We, Pharma Solutions USA, Inc., are an industry leader in providing state and federal compliance solutions to the drug and device industry. We are experts in navigating the various industry business models and activities associated with state and federal definitions. Pharma Solutions has been engaged by over 500 clients to assist with navigating compliance requirements across their business activities, models and product portfolios.

We thank the State Board of Health “Board” for the opportunity to clarify the definition of Manufacturer and Reporting Entity as defined in the October 8, 2021, Emergency/NOIR for new chapter 12VAC5-219-10. We further thank you for recognizing this and attempting to clarify through the addition of Reporting Entity within the proposed 12VAC5-219-10 chapter.

However, Reporting Entity remains vague because it utilizes the term “manufacturer” without defining the parameters of a manufacturer. § 38.2-3407.15:6 and 12VAC5-219-10 defines a “manufacturer” as “every person who manufactures, a manufacturer's co-licensed partner, or a repackager” per § 54.1-3401.

This definition is ambiguous, as there are numerous types of business activities performed by a manufacturer.

We would like to clarify a specific manufacturer business and activity model known in industry as Contract Manufacturing Organizations “CMO”. A CMO is a company that produces pharmaceutical drug products under contract for another company, “Client”, to sell under the label or brand name of that Client. CMOs do not hold regulatory filings (NDAs or ANDAs); the Client does. While CMOs do manufacture prescription drugs, it is the Client that arranges for pick-up of the products at a CMO’s facility and the CMO bears no responsibility, nor knowledge of, shipping, sale, distribution, and pricing of the products to the market. As such, CMOs have no information regarding product pricing to report. A CMO does not have insight into how the products are priced nor if prices change. A CMO does not sell or set the list price to wholesalers/distributors or pharmacies and does not negotiate with insurance payors or PBMs.

Therefore, WAC as referenced and defined by 42 U.S.C. § 1395w-3a(c)(6)(B) is not relevant to a CMO because CMOs will not have any data to report. If this requirement is applied to a CMO it would add an unnecessary burden on CMOs in completing a zero report, as well as on the Board in their review and approval of such reports.

We respectfully request that the Board consider adding 1) exemption language similar to “manufacturers that perform contract manufacturing and do not sell or set price are exempt from reporting,” or 2) clarification language as to a reporting manufacturer “means a manufacturer, that sets or changes the wholesale acquisition cost of the drugs it manufacturers.”