National Analysis of the Requirements and Implementation of State Prescription Drug Price Transparency Laws

Abstract

Policy Points.

• A total of 21 states have passed drug price transparency laws with the goals of creating accountability around drug pricing and facilitating the development of policy solutions to address high prices.

• These laws vary in design but often require manufacturers to report the wholesale acquisition cost of drugs above a certain threshold for new drugs or of drugs that undergo a price increase above a certain margin, along with other data such as the manufacturer's costs.

• Initial findings suggest these laws may have contributed toward informing policymaking based on newly available public information but do not appear to have affected drug prices.

Prescription drug prices in the united states are substantially higher than in other high‐income countries, with US prices reported to be an average of 2.78 times those of other countries in the Organisation for Economic Co‐operation and Development. ¹ In response to these high prices, along with an opaque supply chain that can lead to substantial discrepancies in prices across different payors, states have passed drug price transparency laws that require manufacturers to disclose information on drug prices. Beginning in 2016, when Vermont passed the first state drug price transparency law, ² 21 states have passed transparency laws by 2024. Drug price transparency laws have numerous goals, including to create accountability around drug pricing and to allow state policymakers to get greater insight into complex drug pricing systems that might help them develop legislative and policy solutions to address high prices for the patients in their states.

This article explores state drug price transparency laws that place price reporting mandates on manufacturers. These laws vary in design but often require manufacturers to report the wholesale acquisition cost (WAC) of drugs—the list price of a drug that is set by the manufacturer and represents the price paid to manufacturers by distributors, the next step in the supply chain—that are above a certain threshold for a new drug or that are increased above a certain margin, along with other data such as the manufacturer's costs. The data are reported to the state, and some aspects of the data may be publicly shared. This article will begin with a summary of the price transparency laws enacted across states and will then discuss any evidence of the impacts of these laws. The article will end with an analysis of whether the implementation of these transparency laws has met the goals of the legislation.

Methods

State drug price transparency laws were identified by conducting a Westlaw search using the following search terms: (“prescription drug” OR “generic drug” OR “brand name drug” OR “specialty drug” OR pharmaceutical OR medication) /s (price OR cost) /s (report OR disclos! OR notif! OR transparen! OR inform! OR publish OR record or submit OR file OR data) /s (requir! OR mandate OR shall OR must OR compel OR enforce OR direct OR will). We additionally consulted three summaries of state drug price transparency laws to identify laws that may not have been captured in the Westlaw search—the National Academy for State Health Policy, ³ Goodwin Procter, ⁴ and a research letter in The Journal of the American Medical Association (JAMA). ⁵

Laws were included in our analysis if they required manufacturers of prescription drugs to report price data for their drugs to the state or any health care entity. Once we identified the 26 laws (or 33 laws including amendments) across 21 states meeting these inclusion criteria, we extracted data on the following in an Excel table: scope of law, trigger for reporting requirements, data to be reported, the entity to which the manufacturer must report, reporting timeline, transparency of data, postreporting obligations, enforcement, time limit of law, and whether the law was amended.

To assess the implementation of laws, we searched for websites and reports by each of the states with transparency laws and consulted news articles, academic articles, and research papers.

To identify lawsuits challenging these laws, we conducted a Westlaw search using the following search term: (“prescription drug” OR “generic drug” OR “brand name drug” OR “specialty drug” OR pharmaceutical OR medication) /s (price OR cost) /s (report OR disclos! OR notif! OR transparen! OR inform! OR publish OR record or submit OR file OR data) /s (law OR statute OR act) /s (challenge OR constitutional OR concern). We also examined news articles and client alerts published by law firms to identify lawsuits that may have been missed in our Westlaw search.

Landscape of State Drug Price Transparency Laws

Table 1 summarizes key features of state drug price transparency laws, including the reporting triggers, data to be reported, the entity to which the manufacturers must report, enforcement penalties, and whether data are publicly shared. Figure 1 provides a visual summary of drug price transparency requirements across states. California, Minnesota, Oregon, and Washington are among states with the most robust reporting requirements, and Colorado and Louisiana have the most minimal reporting requirements. Greater detail about each law can be found in Supplemental Table 1.

Table 1.

