Title of Regulation: 12VAC5-219. Prescription Drug Price Transparency Regulation (adding 12VAC5-219-10 through 12VAC5-219-140).

Statutory Authority: §§ 32.1-12 and 32.1-23.4 of the Code of Virginia.

Effective Dates: January 17, 2022, through July 16, 2023.

Agency Contact: Michael Sarkissian, Director, Data and Quality, Office of Information Management, Virginia Department of Health, 9960 Mayland Drive, Suite 401, Richmond, VA 23233, telephone (804) 229-0517, FAX (804) 527-4502, or email vdh_oim_regulations@vdh.virginia.gov.

Preamble:

Section 2.2-4011 B of the Code of Virginia states that agencies may adopt emergency regulations in situations in which Virginia statutory law or the appropriation act or federal law or federal regulation requires that a regulation be effective in 280 days or less from its enactment, and the regulation is not exempt under the provisions of § 2.2-4006 A 4 of the Code of Virginia.

Chapter 304 of the 2021 Acts of Assembly, Special Session I, requires the specification of prescription drugs for the purpose of data collection and procedures for auditing information provided by health carriers, pharmacy benefits managers, wholesale distributors, and manufacturers, as well as a schedule of civil penalties for failure to report the information required based on the severity of the violation. This action adds a new regulation establishing the requirements to report prescription drug price information to meet the statutory mandate.

Chapter 219

Prescription Drug Price Transparency Regulation

Part I

General Information and Requirements

12VAC5-219-10. Definitions.

The following words and terms when used in this chapter have the following meanings unless the context clearly indicates otherwise:

"Biologic" means a therapeutic drug, made from a living organism such as human, animal, yeast or microorganisms, which is licensed under a Biologic License Application by the FDA.

"Biosimilar" has the same meaning as ascribed to the term in § 54.1-3442.02 of the Code of Virginia.

"Brand-name drug" has the same meaning as ascribed to the term in §§ 54.1-3436.1 and 54.1-3442.02 of the Code of Virginia.

"Carrier" has the same meaning as ascribed to the term in § 38.2-3407.10 of the Code of Virginia.

"Commissioner" means the State Health Commissioner.

"Department" means the Virginia Department of Health.

"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.

"Drug product" means a finished dosage form, such as a tablet or solution, that contains a prescription generally, but not necessarily, in association with inactive ingredients and that has been issued a National Drug Code by the FDA.

"Enrollee" has the same meaning as ascribed to the term in § 38.2-3407.10 of the Code of Virginia.

"FDA" means the U.S. Food and Drug Administration.

"Generic drug" has the same meaning as ascribed to the term in § 54.1-3436.1 of the Code of Virginia.

"Health benefit plan" has the same meaning as ascribed to the term in § 38.2-3438 of the Code of Virginia.

"IRS" means the U.S. Internal Revenue Service.

"Launched" means the month and year on which a manufacturer acquired or first marketed a prescription drug for sale in the United States.

"Manufacturer" has the same meaning as ascribed to the term in § 54.1-3401 of the Code of Virginia.

"New prescription drug" has the same meaning as ascribed to the term in § 54.1-3442.02 of the Code of Virginia.

"Nonprofit data services organization" or "NDSO" has the same meaning as ascribed to the term in § 32.1-23.4 of the Code of Virginia.

"Outpatient prescription drug" means a prescription drug that may be obtained only by prescription and dispensed by a pharmacy licensed to dispense prescription drugs in Virginia, including from a retail, outpatient, mail order, or other delivery setting. Outpatient prescription drug excludes prescription drugs provided as part of or incident to and in the same setting as inpatient and outpatient hospital services, hospice services, and dental services.

"Pharmacy benefits management" has the same meaning as ascribed to the term in § 38.2-3407.15:4 of the Code of Virginia.

"Pharmacy benefits manager" or "PBM" has the same meaning as ascribed to the term in § 38.2-3407.15:4 of the Code of Virginia.

"Premium" means the amount members pay to a carrier or health benefit plan for their medical and prescription drug insurance.

"Price" means the amount of money an individual consumer pays at retail for a prescription drug in the absence of a discount.

"Prescription drug" has the same meaning as ascribed to the term in § 54.1-3401 of the Code of Virginia. "Prescription drug" includes biologics and biosimilars for which a prescription is needed.

"Rebate" has the same meaning as ascribed to the term in § 38.2-3407.22 of the Code of Virginia.

"Reporting entity" means carriers, PBMs, wholesale distributors, and manufacturers.

