The Pharmaceutical Research and Manufacturers of America (“PhRMA”) represents the country’s leading innovative biopharmaceutical research companies, which are devoted to discovering and developing medicines that enable patients to live longer, healthier, and more productive lives. PhRMA respectively submits our concerns related to the regulations published by Virginia Department of Health (“the Department”) on January 17, 2022 as proposed 12VAC5 chapter 219, implementing the requirements of House Bill 2007, Prescription Drug Price Transparency, which was enacted in the 2021 Legislative Session and printed as Chapter 304 of the Virginia Acts of Assembly (“the Act”).

We appreciate the changes that have been included in the current regulations and the opportunity to reiterate our remaining concerns. Our concerns in the most recent volume of the regulations center around the expansion of the Department’s authority on certain reporting requirements, clarification of certain definitions, and confirmation on variance reporting requirements. PhRMA respectfully requests that the Department not include any elements in its final regulations that are not consistent with its authority in the Act.

12VAC5-219-10 Definitions

PhRMA seeks clarification and/or removal of several of the terms included in the definitions section of the draft regulations to ensure statutory alignment and resolve ambiguity.

• “Discount” – This definition in the draft regulations extends beyond the traditional scope of this term. The definition of “discount” in the draft regulations states:
o “‘Discount’ means any price concessions offered or provided by a reporting entity for a prescription drug, including rebates, reductions in price, coupons, out-of-pocket cost assistance, premium assistance, or copay assistance, that has the effect of reducing the cost of a prescription drug.”

The inclusion of coupons, out-of-pocket cost assistance, premium assistance, or copay assistance is inappropriate in this context as such discounts are solely intended to provide financial benefit directly to a consumer and not to impact payors, pharmacy benefit managers, wholesale distributors, or other supply chain entities. PhRMA recommends that “coupons, out-of-pocket cost assistance, premium assistance, or copay assistance” be removed from the definition.

• “Launched” – PhRMA recommends that the definition be clarified to limit “launched” to the date that a product is first made available for sale in Virginia. In addition, we request the removal of the word “acquired” as it is an additional data point not required by the Act and could cause confusion because it incorporates into the definition a concept that is not commonly understood to be a “launch.”

• “Price” – PhRMA recommends striking this term from the final regulations. Wholesale Acquisition Cost is the metric used throughout the reporting requirements and is defined in the Act, so the term “price” could lead to confusion. Furthermore, “price,” as defined, is a function of insurance benefit design and is not determined by the manufacturer.

12VAC5-219-40. Allowable Variances

We appreciate the intent of these requirements to permit the commissioner to grant variances if warranted, address unforeseen circumstances that may complicate a reporting entity’s compliance with the chapter, and to create a clear process by which variances may be requested or modified. In line with the requirements of the statute, we request confirmation of our understanding that nothing in this section will be interpreted to impose greater requirements on reporting entities than those set forth in statute.

12VAC5-219-70 Manufacturer Reporting Requirements: Data Element Chart

PhRMA is concerned that certain data elements included in the Data Element Chart at 12VAC5-219-70(C) are items that manufacturers are not required to report under the Act, and that inclusion of these items in the draft regulations therefore exceeds the scope of the Department’s authority. PhRMA also has specific objections to certain of these items as described below.

PhRMA requests that these data elements not be included in the final regulations:

• WAC Unit
• Drug group: Medi-Span© Generic Product Identifier (GPI): Medi-Span© GPI is a proprietary data element of Medi-Span’s drug pricing compendium, and manufacturers may not have access to this information.
• Date of initial generic competition
• WAC at market introduction
• WAC on January 1 of prior calendar year
• WAC on December 31 of the prior calendar year

Section D Reporting Requirements

PhRMA requests that the regulations utilize the statutory language which provides clear guidance to reporting entities regarding which materials satisfy a reporting obligation. Va. Code § 54.1-3442.02(C) states that a manufacturer’s reporting obligation is fully satisfied by the disclosure of information in “the manufacturer’s annual consolidation report on Securities and Exchange Commission Form 10-K or any other public disclosure.” However, the implementing regulations do not specify that a manufacturer’s obligations will be considered “fully satisfied” as a result. PhRMA requests that the language in 12VAC5-219-70(D) be amended to accurately reflect the statutory language:

“A manufacturer’s obligations pursuant to the section shall be fully satisfied by the submission to the nonprofit data services organization with which the Department of Health has entered into a contract pursuant to Section 32.1-23.3 of information and data that a manufacturer includes in the manufacturer’s annual consolidation report on Securities and Exchange Commission Form 10-K or any other public disclosure.” Section 54.1- 3442.02(C)

Thank you for the opportunity to engage with the Department on the draft regulations for Chapter 304 of the 2021 Acts of the Assembly. We remain committed to discussing these issues with you and working collaboratively toward their resolution. Please do not hesitate to contact Kristin Parde at kparde@phrma.org to discuss these items further.