TITLE 12. HEALTH

STATE BOARD OF HEALTH

Proposed Regulation

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.

Public Hearing Information: No public hearing is currently scheduled.

Public Comment Deadline: November 7, 2025.

Agency Contact: Kindall Bundy, Policy Planning Specialist II, Office of Information Management, Virginia Department of Health, 109 Governor Street, Richmond, VA 23219, telephone (804) 986-5270, or email kindall.bundy@vdh.virginia.gov.

Basis: Section 32.1-23.4 of the Code of Virginia requires the State Board of Health to adopt regulations that include (i) provisions related to 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 and (ii) a schedule of civil penalties for failure to report information required pursuant to § 32.1-23.4, 38.2-3407.15:6, 54.1-3436.1, or 54.1-3442.02 of the Code of Virginia, which shall be based on the level of severity of the violation.

Purpose: This action is essential to protect the health, safety, and welfare of citizens because the new regulation requires that reporting entities provide vital information about prescription drug pricing, which is a driver of increased health care costs in the Commonwealth.

Substance: This action proposes a new chapter that (i) sets out reporting requirements of prescription drug price information for health carriers, pharmacy benefits managers, wholesale distributors, and manufacturers and (ii) establishes a schedule of civil penalties based on the severity of the violation for failure to report the required information.

Issues: The primary advantage of this action to the public is increased transparency about prescription drug pricing. The primary disadvantage to the public is that businesses subject to the reporting requirements may incur increased expenses for compliance. There are no disadvantages to individual private citizens. The primary advantage to the board and the Commonwealth is increased transparency about prescription drug pricing and the availability of data for research. The primary disadvantage to the board and the Commonwealth is the fiscal impact of data collection and of adjudication in the event a reporting entity fails to comply.

Department of Planning and Budget Economic Impact Analysis:

The Department of Planning and Budget (DPB) has analyzed the economic impact of this proposed regulation in accordance with § 2.2-4007.04 of the Code of Virginia and Executive Order 19. The analysis presented represents DPB's best estimate of the potential economic impacts as of the date of this analysis.¹

Summary of the Proposed Amendments to Regulation. As the result of a 2021 legislative mandate, the Virginia Department of Health (VDH) proposes to make permanent an emergency regulation that establishes new prescription drug pricing reporting requirements.