"Specialty drug" means a prescription drug that:

1. Has a price for a 30-day equivalent supply equal to or greater than the current minimum specialty tier eligibility threshold under Medicare Part D as determined by the U.S. Centers for Medicare and Medicaid Services; and

2. Is:

a. Prescribed for a person with a chronic, complex, rare, or life-threatening medical condition;

b. Requires specialized supply chain features, product handling, or administration by the dispensing pharmacy; or

c. Requires specialized clinical care, including intensive clinical monitoring or expanded services for patients such as intensive patient counseling, intensive patient education, or ongoing clinical support beyond traditional dispensing activities.

A prescription drug appearing on Medicare Part D's specialty tier is presumed to be a specialty drug.

"Spending" means the amount of money, expressed in United States dollars, expended after discounts.

"Therapeutically equivalent" means a generic drug that is:

1. Approved as safe and effective;

2. Adequately labeled;

3. Manufactured in compliance with 21 CFR Part 210, 21 CFR Part 211, and 21 CFR Part 212; and

4. Either:

a. A pharmaceutical equivalent to a brand-name drug in that it:

(1) Contains identical amounts of the identical active drug ingredient in the identical dosage form and route of administration; and

(2) Meets compendial or other applicable standards of strength, quality, purity, and identity; or

b. A bioequivalent to a brand-name drug in that:

(1) It does not present a known or potential bioequivalence problem, and they meet an acceptable in vitro standard; or

(2) If it does present such a known or potential problem, it is shown to meet an appropriate bioequivalence standard.

"USAN Council" means the United States Adopted Names Council.

"Utilization management" means strategies, including drug utilization review, prior authorization, step therapy, quantity or dose limits, and comparative effectiveness reviews, to reduce a patient's exposure to inappropriate drugs and lower the cost of treatment.

"Wholesale acquisition cost" or "WAC" has the same meaning as ascribed to the term in §§ 54.1-3436.1 and 54.1-3442.02 of the Code of Virginia.

"Wholesale distributor" has the same meaning as ascribed to the term in § 54.1-3401 of the Code of Virginia.

"30-day equivalent supply" means the total daily dosage units of a prescription drug recommended by its prescribing label as approved by the FDA for 30 days or fewer. If there is more than one such recommended daily dosage, the largest recommended daily dosage will be considered for purposes of determining a 30-day equivalent supply. "30-day equivalent supply" includes a 30-day supply and a single course of treatment under subsection B of § 54.1-3442.02 of the Code of Virginia.

12VAC5-219-20. Registration.

A. Each reporting entity shall furnish to and maintain with the NDSO:

1. Its legal name and any fictitious names under which it operates;

2. Its current mailing address of record; and

3. Its current electronic mailing address of record.

B. The reporting entity shall notify the NDSO in writing of any change in its legal name or addresses of record within 30 calendar days of such change.

C. Each reporting entity shall notify the NDSO of its business closing, discontinuation of business as a carrier, PBM, manufacturer, or wholesale distributor, or acquisition at least 30 days prior to such closure, discontinuation, or acquisition.

1. A reporting entity shall file any report otherwise due on April 1 for the preceding calendar year pursuant to Part II (12VAC5-219-50 et seq.) of this chapter prior to its closure, discontinuation, or acquisition if the reporting entity plans or anticipates that between January 1 and April 1:

a. Its business will close;

b. Its business as a carrier, PBM, manufacturer, or wholesale distributor will be discontinued; or

c. Its acquisition will result in the discontinuation of its business as a carrier, PBM, manufacturer, or wholesale distributor.

2. The legal entity acquiring a reporting entity shall ensure that it complies with the provisions of this chapter.

3. The commissioner shall deem the failure to comply with subdivision C 1 of this section as a failure to report pursuant to Part II (12VAC5-219-50 et seq.) of this chapter.

12VAC5-219-30. Notice.

A. The NDSO shall send to the reporting entity at the last known electronic mailing address of record:

1. An annual notice on or before March 1 regarding its reporting obligations under Part II (12VAC5-219-50 et seq.) of this chapter. Failure to receive this notice does not relieve the reporting entity of the obligation to timely report;

2. Any notices pursuant to subsection C of 12VAC5-219-90; and

3. Any notices pursuant to Article 1 (12VAC5-219-100 et seq.) of Part III of this chapter.

B. If the NDSO determines that it will accept an alternate drug group system other than Medi-Span^© for reports due pursuant to Part II (12VAC5-219-50 et seq.) of this chapter:

1. The department shall publish a general notice in the Virginia Register of Regulations that contains the NDSO's determination and the effective date of this determination; and

2. The NDSO shall notify every reporting entity of the NDSO's determination by electronic mail at its electronic mailing address of record.

