Fact Sheets

Prescription Drug and Health Care Spending Interim Final Rule with Request for Comments

On November 17, 2021, the Department of Health and Human Services (HHS), together with the Department of Labor (DOL) and the Department of the Treasury (collectively, the Departments), as well as the Office of Personnel Management (OPM), released an interim final rule with request for comments (IFC), entitled “Prescription Drug and Health Care Spending.” This IFC is required under section 204 of Title II (Transparency) of Division BB of the Consolidated Appropriations Act, 2021 (CAA), and implements new requirements for health plans and health insurance issuers in the group and individual markets to submit to the Departments certain information about prescription drug and health care spending. The same information will be submitted by Federal Employees Health Benefits (FEHB) Program carriers in coordination with OPM. The Departments will issue biennial public reports on prescription drug pricing trends and the impact of prescription drug costs on premiums and out-of-pocket costs starting in 2023. These reports are expected to enhance transparency and shed light on how prescription drugs contribute to the growth of health care spending and the cost of health coverage.

Background – Prescription Drug and Health Care Spending Requirements in the CAA

In recent years, there has been a broad effort to promote greater transparency in health care spending as a means to promote competition and bring down overall health care costs.[1] The CAA included a number of provisions aimed at supporting these efforts, including the requirement that plans and issuers submit certain information related to prescription drug and other health care spending to the Departments. This data submission is required to include, among other things, information on the most frequently dispensed and costliest drugs, as well as prescription drug rebates paid by drug manufacturers to plans, issuers, third-party administrators, and pharmacy benefit managers. The CAA further requires the Departments to publish on the internet biennial public reports on prescription drug reimbursements, prescription drug pricing trends, and the impact of prescription drug costs on premiums and out-of-pocket costs.

This IFC complements several rules issued earlier in 2021 to implement other provisions of the CAA. Two IFCs—“Requirements Related to Surprise Billing; Part I,”^[2] published on July 13, 2021; and “Requirements Related to Surprise Billing; Part II,”^[3] published on October 7, 2021—establish new protections from surprise billing and excessive out-of-pocket costs for consumers. A notice of proposed rulemaking (NPRM)—“Reporting Requirements Regarding Air Ambulance Services, Agent and Broker Disclosure Requirements and HHS Enforcement,” published on September 16, 2021—would promote transparency by establishing new requirements related to reporting of the costs of air ambulance services, disclosure and reporting of agent and broker compensation, and revised procedures for enforcement of certain Public Health Service Act provisions. Review the Requirements Related to Surprise Billing, Part I fact sheet; the Requirements Related to Surprise Billing, Part II fact sheet; and the Air Ambulance NPRM fact sheet for more information on these rules.

Summary of the November 17, 2021 IFC

This IFC requires plans and issuers in the group and individual markets to submit certain information on prescription drug and other health care spending to the Departments annually, including:

• General information regarding the plan or coverage;
• Enrollment and premium information, including average monthly premiums paid by employees versus employers;
• Total health care spending, broken down by type of cost (hospital care; primary care; specialty care; prescription drugs; and other medical costs, including wellness services), including prescription drug spending by enrollees versus employers and issuers;
• The 50 most frequently dispensed brand prescription drugs;
• The 50 costliest prescription drugs by total annual spending;
• The 50 prescription drugs with the greatest increase in plan or coverage expenditures from the previous year;
• Prescription drug rebates, fees, and other remuneration paid by drug manufacturers to the plan or issuer in each therapeutic class of drugs, as well as for each of the 25 drugs that yielded the highest amount of rebates; and
• The impact of prescription drug rebates, fees, and other remuneration on premiums and out-of-pocket costs.

The IFC provides that plan sponsors, issuers, and FEHB carriers generally will be required to submit this information aggregated at the state/market level, rather than separately for each plan. To ensure that the Departments and OPM are able to conduct meaningful data analysis and identify prescription drug trends, the IFC further provides uniform standards and definitions, including for identifying prescription drugs regardless of the dosage strength, package size, or mode of delivery.

Applicability Date and Comment Period

The CAA requires plans and issuers to begin submitting the required information to the Departments by December 27, 2021, and to submit this information by June 1 of each year thereafter. However, the Departments have announced that they will exercise discretion to provide temporary deferral of enforcement with regard to the December 27, 2021 and June 1, 2022 deadlines, and that they will not initiate enforcement action against a plan or issuer that submits the required information for 2020 and 2021 by December 27, 2022. OPM also will allow its FEHB carriers to report information for 2020 and 2021 by December 27, 2022.

Comments on this IFC are due at 5 p.m. on January 24, 2022.

Visit the Federal Register to read more about the IFC.

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