Background. Chapter 304 of the 2021 Acts of Assembly, Special Session I² directed VDH to enter into a contract or an agreement with a nonprofit data services organization (NDSO) to annually collect, compile, and make available information about prescription drug pricing to appear on its website. The legislation also requires every carrier,³ pharmacy benefits manager,⁴ and drug manufacturer to report information about prescription drug prices to this organization. Additionally, it allows VDH to require wholesale distributors to report certain data about prescription drug costs when VDH determines that the data provided by the other entities is insufficient. For carriers, the legislation directs annual reporting to the NDSO of the following information on spending on prescription drugs in total, before enrollee cost sharing, for each health benefit plan offered by the carrier in the Commonwealth: (i) for covered outpatient prescription drugs that were prescribed to enrollees during the calendar year, the names of the 25 most frequently prescribed outpatient prescription drugs, 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 the 25 outpatient prescription drugs that experienced the greatest year-over-year increase in cost, calculated using the total annual spending by such health benefit plan for each outpatient prescription drug covered by the health benefit plan; (ii) the percent increase in annual net spending for prescription drugs after accounting for aggregated rebates, discounts, or other reductions in price; (iii) the percent increase in premiums that were attributable to each health care service, including prescription drugs; (iv) the percentage of specialty drugs with utilization management requirements; and (v) the premium reductions that were attributable to specialty drug utilization management. The legislation specifies that every carrier offering a health benefit plan shall require each pharmacy benefits manager with which it enters into a contract to report to the NDSO annually the following information for each drug reported by the carrier: (i) the aggregate amount of rebates received by the pharmacy benefits manager; (ii) the aggregate amount of rebates distributed to the relevant health benefit plan; and (iii) the aggregate amount of rebates passed on to enrollees of each health benefit plan at the point of sale that reduced an enrollee's applicable deductible, copayment, coinsurance, or other cost-sharing amount. For manufacturers, specific annual reporting requirements (to the NDSO) in the legislation include the following for each (i) brand-name drug and biologic other than a biosimilar with a wholesale acquisition cost of $100 or more for a 30-day supply or a single course of treatment and any increase of 15% or more in the wholesale acquisition cost of such brand-name drug or biologic over the preceding calendar year; (ii) biosimilar with an initial wholesale acquisition cost that is not at least 15% less than the wholesale acquisition cost of the referenced brand biologic at the time the biosimilar is launched; and (iii) generic drug with a price increase that results in an increase in the wholesale acquisition cost of such generic drug that is equal to 200% or more during the preceding 12-month period, when the wholesale acquisition cost 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, with such increase defined as the difference between the wholesale acquisition cost of the generic drug after such increase and the average wholesale acquisition cost of such generic drug during the previous 12 months: (i) the name of the prescription drug; (ii) whether the drug is a brand-name or generic; (iii) the effective date of the change in wholesale acquisition cost; (iv) aggregate, company-level research and development costs for the most recent year for which final audit data is available; (v) the name of each of the manufacturer's new prescription drugs approved by the U.S. Food and Drug Administration within the previous three calendar years; (vi) 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 (vii) a concise statement regarding the factor or factors that caused the increase in wholesale acquisition cost. The legislation also directed VDH to adopt regulations that are to include (i) provisions related to the specification of prescription drugs for the purpose of data collection and procedures for auditing information provided by carriers, pharmacy benefits managers, wholesale distributors, and manufacturers and (ii) a schedule of civil penalties for failure to report information. It specifies that civil penalties are not to exceed $2,500 per day from the date on which such reporting is required. The proposed text is consistent with the legislation and does not produce cost beyond that which is already required by the legislation.

Estimated Benefits and Costs.

Costs: Costs for pharmaceutical manufacturers, carriers, pharmacy benefit managers, and possibly pharmaceutical wholesalers would be limited to the costs of projected reporting, recordkeeping and other administrative costs required for compliance. VDH estimates that these costs are not likely to exceed $2,500 per firm per year. Costs for VDH include $275,000 annually for its contract with the NDSO for collection, compilation, and publication of data collected, and $43,801 annually for a wage position to determine compliance with the prescription drug price transparency program requirements, assess and collect penalties for noncompliance, and provide administrative support for any resulting proceedings under the Administrative Process Act.⁵

Benefits: The prescription drug price transparency program is beneficial in that it produces increased knowledge of and transparency for prescription drug pricing and the factors that influence consumer health care costs. This can potentially enable policymakers to make better informed decisions that affect health care costs in the Commonwealth. The required public reporting by manufacturers of price increases over a set threshold with a statement regarding the factor or factors that caused the increase may discourage some price increases above the threshold. There is some evidence that this has happened in other states that started prescription drug price transparency programs before Virginia. The Vermont Medicaid program explained in its 2020 report that compared to 2016, there was a 79% decline in the number of drugs reaching the state per year price increase reporting threshold.⁶ The program report concludes that fewer manufacturers are excessively increasing the price of drugs. Similarly, the Oregon transparency program reported that compared to its first year of implementation in 2019, the program received 70% fewer reports for price increases in 2020.⁷ However, during that same time, Oregon saw a 15% increase in the number of drugs with high launch prices.⁸

Businesses and Other Entities Affected. The proposed regulation affects the 231 pharmaceutical manufacturers, 100 carriers, 36 pharmacy benefit managers, and potentially the 300 pharmaceutical wholesalers that do business in the Commonwealth.⁹ The Code of Virginia requires DPB to assess whether an adverse impact may result from the proposed regulation.¹⁰ An adverse impact is indicated if there is any increase in net cost or reduction in net revenue for any entity, even if the benefits exceed the costs for all entities combined. The costs from the program stem from the legislation. Thus, no adverse impact for the proposed regulation is indicated.