Summary of Key Features of State Drug Price Transparency Laws

		Data to Be Reported (Y/N)
State Law	Reporting Triggers a	Current WAC	WAC Increase	Explanation for WAC Increase	Cost Data (e.g., R&D)	Launch Pricing Information	Financial Info (e.g., Revenue)	Other	Entity to Which Manufacturer Must Report	Enforcement	Data Public? (Y/N)
California AB 133, Ch 143, §109‐112 (2021), amending SB 17, Ch 603, §4 (2017)	WAC increase >16% over 2 years and WAC >$40 Launch WAC > Medicare drug threshold	Y	Y	Y	N	Y	N	Y	Department of Statewide Planning and Development	Civil penalty of $1,000 per day	Y
Colorado HB 1131 (2019)	When manufacturer provides information about drug to prescriber	Y	N	N	N	N	N	N	Prescriber	N/A	N
Connecticut HB 6669 § 8 (2023), amending HB 5384, §10 (2018)	WAC ≥$40, WAC increase ≥16% over 2 years and inclusion of drug on list Submission of NDA or biologics license and data request by Office	Y	Y	Y	Y	Y	N	Y	Office of Health Strategy	Civil penalty of no more than $7,500 per violation	Y
Florida SB 1550 § 4 (2023)	WAC increase >15% and WAC >$100	Y	Y	Y	N	N	N	Y	Department of Business and Professional Regulation	Administrative fee of $5,000 for each violation	Y
Louisiana HB 436 (2017)	Marketing of any prescription drug	Y	N	N	N	N	N	N	Louisiana Board of Pharmacy	N/A	N
Louisiana SB 283 (2018)	WAC increase ≥50% and WAC ≥$100	N	Y	N	N	N	N	N	Commissioner of Insurance	N/A	N
Maine LD 686 (2021), amending LD 1162, Ch 470, Subchapter 3 (2019)	Inclusion on Maine Health Data Organization's list	N	N	N	Y	N	Y	N	Maine Health Data Organization	Fine of up to $25,000 per occurrence for failure to pay the annual $500 assessment fee, register or submit report and up to $30,000 per day for violations regarding accuracy of reporting	Y
Maine LD 2282 (2024)	All insulin products	Y	N	N	N	N	N	N	Maine Health Data Organization	N/A	N
Massachusetts HB 4000 § 6 (2019)	MassHealth coverage expected to exceed a postrebate cost per utilizer of $25,000 annually	Y	Y	Y	Y	N	N	N	Health Policy Commission	Penalties for noncompliance not to exceed $500,000 in each instance	Y
Minnesota SF 2995, Ch 70, §§9‐16 (2023), amending SF 1098, Ch 78 (2020)	WAC increase, for brand‐name drugs ≥10%; and for generic drugs ≥50% and WAC >$100 Launch WAC > Medicare drug threshold	Y	Y	Y	Y	Y	Y	Y	Commissioner of Health	Civil penalty of up to $10,000 per day	Y
Nevada SB 380 §§ 9.3‐12 (2021), amending SB 539, Ch 592, §§3.8, 4, 4.3, 4.6 (2018)	WAC >$40 and WAC increase ≥10%	Y	Y	Y	Y	N	Y	Y	Department of Health and Human Services	Fine of up to $5,000 per day	Y
New Hampshire HB 703 (2020)	Launch WAC > Medicare drug threshold	Y	N	N	Y	Y	N	Y	Insurance Department	Civil penalty of no more than $1,000 per day	Y
New Hampshire HB 1280, Ch 126, BB 9–10 (2020)	WAC increase >20% and WAC ≥$10 Launch WAC > Medicare drug threshold	Y	Y	Y	Y	N	N	N	Prescription Drug Affordability Board	Civil penalty of up to $1,000 per day. Cannot exceed $25,000 for any one occurrence	Y
New Jersey SB 1615, Ch 106 (2023)	WAC increase >20% for brand‐name drug, >40% for generic drug costing between $10 and $100, or >10% for generic drug ≥$100 Launch WAC > Medicare drug threshold	Y	Y	Y	Y	Y	Y	Y	Division of Consumer Affairs in the Department of Law and Public Safety	Civil penalties of $10,000 for the first day of violation and an amount starting at $11,000 and increasing by $1,000 for each additional day of noncompliance, not to exceed $100,000 per day	Y
New Jersey SB 2389 (2019)	Marketing of pharmaceutical drugs or biological products in the state	Y	N	N	N	N	N	N	State Board of Pharmacy	Penalty of $200‐$5,000 for first offense and $1,000‐$20,000 for succeeding offenses	Y
New Mexico HB 33 § 3 (2024)	WAC increase, for brand‐name drugs, of >10% or for generic drugs >30% and WAC ≥$400 Launch WAC > Medicare drug threshold	Y	Y	Y	Y	Y	Y	Y	Superintendent of Insurance	Penalty for noncompliance (amount not specified)	Y
New York SB 599 (2024)	WAC increase >16% and WAC >$40	Y	Y	Y	N	N	N	N	Department of Financial Services	Penalty of up to $5,000 per day	Y
North Dakota HB 1032 (2021)	All manufacturers must report WAC Detailed reporting is triggered following >10% WAC increase and WAC >$70 Launch WAC > Medicare drug threshold	Y	Y	Y	Y	Y	Y	Y	Insurance Commissioner	Civil penalty of $10,000 or less for each violation	Y
Oregon HB 2658 (2019), amending Oregon HB 4005, Ch 7, §§2‐3 (2018)	WAC increase ≥10% or ≥$10,000; or WAC increase for generic drug of ≥25% or ≥$300	Y	N b	Y	Y	Y	Y	Y	Department of Consumer and Business Services	Civil penalty of $10,000 or less per day of violation	Y
Texas HB 1033, Ch 50 (2021), amending Texas HB 2536 (2019)	Reporting of only WAC is required for all prescription drugs. Detailed price increase reporting is required for drugs with WAC >$100 and a WAC increase >15%	Y	Y	Y	Y	N	N	Y	Department of State Health Services	Administrative penalty of up to $1,000 per day	Y
Utah HB 272, Ch 198, §13 (2020)	WAC increase >10% and WAC >$100	Y	Y	Y	Y	N	N	Y	Insurance Department	N/A	Y
Vermont SB 92 §§ 9–10 (2018), amending Vermont SB 216 § 2 (2016)	For WAC increases, inclusion on the AG's list Launch WAC > Medicare drug threshold	Y	Y	Y	N	Y	N	Y	Department of Vermont Health Access, Office of the AG	Civil penalty of up to $10,000 per violation (for price increases) or up to $1,000 per day (for launch prices) for failure to report	Y
Virginia HB 2007, Assembly Ch 304 (2021)	WAC increase, for brand‐name drugs >15% and for generic drugs >200% and WAC >$100 over a course of treatment Launch of biosimilars with WAC <15% below the referenced brand biologic at launch	Y	Y	Y	Y	N	N	Y	Department of Health	Civil penalty not to exceed $2,500 per day	Y
Washington HB 1224, Ch 334, §§6‐8 (2019)	WAC increase ≥20% and WAC >$100 Launch of new drug with WAC ≥$10,000 Filing of an NDA or biologics license application and WAC ≥$10,000	Y	Y	Y	Y	Y	N	N	Washington Health Care Authority	Fine of up to $1,000 per day for failure to comply	Y
West Virginia SB 689 (2020)	WAC increase ≥15% and WAC >$100	Y	Y	Y	Y	N	Y	Y	State Auditor of West Virginia	State will publish identity of any drug manufacturer who fails to comply	Y

