Biden Administration is requiring insurers, health plans to report on prescription drug costs

Photo: Jeff Lagasse/Healthcare Finance News

In an interim final rule, the Biden Administration is now requiring private insurers to report prescription drug costs, as well as key data, to the departments of Health and Human Services, Labor and Treasury.

It’s the fourth rule in a series that the departments are issuing to implement the No Surprises Act, as well as transparency requirements of the Consolidated Appropriations Act of 2021, according to the Centers for Medicare and Medicaid Services.

The action requires health plans, health insurance issuers offering group or individual health insurance coverage, and health benefits plans offered to federal employees to submit key data to the departments, which will work through the HHS Assistant Secretary for Planning and Evaluation to publish a report on prescription drug pricing trends and rebates, as well as their impact on premiums and consumers’ out-of-pocket costs.

The data submission requirements include information on average monthly premiums and drug spending for patients, compared to their employers and/or group health plans and health insurance issuers.


The administration said that prescription drugs account for a significant portion of healthcare spending for consumers, plans, issuers and the federal government. Because of that, the interim final rule also implements requirements to identify specific cost drivers. 

Plans and issuers must now provide the departments with an annual overview of their top 50 drugs across key areas of concern. These include the most frequently dispensed brand prescription drugs, the costliest prescription drugs, and the prescription drugs that had the greatest increase in total annual plan spending over the previous year.

CMS said the additional information on prescription drug rebates, fees and other remunerations paid by drug manufacturers to plans, issuers and pharmacy benefit managers – including the top 25 drugs generating the highest rebate amounts – will help the departments understand and report on prescription drug costs and how they fluctuate over time.

The agency has also released a fact sheet featuring details on data submission requirements, including how the data will be collected and analyzed. The new requirements will start with data from the 2020 calendar year.

However, the departments are deferring enforcement of the new requirements until December 27, 2022, to give regulated entities more time to come into compliance. This means the required information for 2020 and 2021 is due by December 27, 2022, although it may be submitted sooner. The departments anticipate releasing their first report in June 2023 and biennially from that point forward.


Tackling prescription drug costs has long been a priority for the Biden White House. In September, HHS Secretary Xavier Becerra released a plan intended to lower drug prices, in part by allowing the HHS head to negotiate Medicare Part B and Part D drug prices directly with pharmaceutical companies and make those prices available to other purchasers.

PhRMA TV ads have said the move to have Medicare negotiate drug prices would take away consumer choice.

Biden’s budget proposal in August called on Congress to pass solutions to reduce prescription drug prices and hold brand-name drug manufacturers accountable. He called for Medicare to cap yearly out-of-pocket drug costs for beneficiaries, as well as backing Food and Drug Administration efforts to accelerate the development of generic medicines, which typically have far lower costs to consumers.

Biden also called for states to work on plans to import drugs from Canada, where costs are also much lower, and proposed penalizing drugmakers who raise prices out of balance with inflation.

The net cost of prescription drugs – meaning sticker price minus manufacturer discounts – rose more than three times faster than the rate of inflation over the course of a decade, according to a 2020 JAMA study.

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