C. The department shall send notices pursuant to Part III (12VAC5-219-100 et seq.) of this chapter and case decisions to the last known electronic mailing address of record and mailing address of record.

D. The NDSO shall provide any record requested by the commissioner or department related to the enforcement or administration of § 32.1-23.4 of the Code of Virginia or this chapter no more than 10 business days after the request, except as otherwise agreed to between the NDSO and the commissioner or the department.

12VAC5-219-40. Allowable variances.

A. The commissioner may authorize a variance to Part II (12VAC5-219-50 et seq.) of this chapter.

B. A variance shall require advance written approval from the commissioner.

C. The department, the NDSO, or a reporting entity may request a variance at any time by filing the request in writing with the commissioner. The request for a variance shall include:

1. A citation to the specific standard or requirement from which a variance is request;

2. The nature and duration of the variance requested;

3. A description of how compliance with the current standard or requirement is economically burdensome and constitutes an impractical hardship unique to the requester;

4. Statements or evidence why the purpose of the standard or requirement would not be frustrated if the variance were granted;

5. Proposed alternatives to meet the purpose of the standard or requirement; and

6. Other information, if any, believed by the requester to be pertinent to the request.

D. The requester shall provide additional information as may be requested or required by the commissioner to evaluate the variance request.

E. The requester may withdraw a request for a variance at any time.

F. The commissioner shall notify the requester in writing of the commissioner's decision on the variance request. If granted, the commissioner:

1. Shall identify:

a. The standard or requirement to which a variance has been granted;

b. To whom the variance applies; and

c. The effective date and expiration date of the variance; and

2. May attach conditions to a variance that, in the sole judgment of the commissioner, satisfies, supports, or furthers the purpose of the standard or requirement.

G. The requester shall comply with the standard or requirement to which a variance has been requested unless a variance has been granted.

H. The commissioner may rescind or modify a variance if:

1. The impractical hardship unique to the requester changes or no longer exists;

2. Additional information becomes known that alters the basis for the original decision, including if the requester elected to fail to comply with the standard or requirement prior to receiving a variance;

3. The requester fails to meet any conditions attached to the variance; or

4. Results of the variance fail to satisfy, support, or further the purpose of the standard or requirement.

I. If a variance is denied, expires, or is rescinded, the commissioner, the department, or the NDSO, as applicable, shall enforce the standard or requirement to which the variance was granted.

Part II

Reporting Requirements

12VAC5-219-50. Carrier reporting requirements.

A. Every carrier offering a health benefit plan shall report annually by April 1 to the NDSO the information required in this subsection on total annual spending on prescription drugs, before enrollee cost sharing, for each health benefit plan offered by the carrier in the Commonwealth:

1. For covered outpatient prescription drugs that were prescribed to enrollees during the immediately preceding calendar year:

a. The names of the 25 most frequently prescribed outpatient prescription drugs;

b. The names of the 25 outpatient prescription drugs covered at the greatest cost, calculated using the total annual spending by such health benefit plan for each outpatient prescription drug covered by the health benefit plan; and

c. The names of the 25 outpatient prescription drugs that experienced the greatest year-over-year increase in cost, calculated using the total annual spending by a health benefit plan for each outpatient prescription drug covered by the health benefit plan;

2. The percent increase in annual net spending for prescription drugs after accounting for aggregated discounts;

3. The percent increase in premiums that were attributable to each health care service, including prescription drugs;

4. The percentage of specialty drugs with utilization management requirements; and

5. The premium reductions that were attributable to specialty drug utilization management.

B. In determining which outpatient prescription drugs are reportable under subdivision A 1 of this section, the carrier shall:

1. Average the frequency of prescription for all drug products of an outpatient prescription drug for such health benefit plan to determine which outpatient prescription drugs are reportable under subdivision A 1 a of this section;

2. Average the cost, calculated using the total annual spending by such health benefit plan for all drug products of an outpatient prescription drug covered by the health benefit plan, to determine which outpatient prescription drugs are reportable under subdivision A 1 b of this section; and

3. Average the year-over-year increase in cost, calculated using the total annual spending by a health benefit plan for all drug products of an outpatient prescription drug covered by the health benefit plan, to determine which outpatient prescription drugs are reportable under subdivision A 1 c of this section.

