We’ve got transparency…right here in River City! Today’s musical number is all about price transparency regulations and legislation for pharmaceuticals. The topic is coming up frequently these days because of the brief pending inclusion of Pharmaceutical Benefits Managers (PBMs) within the proposed spending bill for 2025. While they weren’t included federally, state legislation could bring them center stage. Let’s explore current regulations and potential changes we might see develop throughout the year.

Drug Reporting Requirement for Hospitals | Effective as of 1/1/25

Similar to the dynamic between the Hospital Price Transparency Rule (aka price transparency requirements for hospitals) and Transparency in Coverage Final Rule (TiC) (aka price transparency requirements for payers), pharmaceutical price transparency regulation is mirrored between hospitals and payers via two different requirements.

The first requirement is detailed in the 2024 Hospital Price Transparency Final Rule.

The Drug Reporting Requirement, effective 1/1/25, mandates hospitals to publish a machine-readable file (MRF) containing the following information for all drugs within the hospital’s chargemaster (CDM):

  • Gross Charge: Charge for an individual item or service reflected in the hospital’s chargemaster (i.e. list price)
  • Discounted Cash Price: Charge for an item or service administered by the hospital to a patient who will pay in cash or a cash equivalent
  • Payer-Specific Negotiated Charge: Charge negotiated with a third-party payer for an item or service
  • De-Identified Minimum Negotiated Charge: Lowest charge a hospital has negotiated with all third-party payers for an item or service
  • De-Identified Maximum Negotiated Charge: Highest charge a hospital has negotiated with all third-party payers for an item or service
  • Drug Unit: The unit value that corresponds to the established standard charge for the drug
  • Drug Type of Measurement: The measurement type that corresponds to the established standard charge for drugs based on a list of options

This is the second iteration of MRF requirements for hospitals. Compounding with the new hospital MRF schema (effective as of 7/1/24). CMS recently published an updated FAQ including questions related to this requirement. It’s lengthy but insightful!

Drugs, like the rest of healthcare items and services, have existed in a black box of cost for too long and are often less organized than other CDM line items. Transparency into the cost of these drugs will invite natural economic forces to the party. And reader, we love us a good transparent party.

Prescription Drug File Requirement for Payers

The Prescription Drug File Requirement comes from TiC. The overachievers in the room will remember that TiC mandates three MRFs:

  1. In-Network Rate File: rates for all covered items and services between the plan or issuer and in-network providers.
  2. Allowed Amount File: allowed amounts for, and billed charges from, out-of-network providers.
  3. Prescription Drugs File: negotiated rate and historical net price.

Files 1 and 2 have been enforced since 7/1/22, but the third file was indefinitely delayed…until recently! Last September, CMS released FAQs About Affordable Care Act Implementation Part 61, which included updates related to the Prescription Drugs File MRF requirements from TiC. The Part 61 FAQs ended the enforcement deferral period for the prescription drugs MRF. While this file is back in the realm of possibility, an enforcement date has yet to be announced pending a commitment from CMS. At the time of writing this, this remains indefinitely delayed.

Thankfully, some drug rates are already made public thanks to hospital MRFs. Part B injectable drugs are included in hospital MRFs because hospital files must be built on all items and services within a hospital’s CDM. Using innovative technical wizardry, Turquoise has been able to glean insights and per-unit pricing from those hospital MRFs. The addition of a payer-created file specifically dedicated to prescription drugs furthers that progress tenfold.

Pharmacy Benefits Price Transparency Requirement for PBMs

Within H.R.5378 (Lower Costs, More Transparency Act) Federal Bill Draft, was the Pharmacy Benefits Price Transparency Requirement for PBMs. While the bill passed the House in Dec 2023, it remains pending approval by the Senate. This bill would mandate plans, insurers, or any entity/subsidiary providing PBM services to create and submit an MRF to group health plans.

This would need to include a whole host of elements related to drug name, dispensing info, Wholesale Acquisition Cost (WAC), Average Wholesale Price (AWP), and numerous other cost, price, and usage information. You can read the full list of requirements here if you’re into details. Unlike payer MRFs under TiC which must be updated monthly, this file will need to be updated once every six months. A few select organizations have started to publish these files on a state-by-state basis, and like the overachievers we are, we’ve begun to parse these to get ready for prime time.

Including PBMs was briefly introduced in the 2025 spending bill but, unfortunately, it was removed. There is significant state interest in passing requirements for PBMs independently from the federal government. Most notably, E&C Health Subcommittee Chairman, Representative Buddy Carter (R-GA), has been quoted affirming his dedication to seeing Part D drugs made public: “We will work towards this goal, in lockstep with President Trump, to tackle our nation’s chronic disease epidemic, increase price transparency, incentivize competition, combat harmful health care consolidation, fight the scourge of fentanyl, and build a health care system that puts patients before profits. Through transparency, competition, and innovation, we will Make America Healthy Again…”

We believe that price transparency data only helps every industry stakeholder understand costs and pricing. This allows economic forces to set fair market rates. As a result, we are dedicated to parsing the data that will come from the Prescription Drug Files, and we are hopeful PBM reporting requirements will pass in Congress.

Here’s to you, Pharma

2025 holds incredible transparent potential for the entire industry. These additional drug rates will round out the industry’s understanding of healthcare and show once and for all that even Pharma can take part in good faith efforts to create more transparency in healthcare. Crossing our fingers congress shares our thoughts 🤞