Small Businesses¹¹ Affected.¹²

Types and Estimated Number of Small Businesses Affected: VDH does not have data on how many, if any of the pharmaceutical, manufacturers, carriers, pharmacy benefit managers, and pharmaceutical wholesalers would qualify as small businesses.

Costs and Other Effects: The reporting, recordkeeping and other administrative costs are due to the legislation rather than the proposed regulation.

Alternative Method that Minimizes Adverse Impact: The proposed regulation does not create adverse impact.

Localities¹³ Affected.¹⁴ The proposed regulation neither disproportionally affects particular localities, nor introduces costs for local governments.

Projected Impact on Employment. VDH plans to hire an individual to determine compliance with the prescription drug price transparency program requirements, assess and collect penalties for noncompliance, and provide administrative support for any resulting proceedings under the Administrative Process Act.¹⁵ The contracted NDSO, Virginia Health Information, has hired a prescription drug data consultant for the program.¹⁶

Effects on the Use and Value of Private Property. The legislation requires affected firms to report information and incur some cost. The proposed regulation provides detail on how the reporting is to be done, but does not directly add to the cost. The proposed regulation does not affect real estate development costs.

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¹ Section 2.2-4007.04 of the Code of Virginia requires that such economic impact analyses determine the public benefits and costs of the proposed amendments. Further the analysis should include but not be limited to: (1) the projected number of businesses or other entities to whom the proposed regulatory action would apply, (2) the identity of any localities and types of businesses or other entities particularly affected, (3) the projected number of persons and employment positions to be affected, (4) the projected costs to affected businesses or entities to implement or comply with the regulation, and (5) the impact on the use and value of private property.

² https://leg1.state.va.us/cgi-bin/legp504.exe?212+ful+CHAP0304.

³ Per § 38.2-3407.10 of the Code of Virginia, "Carrier" means: 1. Any insurer proposing to issue individual or group accident and sickness insurance policies providing hospital, medical and surgical or major medical coverage on an expense incurred basis; 2. Any corporation providing individual or group accident and sickness subscription contracts; 3. Any health maintenance organization providing health care plans for health care services; 4. Any corporation offering prepaid dental or optometric services plans; or 5. Any other person or organization that provides health benefit plans subject to state regulation, and includes an entity that arranges a provider panel for compensation. See https://law.lis.virginia.gov/vacode/38.2-3407.10/.

⁴ Per § 38.2-3407.15:4 of the Code of Virginia, "Pharmacy benefits manager" means an entity that performs pharmacy benefits management. The term includes a person or entity acting for a pharmacy benefits manager in a contractual or employment relationship in the performance of pharmacy benefits management for a carrier. "Pharmacy benefits management" means the administration or management of prescription drug benefits provided by a carrier for the benefit of enrollees. See https://law.lis.virginia.gov/vacode/title38.2/chapter34/section38.2-3407.15:4/.

⁵ Source: VDH.

⁶ See https://gmcboard.vermont.gov/sites/gmcb/files/documents/Merged_DVHA_Act193_2021Submission.pdf and https://nashp.org/drug-price-transparency-laws-position-states-to-impact-drug-prices/.

⁷ See https://dfr.oregon.gov/drugtransparency/Documents/Prescription-Drug-Price-Transparency-Annual-Report-2020.pdf and https://nashp.org/drug-price-transparency-laws-position-states-to-impact-drug-prices/.

⁸ The Oregon report states that new high-cost drugs are reported to the program when they are priced at $670 or more. This is the financial threshold set by the federal government to categorize a drug as a specialty drug under Medicare Part D.

⁹ Data source: VDH.

¹⁰ Pursuant to § 2.2-4007.04 D: In the event this economic impact analysis reveals that the proposed regulation would have an adverse economic impact on businesses or would impose a significant adverse economic impact on a locality, business, or entity particularly affected, the Department of Planning and Budget shall advise the Joint Commission on Administrative Rules, the House Committee on Appropriations, and the Senate Committee on Finance. Statute does not define "adverse impact," state whether only Virginia entities should be considered, nor indicate whether an adverse impact results from regulatory requirements mandated by legislation.