C. A carrier may not disclose the identity of a specific health benefit plan or the price charged for a specific prescription drug or class of prescription drugs when submitting a report pursuant to subsection A of this section. A carrier shall use a health benefit plan unique identifier as described in subsection E of this section in lieu of the health benefit plan's identity when submitting a report pursuant to subsection A of this section.

D. Every carrier offering a health benefit plan shall require each PBM with which it enters into a contract for pharmacy benefits management to comply with 12VAC5-219-60.

E. Every carrier shall provide the information specified in subsections B and C of this section on a form prescribed by the department that includes the following data elements:

Data Element Name	Data Element Definition
Carrier tax identification number	The nine-digit tax Taxpayer Identification Number used by the IRS.
Carrier name	The legal name of the reporting entity.
Health benefit plan category	The two-digit health plan category identifier. The first digit corresponds to the insurance line and valid values are D (Medicaid); R (Medicare); C (commercial); and O (other). The second digit corresponds to the insurance policy type and valid values include I (individual); F (fully insured group); S (self insured group); and C (Commonwealth of Virginia employees).
Health benefit plan unique identifier	A unique five-digit incremental number assigned by a carrier to a health benefit plan within a given health benefit plan category for the purpose of anonymizing the health benefit plan's identity.
Proprietary drug name	The brand or trademark name of the prescription drug reported to the FDA.
Non-proprietary drug name	The generic name of the prescription drug assigned by the USAN Council.
WAC unit	The lowest identifiable quantity of the prescription drug that is dispensed, exclusive of any diluent without reference to volume measures pertaining to liquids.
Drug group	The first two digits of the Medi-Span© Generic Product Identifier assigned to the proprietary prescription drug.
Brand-name or generic	Whether the prescription drug is brand-name or generic.
Net spending increase	The percent year-over-year increase in annual net spending for prescription drugs after accounting for aggregated discounts or other reductions in price.
Premium increase	The percent year-over-year increase in premiums that were attributable to each health care service, including prescription drugs.
Specialty drugs with utilization management	The percentage of specialty drugs with utilization management requirements.
Premium reductions	The percent year-over-year of premium reductions that were attributable to specialty drug utilization management.
Comments	A text field for any additional information the carrier wishes to provide.

12VAC5-219-60. Pharmacy benefits manager reporting requirements.

A. Every PBM providing pharmacy benefits management under contract to a carrier shall report annually by April 1 to the NDSO the following information for each prescription drug upon which the carrier is reporting pursuant to 12VAC5-219-50:

1. The aggregate amount of rebates received by the PBM;

2. The aggregate amount of rebates distributed to the relevant health benefit plan; and

3. The aggregate amount of rebates passed on to enrollees of each health benefit plan at the point of sale that reduced the enrollees' applicable deductible, copayment, coinsurance, or other cost-sharing amount.

B. Every PBM shall provide the information specified in subsection A of this section on a form prescribed by the department that includes the following data elements:

Data Element Name	Data Element Definition
PBM tax identification number	The nine-digit tax Taxpayer Identification Number used by the IRS.
PBM name	The legal name of the reporting entity.
Proprietary drug name	The brand or trademark name of the prescription drug reported to the FDA.
Non-proprietary drug name	The generic name of the prescription drug assigned by the USAN Council.
Drug group	The first two digits of the Medi-Span© Generic Product Identifier assigned to the proprietary prescription drug
Brand-name or generic	Whether the prescription drug is brand-name or generic.
Carrier name	The legal name of the carrier to whom rebates were distributed or passed on.
Total rebates	Total aggregate rebates received or negotiated directly with the manufacturer in the last calendar year, for business in the Commonwealth.
Total rebates distributed	Total aggregate rebates distributed to the relevant health benefit plan in the last calendar year, for business in the Commonwealth.
Total rebates passed on	Total aggregate rebates passed on to all enrollees of a health benefit plan at the point of sale that reduced the enrollees' applicable deductible, copayment, coinsurance, or other cost-sharing amount in the last calendar year, for business in the Commonwealth.
Comments	A text field for any additional information the PBM wishes to provide.

12VAC5-219-70. Manufacturer reporting requirements.

