Catalent currently manufactures approved prescription drugs under contract agreements serving as a Contract Manufacturing Organization (CMO) to our customers (Application Holder) who hold approved applications (NDA/ANDA/BLA) with the Food and Drug Administration (FDA).

As a CMO of approved prescription drugs, Catalent's business operations include manufacturing, labeling, packaging, and analytical testing activities.

Catalent’s customers (Application Holder) or their co-licensed partners set pricing for the prescription drug products they distribute and or market; Catalent as a CMO does not participate in distribution/marketing nor price-setting thereof. 

The VA Emergency Regulation 12VAC5-219. Prescription Drug Price Transparency Regulation (adding 12VAC5-219-10 through 12VAC5-219-140) requires manufacturers to register with the NDSO [12VAC5-219-20. Registration] and provide information [12VAC5-219-70. Manufacturer reporting requirements] that only an approved Application Holder or their co-licensed partners would have readily available.

Likewise, the VA Code at § 32.1-23.4. (Effective January 1, 2022) Prescription drug price transparency; civil penalty and § 54.1-3442.02. (Effective January 1, 2022) Prescription drug price transparency requires manufacturers to report information that only an approved Application Holder or their co-licensed partners would have readily available. The definition of “manufacturer” in this regulation is the same as defined in § 54.1-3401 and means “every person who manufactures, a manufacturer's co-licensed partner, or a repackager,” and “manufactures” means “the production, preparation, propagation, conversion, or processing of any item regulated by this chapter, either directly or indirectly by extraction from substances of natural origin, or independently by means of chemical synthesis, or by a combination of extraction and chemical synthesis, and includes any packaging or repackaging of the substance or labeling or relabeling of its container.”

Therefore, we recommend that the regulation explicitly exclude CMOs [and similar organizations] who manufacture but do not participate in marketing or price-setting activities from registering and reporting under VA Emergency Regulation 12VAC5-219.  Instead, we recommend the regulation explicitly adopt the Drug Supply Chain Security Act (DSCSA) definition for Manufacturer which refers to an approved Application Holder or their Co-Licensed Partner (as both terms are defined therein). The approved Application Holder or their Co-Licensed Partner who markets a prescription drug product that is subject to reporting under this regulation and/or who sets pricing for such prescription drug are the appropriate entities to register and report under the VA Emergency Regulation 12VAC5-219 and VA Code at § 32.1-23.4 and § 54.1-3442.02. 

Pharma & Biopharma Outsourcing Association (PBOA) is the non-profit trade association representing the legislative, regulatory and general business interests of Contract Manufacturing Organizations (CMOs) in the bio/pharma industry. Our members provide manufacturing, packaging, labeling, and testing services for clients who hold the licenses and applications for drugs, vaccines and other medical products (NDAs, ANDAs, BLAs, sBLAs). In some cases, a Co-Licensed Partner may pay the license holder and employ a CMO for manufacture of a drug product.

Several of our members have received requests from Virginia’s Department of Health (VDH) requiring them to comply with VA Emergency Regulation 12VAC5-219 et seq., the Prescription Drug Price Transparency Regulation, which requires pharmaceutical manufacturers to register and provide information that only an approved Application Holder or their Co-Licensed Partners would be able to provide.

In their role as CMOs, my members & the rest of their sector are not involved in the setting of prices of drug products that they manufacture on behalf of their license-holding clients, nor are they involved in the distribution and marketing of these drug products. Similarly, they are not made aware of their clients’ changes to product prices or Wholesale Acquisition Cost (WAC), nor are they involved in negotiations with wholesalers, insurers, PBMs or other payors.

Requiring such facilities to register and report with the Nonprofit Data Services Organization (NDSO) under 12VAC5-219 would only result in undue compliance burden on their part and more work for the DoH board, while generating no WAC or other pricing data that VDH intends to collect with this regulation.

We suggest that the regulation explicitly exclude CMOs, which provide manufacturing services but are not involved in pricing or marketing/distribution, from registering and reporting requirements under VA Emergency Regulation 12VAC5-219.

This could be achieved by including language specifying that only manufacturers who set or change WAC should register and report, or preferably, we recommend the regulation explicitly adopt the definition for Manufacturer used in Drug Supply Chain Security Act (DSCSA, Public Law 113-54, Nov. 27, 2013) which provides clarity for an approved Application Holder and a Co-Licensed Partner. As per the DSCSA’s definitions, the Application Holder or Co-Licensed Partner — the party that markets a prescription drug product and/or who sets pricing for that drug — would be more appropriate entities than CMOs to register and report under 12VAC5-219 and VA Code at § 32.1-23.4 and § 54.1-3442.02. License holders and their partners are already familiar with such definitions as part of their DSCSA requirements.

We thank you for the opportunity to comment and hope you will consider these suggestions to improve the effectiveness of your initiative for drug pricing transparency.

—Gil Roth, President, PBOA

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.”

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.