¹¹ Pursuant to § 2.2-4007.04, small business is defined as "a business entity, including its affiliates, that (i) is independently owned and operated and (ii) employs fewer than 500 full-time employees or has gross annual sales of less than $6 million."

¹² If the proposed regulatory action may have an adverse effect on small businesses, § 2.2-4007.04 requires that such economic impact analyses include: (1) an identification and estimate of the number of small businesses subject to the proposed regulation, (2) the projected reporting, recordkeeping, and other administrative costs required for small businesses to comply with the proposed regulation, including the type of professional skills necessary for preparing required reports and other documents, (3) a statement of the probable effect of the proposed regulation on affected small businesses, and (4) a description of any less intrusive or less costly alternative methods of achieving the purpose of the proposed regulation. Additionally, pursuant to § 2.2-4007.1 of the Code of Virginia, if there is a finding that a proposed regulation may have an adverse impact on small business, the Joint Commission on Administrative Rules shall be notified.

¹³ "Locality" can refer to either local governments or the locations in the Commonwealth where the activities relevant to the regulatory change are most likely to occur.

¹⁴ Section 2.2-4007.04 defines "particularly affected" as bearing disproportionate material impact.

¹⁵ Source: VDH.

¹⁶ Source: Virginia Health Information.

Agency Response to Economic Impact Analysis: The State Board of Health has reviewed and concurs with the Department of Planning and Budget's economic impact analysis.

Summary:

Pursuant to Chapter 304 of the 2021 Acts of Assembly, Special Session I, this proposed action creates a new chapter that establishes (i) reporting requirements of prescription drug price information for health carriers, pharmacy benefits managers, wholesale distributors, and manufacturers and (ii) a schedule of civil penalties, based on the severity of the violation, for failure to report the information required.

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:

"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 § 54.1-3442.02 B of the Code of Virginia.

"Biologic" means a therapeutic drug, made from a living organism such as human, animal, yeast, or microorganisms, that 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 concession, however characterized, offered or provided by a reporting entity for a prescription drug, including rebates and reductions in price, that has the effect of reducing the cost of a prescription drug for a consumer.

"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 first marketed a prescription drug for sale in the Commonwealth.

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

"National Drug Code" or "NDC" means a unique numeric code assigned by the FDA for each finished drug product or unfinished drug subject to the listing requirements of 21 CFR Part 207.

"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 medical and prescription drug insurance.

"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. a. Is 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 the Medicare Part D specialty tier is presumed to be a specialty drug.

"Spending" means the amount of money, expressed in U.S. 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 the two drugs 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.

12VAC5-219-20. Registration.

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

1. The entity's legal name and any fictitious names under which the entity operates;

2. The entity's current mailing address of record; and

3. The entity's current email address of record.

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

C. Each reporting entity shall notify the NDSO of the entity's 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. The entity's business will close;

b. The entity's business as a carrier, PBM, manufacturer, or wholesale distributor will be discontinued; or

c. The entity's 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 email address of record:

1. An annual notice on or before March 1 regarding the reporting entity's 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 12VAC5-219-90 C; and

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

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

C. 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 requested;

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. When submitting a report pursuant to this section, a carrier:

1. 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;

2. 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; and

3. Shall report on all drug products of an outpatient prescription drug determined to be reportable pursuant to subsections A and B 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 A and B 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 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.
Nonproprietary 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.
NDC	The NDC assigned to each drug product of an outpatient prescription drug.
Brand-name or generic	Whether the prescription drug is brand-name or generic.
Inclusion criteria	The criteria, as specified in subdivision A 1 of this section, that resulted in the outpatient prescription drug being determined to be reportable.
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 an enrollee's applicable deductible, copayment, coinsurance, or other cost-sharing amount.