A. Every manufacturer shall report annually by April 1 to the NDSO on each of its:

1. Brand-name prescription drug and biologic, other than a biosimilar, with:

a. A WAC of $100 or more for a 30-day supply or a single course of treatment; and

b. Any increase of 15% or more in the WAC of such brand-name drug or biologic over the preceding calendar year;

2. Biosimilar with an initial WAC that is not at least 15% less than the WAC of the referenced brand biologic at the time the biosimilar is launched and that has not been previously been reported to the NDSO; and

3. Generic drug with a price increase that results in an increase in the WAC equal to 200% or more during the preceding 12-month period, when the WAC of such generic drug is equal to or greater than $100, annually adjusted by the Consumer Price Index for All Urban Consumers, for a 30-day supply.

For the purposes of this subdivision, a price increase is the difference between the WAC of the generic drug after increase in the WAC and the average WAC of such generic drug during the previous 12 months.

B. For each prescription drug identified in subsection A of this section, a manufacturer shall report:

1. The name of the prescription drug;

2. Whether the prescription drug is a brand name or generic;

3. The effective date of the change in WAC;

4. Aggregate, company-level research and development costs for the most recent year for which final audit data is available;

5. The name of each of the manufacturer's new prescription drugs approved by the FDA within the previous three calendar years;

6. The name of each of the manufacturer's prescription drugs that, within the previous three calendar years, became subject to generic competition and for which there is a therapeutically equivalent generic version; and

7. A concise statement regarding the factors that caused the increase in WAC.

C. Every manufacturer shall provide the information specified in subsection B of this section on a form prescribed by the department that includes the following data elements:

Data Element Name	Data Element Definition
Manufacturer tax identification number	The nine-digit tax Taxpayer Identification Number (TIN) used by the IRS.
Manufacturer name	The legal name of the reporting entity.
Proprietary drug name	The brand or trademark name of the prescription drug reported to the FDA.
Non-proprietary drug name	The generic name of the prescription drug assigned by the USAN Council.
WAC unit	The lowest identifiable quantity of the prescription drug that is dispensed, exclusive of any diluent without reference to volume measures pertaining to liquids.
Drug group	The first two digits of the Medi-Span© Generic Product Identifier assigned to the prescription drug.
Brand-name drug or generic drug	Whether the report is about a brand-name drug or generic drug.
Subject to generic competition	The month and year of initial generic competition.
Date of initial generic competition	The year of market introduction of the prescription drug.
WAC at market introduction	The manufacturer's list price to wholesalers or direct purchasers in the United States at market introduction, as reported in wholesale price guides or other publications of prescription pricing data; it does not include discounts or reductions in price.
WAC on January 1 of the prior calendar year	The manufacturer's list price in United States dollars per unit, to wholesalers or direct purchasers in the United States on January 1 of the prior calendar year, as reported in wholesale price guides or other publications of prescription drug pricing data; it does not include discounts.
WAC on December 31 of the prior calendar year	The manufacturer's list price in United States dollars per unit, to wholesalers or direct purchasers in the United States on December 31 of the prior calendar year, as reported in wholesale price guides or other publications of prescription drug pricing data; it does not include discounts.
Effective date of change in WAC	The month and year that the WAC changed.
Justification for current-year WAC increase	The reason or reasons that the manufacturer increased the WAC of the prescription drug compared with last year.
Research and development costs	Aggregate, company-level research and development costs in United States dollars for the most recent year for which final audit data is available.
Year of research and development costs	The year in which final audit data is available.
Comments	A text field for any additional information the manufacturer wishes to provide.

D. To satisfy the reporting requirements of this section, a manufacturer may submit information and data that a manufacturer includes in its annual consolidation report on the U.S. Securities and Exchange Commission Form 10-K or any other public disclosure.

12VAC5-219-80. Wholesale distributor reporting requirements.

A. For the purposes of this section, "cost" means the expense incurred and the monetary value of the resources used or consumed in the provision of a prescription drug by a wholesale drug distributor.

B. If the department determines that data received from carriers, PBMs, and manufacturers is insufficient, the department may request wholesale distributors to report the information specified in subsection C of this section.

1. The department shall publish a general notice in the Virginia Register of Regulations that contains its determination, the request for wholesale distributors reporting, and the deadline for wholesale distributors to report pursuant to subsection C of this section.

2. The NDSO shall notify every wholesale distributor of the department's determination and request by electronic mail at its electronic mailing address of record.

