers) offering group or individual health insurance coverage submit reports about prescription drugs and health care spending. The following plans are not required to submit reports:

  • Account-based plans, such as health reimbursement arrangements
  • “Excepted benefits” including but not limited to short-term limited-duration insurance, hospital or other fixed indemnity insurance, and disease-specific insurance
  • Medicare Advantage and Part D plans
  • Medicaid plans
  • State children’s health insurance program plans
  • Basic Health Program plans

It is unclear whether the relevant departments intend to provide general relief for plans and issuers that make “good-faith efforts” to comply with the new law, so while plans’ third-party service providers will in most cases be preparing and submitting the information, plans are still ultimately responsible for the content of the report, and should therefore ensure that all reports are timely and accurately completed and submitted.

If you have questions about any of the prescription drug pricing reporting requirements, contact a member of Mayer Brown’s Employee Benefits team.