B. A PBM shall report on all drug products of a prescription drug determined to be reportable pursuant to subsection A of this section.

C. 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 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.
Nonproprietary drug name	The generic name of the prescription drug assigned by the USAN Council.
NDC	The NDC assigned to each drug product of a 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 an enrollee's 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. Except as provided in subsection D of this section, every manufacturer shall report annually by April 1 to the NDSO on each of its:

1. Brand-name prescription drugs and biologics, 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 the brand-name drug or biologic over the preceding calendar year;

2. Biosimilars 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 previously been reported to the NDSO; and

3. Generic drugs 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 calculated as the difference between the WAC of the generic drug after increase in the WAC and the average WAC of such generic drug during the 12 months preceding the increase.

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. A manufacturer shall report on all drug products of a prescription drug determined to be reportable pursuant to subsection A of this section.

D. A manufacturer that does not own the NDC of a prescription drug or does not control the WAC of a prescription drug shall report annually by April 1 to the NDSO that it has no data responsive to the requirements of this section.

E. Except as provided in subsection D of this section, every manufacturer shall provide the information specified in subsections A and 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 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.
Nonproprietary drug name	The generic name of the prescription drug assigned by the USAN Council.
NDC	The NDC assigned to each drug product of a prescription drug. If a segment contains fewer than the number of digits as defined in 12VAC5-219-10, a manufacturer shall add at least one "0" to the front of the segment such that the segment contains the specified number of digits.
Brand-name drug or generic drug	Whether the prescription drug is a brand-name drug or generic drug.
Date of market introduction	The year of market introduction of the prescription drug.
Effective date of change in WAC	If applicable, the month and year that the WAC changed.
Reasons for current-year WAC increase	If applicable, the reason that the manufacturer increased the WAC of the prescription drug compared with last year.
Inclusion criteria	The criteria, as specified in subsection A of this section, that resulted in the prescription drug being determined to be reportable.
Research and development costs	Aggregate, company-level research and development costs in U.S. 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.

F. A manufacturer's obligations pursuant to this section shall be fully satisfied by the submission to the NDSO of information and data that the manufacturer includes in the manufacturer's annual consolidation report on 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 the department's determination, the request for wholesale distributor 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 email at the wholesale distributor's email 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; and

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

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. A wholesale distributor shall report on all drug products of a prescription drug determined to be reportable pursuant to subsections C and D of this section.

F. A 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 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.
Nonproprietary 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.
NDC	The NDC assigned to each drug product of a prescription drug.
Current year minus one WAC	WAC in U.S. 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 U.S. 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

G. 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 1.2.

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 2 of this subsection 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 2 of this subsection the specific report and the data elements within the report that are incomplete; and

5. Provide a copy of the notification specified in subdivision 2 of this subsection to the commissioner at the same time the notification 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 or request an informal fact-finding conference pursuant to § 2.2-4019 of the Code of Virginia within 30 calendar days of the notification.

C. If a reporting entity fails to correct the report or request an informal fact-finding conference 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 the notification 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 email 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 the reporting entity's email 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 notification 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 or request an informal fact-finding conference pursuant to § 2.2-4019 of the Code of Virginia no more than 10 business days after receipt of the audit findings. The corrective action plan shall include:

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 the person's 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 § 32.1-27 B or C of the Code of Virginia for each violation of this chapter; and

2. Levy a civil penalty upon the reporting entity as specified in 12VAC5-219-130 B and pursuant to § 32.1-23.4 C 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.) of this chapter.

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 12VAC5-219-80 A 1 for a wholesale distributor 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 12VAC5-219-100 C 1 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. Civil penalty; informal fact-finding proceeding.

A. A reporting entity may dispute the imposition of a civil penalty pursuant to 12VAC5-219-120 B 2 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 12VAC5-219-130 B; and

2. Shall toll all assessments and charges under 12VAC5-219-130 F 1 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 12VAC5-219-120 B 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 Data Submission Manual, Version 1.2, Virginia Health Information (rev. 8/2025)