C. If requested by the department pursuant to subsection B of this section and no more than 45 calendar days after the publication of the general notice pursuant to subdivision B 1 of this section, a wholesale distributor shall report for the 25 costliest prescription drugs dispensed in the Commonwealth, including each drug product of a reportable prescription drug:

1. The WAC directly negotiated with a manufacturer in the last calendar year;

2. The WAC directly negotiated with a manufacturer in the current calendar year;

3. Aggregate total discounts directly negotiated with a manufacturer in the last calendar year, for business in the Commonwealth, in total; and

4. Aggregate total discounts, dispensing fees, and other fees negotiated in the last calendar year with pharmacies, in total.

D. In determining which prescription drugs are reportable under subsection C of this section, the wholesale distributor shall average the cost for all drug products of a dispensed prescription drug.

E. Every wholesale distributor shall provide the information specified in subsection C of this section on a form prescribed by the department that includes the following data elements:

Data Element Name	Data Element Description
Wholesale distributor tax identification number	The nine-digit tax Taxpayer Identification Number used by the IRS.
Wholesale distributor name	The legal name of the reporting entity.
Proprietary drug name	The brand or trademark name of the prescription drug reported to the FDA.
Non-proprietary drug name	The generic name of the prescription drug assigned by the USAN Council.
WAC unit	The lowest identifiable quantity of the prescription drug that is dispensed, exclusive of any diluent without reference to volume measures pertaining to liquids.
Drug group	The first two digits of the Medi-Span© Generic Product Identifier assigned to the prescription drug.
Current year minus one WAC	WAC in United States dollars, for each prescription drug for which the wholesale distributor has negotiated with a manufacturer in the last calendar year, related to prescriptions under a health benefit plan issued in the Commonwealth.
Current year WAC	WAC in United States dollars, for each prescription drug for which the wholesale distributor has negotiated with a manufacturer in the current calendar year, related to prescriptions under a health benefit plan issued in the Commonwealth.
Total manufacturer discounts	Total aggregate discounts for each prescription drug directly negotiated with a manufacturer in the last calendar year, for business in the Commonwealth.
Total pharmacy discounts, dispensing fees, and other fees	Total aggregate discounts, dispensing fees, and other fees for each prescription drug negotiated in the last calendar year with a pharmacy.
Comments	A text field for any additional information the wholesale distributor wishes to provide

F. The commissioner, the department, and the NDSO may not disclose:

1. The identity of a specific wholesale distributor;

2. The price charged for a specific prescription drug or class of prescription drugs; or

3. The amount of any discount or fee provided for a specific prescription drug or class of prescription drugs.

12VAC5-219-90. Method of report submission.

A. A reporting entity shall submit any report required by this part to the NDSO through the NDSO's online collection tool.

B. A reporting entity shall submit any required report by uploading electronic spreadsheet files, or other methods as determined by the NDSO, that include all required information for each report and that comply with the NDSO's Prescription Drug Price Transparency Regulation (12VAC5-219) Submission Manual, Version 1.0.

C. The NDSO shall notify each reporting entity in writing at least 30 calendar days before any change in the report collection method.

Part III

Enforcement

Article 1

Data Validation and Audits

12VAC5-219-100. Data validation; notification; response.

A. The NDSO shall:

1. Validate that the data received from each reporting entity pursuant to a report required under Part II (12VAC5-219-50 et seq.) of this chapter is complete no more than 90 calendar days after submission;

2. Notify a reporting entity if the NDSO cannot validate the data submitted pursuant to a report required under Part II (12VAC5-219-50 et seq.) of this chapter;

3. Send the notification specified in subdivision A 2 of this section no more than three business days after completion of the data validation to the reporting entity's email address of record;

4. Identify in the notification specified in subdivision A 2 of this section the specific report and the data elements within the report that are incomplete; and

5. Provide a copy of the notification specified in subdivision A 2 of this section to the commissioner at the same time it is sent to the reporting entity.

B. Each reporting entity notified under subsection A of this section shall make changes necessary to correct the report within 30 calendar days of the notification.

C. If a reporting entity fails to correct the report within 30 calendar days, the NDSO shall:

1. Notify a reporting entity that it has failed to correct the report;

2. Send the notification specified in subdivision A 1 of this section no more than two business days after the reporting entity's failure to report to the reporting entity's email address of record;

3. Identify in the notification specified in subdivision A 1 of this section the specific report and the data elements within the report that have not been corrected; and

4. Provide a copy of the notification specified in subdivision A 1 of this section to the commissioner at the same time it is sent to the reporting entity.

