Prescription Drug and Health Care Spending
Updated: Feb 2, 2022
Under the Consolidated Appropriations Act (CAA) 2021
On July 9, 2021, President Biden issued Executive Order 14036, “Promoting Competition
in the American Economy.” This order directed the federal government to “enforce
the antitrust laws to combat the excessive concentration of industry, the abuses of market power, and the harmful effects of monopoly and monopsony.”
The goal of the data collection required by these interim final rules is to “provide information about competition and market concentration in the pharmaceutical and health care industries”. In theory, policymakers can use this prescription drug and health care spending data to identify excessive pricing of prescription drugs due to industry concentration and monopolies, promote the use of lower-cost generics, and address the impact of pharmaceutical manufacturer rebates, fees, and other remuneration on prescription drug prices and on plan, issuer, and consumer costs.
An interim final rule with request for comments (IFC) was released on November 23, 2021, through several federal agencies, including the Centers for Medicare & Medicaid Services (CMS). This IFC implements new requirements for health plans and health insurers in group and individual markets to submit information about prescription drugs and other health care spending.
The regulation is effective December 23, 2021 and is applicable beginning December 27, 2021. There will be a temporary deferral of enforcement during the first year of applicability.
Data submission requirements include general information on the plan including beginning and end dates of the plan year, the number of beneficiaries, and each state in which the plan is offered. Plans must also report:
The fifty (50) most frequently dispensed brand prescription drugs;
The total number of paid claims for each of the 50 most frequently dispensed brand prescription drugs;
The fifty (50) most costly prescription drugs by total annual spending; and
The annual amount spent by the plan for each of the most cost prescription drugs;
The fifty (50) prescription drugs with the greatest increase in plan or coverage expenditures from the plan year preceding the plan year that is the subject of the report; and
For each of the drugs with the greatest increase, the change in amounts expended by the plan or coverage in each such plan year (top 50 lists).
In addition, plans must report total spending on health care services by the type of cost:
Health care provider (primary and specialty care separately
Clinical service costs (primary and specialty care separately)
Spending by the plan as well as by beneficiaries
Other medical costs (including wellness services)
Average monthly premiums
Plans must report impacts on premiums by rebates, fees, and any other remuneration paid by drug manufacturers to the plan or its administrators or service providers, including the amount paid for each therapeutic class of drugs for each of the twenty-five (25) drugs that yielded the highest amounts of rebates and other remuneration under the plan or coverage from drug manufacturers during the plan year (top 25 list). Plans must report any reduction in premiums and out-of-pocket costs associated with these rebates, fees, or other remuneration.
Greater technical detail will be provided regarding each data element in the instructions for the information collection instrument. An internet portal will be provided to reporting entities for submission of required data.
Required data shall be reported not later than one (1) year after the date the CAA was enacted, and not later than June 1st of each year thereafter.
The Federal Register Prescription Drug and Health Care Spending regulation can be viewed at: *2021-25183.pdf (govinfo.gov)