D. If a reporting entity fails to correct the report within 15 calendar days of the second notice:

1. The NDSO shall provide to the commissioner within one business day of the second failure to correct:

a. The copy of the original report submitted by the reporting entity;

b. Any subsequent updated reports that the reporting entity may have filed; and

c. Any correspondence between the NDSO and the reporting entity after the notification sent pursuant to subsection A of this section; and

2. The commissioner shall deem the second failure to correct as a failure to report pursuant to Part II (12VAC5-219-50 et seq.) of this chapter.

12VAC5-219-110. Audit; corrective action plan.

A. When submitting any notification or report to the NDSO, a reporting entity shall include:

1. A signed, written certification of the accuracy of any notification or report filed in a physical format; and

2. Electronic certification of the accuracy of any notification or report filed by email or through the NDSO's online collection tool.

B. The NDSO may verify the accuracy of finalized data reported by a reporting entity through an audit conducted by the NDSO, provided that the NDSO gives notice to the reporting entity at its electronic mailing address of record no fewer than 30 calendar days prior to initiating the audit.

C. The NDSO shall send a copy of the audit findings to the reporting entity no more than five business days after the conclusion of the audit at its email mailing address of record.

D. If any deficiencies are found during the audit:

1. The NDSO shall:

a. Notify a reporting entity by providing a copy of the audit findings no more than five business days after completion of the audit to the reporting entity's email address of record; and

b. Provide a copy of the notification to the commissioner at the same time it is sent to the reporting entity.

2. The reporting entity shall prepare a written corrective action plan addressing each deficiency cited at the time of audit as specified in subsection E of this section.

E. The reporting entity shall submit to the NDSO and the commissioner a corrective action plan no more than 10 business days after receipt of the audit findings and shall include in the corrective action plan:

1. A description of the corrective action to be taken for each deficiency and the position title of the employees to implement the corrective action;

2. The deadline for completion of all corrective action, not to exceed 45 business days from the receipt of the audit findings; and

3. A description of the measures implemented to prevent a recurrence of the deficiency.

F. The reporting entity shall ensure that the person responsible for the implementation of the corrective action plan signs, dates, and indicates their title on the corrective action plan.

G. The NDSO shall:

1. Notify the reporting entity if the NDSO determines any item in the corrective action plan is unacceptable;

2. Grant the reporting entity two opportunities to revise and resubmit a corrective action plan that the NDSO initially determines to be unacceptable. If the reporting entity revises and resubmits the corrective action plan, the revision is due to the NDSO and the commissioner no more than 15 business days after the NDSO has notified the reporting entity pursuant to subdivision 1 of this subsection.

H. If a reporting entity fails to comply with the corrective action plan:

1. The NDSO shall provide to the commissioner any correspondence between the NDSO and the reporting entity after the notification sent pursuant to subsection D of this section; and

2. The commissioner shall deem the failure to comply as a failure to report pursuant to Part II (12VAC5-219-50 et seq.) of this chapter.

Article 2

Administrative Process

12VAC5-219-120. Sanctions.

A. A reporting entity may not violate the provisions of this chapter.

B. The commissioner may:

1. Petition an appropriate court for an injunction, mandamus, or other appropriate remedy or imposition of a civil penalty against the reporting entity pursuant to subsection B or C of § 32.1-27 of the Code of Virginia for each violation of this chapter; and

2. Levy a civil penalty upon the reporting entity as specified in subsection B of 12VAC5-219-130 and pursuant to subsection C of § 32.1-23.4 of the Code of Virginia, in accordance with the Administrative Process Act (§ 2.2-4000 et seq. of the Code of Virginia) for each violation of Part II (12VAC5-219-50 et seq.).

C. Each day that a reporting entity fails to report in violation of this chapter is a sufficient cause for imposition of one or more sanctions. If a reporting entity knowingly submits false, inaccurate, or misleading data pursuant to the reporting requirements of this chapter, the commissioner shall deem that submission as a failure to report.

12VAC5-219-130. Civil penalty.

A. The commissioner may reduce or waive the civil penalty imposed pursuant to this section if the commissioner, in the commissioner's sole discretion, determines that the violation was reasonable or resulting from good cause.

B. Except as provided in subsection A of this section, the commissioner shall levy a civil penalty upon the reporting entity in an amount of:

1. For the first offense:

a. $500 for the first day in which the reporting entity fails to report;

b. $1,000 for the second day in which the reporting entity fails to report;

c. $1,500 for the third day in which the reporting entity fails to report;

d. $2,000 for the fourth day in which the reporting entity fails to report; and

e. $2,500 for the fifth day and each subsequent day in which the reporting entity fails to report; and

2. For the second offense:

a. $1,000 for the first day in which the reporting entity fails to report;

b. $1,750 for the second day in which the reporting entity fails to report; and

c. $2,500 for the third and each subsequent day in which the reporting entity fails to report; and

3. For the third and all subsequent offenses, $2,500 for each day in which the reporting entity fails to report.

The commissioner shall assess civil penalties in the aggregate on a per day basis.

C. The commissioner shall deem the first day in which the reporting entity fails to report as:

1. April 2 for a reporting entity that fails to submit any information or documentation pursuant to 12VAC5-219-50, 12VAC5-219-60, or 12VAC5-219-70 or for a reporting entity that knowingly submits false, inaccurate, or misleading data pursuant to 12VAC5-219-50, 12VAC5-219-60, or 12VAC5-219-70;

2. The 46th calendar day after the publication of the general notice pursuant to subdivision A 1 of 12VAC5-219-80 for a wholesale distributor that that fails to submit any information or documentation or that knowingly submits false, inaccurate, or misleading data;

3. The 16th calendar day after notification pursuant to subdivision C 1 of 12VAC5-219-100 for a reporting entity that fails to correct its report submitted pursuant to Part II (12VAC5-219-50 et seq.) of this chapter; and

4. The calendar day immediately succeeding the deadline of a corrective action plan for a reporting entity that fails to comply with its corrective action plan approved pursuant to 12VAC5-219-110.

D. Civil penalties are due 15 calendar days after the date of receipt of the notice of civil penalty imposition or 31 calendar days after the service of a case decision after an informal fact finding proceeding, whichever is later.

E. A reporting entity shall remit a check or money order for a civil penalty payable to the Treasurer of Virginia.

1. If a check, money draft, or similar instrument for payment of a civil penalty is not honored by the bank or financial institution named, the reporting entity shall remit funds sufficient to cover the original civil penalty amount, plus a $50 dishonored payment fee.

2. Unless otherwise provided, the commissioner may not refund civil penalties or fees.

F. A civil penalty imposed pursuant to subsection B of this section is a debt to the Commonwealth and may be sued for and recovered in the name of the Commonwealth.

1. On all past due civil penalties, the commissioner shall assess and charge:

a. Interest at the judgment rate as provided in § 6.2-302 of the Code of Virginia on the unpaid balance unless a higher interest rate is authorized by contract with the debtor or provided otherwise by statute, which shall accrue on the 60th day after the date of the initial written demand for payment;

b. An additional amount that approximates the administrative costs arising under § 2.2-4806 of the Code of Virginia; and

c. Late penalty fees of 10% of the past due civil penalties.

2. The commissioner may refer a past due civil penalty for collection by the Division of Debt Collection of the Office of the Attorney General.

12VAC5-219-140. Informal fact-finding proceeding.

A. A reporting entity may dispute the imposition of a civil penalty pursuant to subdivision B 2 of 12VAC5-219-120 by requesting an informal fact finding proceeding pursuant to § 2.2-4019 of the Code of Virginia:

1. In writing to the commissioner; and

2. No more than 14 calendar days after the date of receipt of the notice of civil penalty imposition.

B. In requesting an informal fact finding proceeding pursuant to subsection A of this section, a reporting entity:

1. Shall identify with specificity the reason or alleged good cause for its failure to report; and

2. May present factual data, argument, information, or proof in support of its reason or alleged good cause for its failure to report.

C. The request for an informal fact finding proceeding:

1. May not toll the imposition of a civil penalty on a per day basis, as specified in subsection B of 12VAC5-219-130; and

2. Shall toll all assessments and charges under subdivision F 1 of 12VAC5-219-130 until a case decision after an informal fact finding proceeding has been served.

D. If a reporting entity does not request an informal fact finding proceeding pursuant to subsection A of this section, the civil penalty imposed pursuant to subdivision B 2 of 12VAC5-219-120 shall be final on the 15th calendar day after the date of receipt of the notice of civil penalty imposition.

E. If a reporting entity remains aggrieved by a case decision after an informal fact finding proceeding, it may seek review of the case decision in accordance with Article 5 (§ 2.2-4025 et seq.) of Chapter 40 of Title 2.2. of the Code of Virginia.

DOCUMENTS INCORPORATED BY REFERENCE (12VAC5-219)

Prescription Drug Price Transparency Regulation Submission Manual, Version 1.0, 2021, Virginia Health Information (eff. 8/2021)