AB, Assembly Bill; AG, Attorney General; BB, Board Bill; Ch, Chapter; HB, House Bill; LD, Legislative Document; N, no; N/A, not applicable; NDA, nondisclosure agreement; R&D, research and development; SB, Senate Bill; SF, Senate File; WAC, wholesale acquisition cost; Y, yes.

^a WAC increase is expressed per 1 year unless otherwise specified; WAC is expressed per 30 days or per course of treatment lasting fewer than 30 days.

^b Oregon's law required manufacturers to submit price increase reports until February 2024, when the price increase reporting requirement was suspended following a lawsuit.

Figure 1.

Summary of State Drug Price Transparency Law Requirements [Colour figure can be viewed at wileyonlinelibrary.com]

WAC, wholesale acquisition cost.

Most state laws fall into one of three categories, ordered from least to most extensive reporting requirements: 1) current WAC reporting (e.g., Colorado ⁶ and Louisiana House Bill [HB] 436 ⁷ only requiring reporting of current WAC—also see Senate Bill [SB] 283, 2018 General Assembly, Regular Session [Louisiana 2018], ⁸ requiring reporting of WAC increases of at least 50% for drugs with a WAC of at least $100 for a 30‐day supply), 2) WAC increase reporting (e.g., New York requiring reporting of WAC increases along with an explanation ⁹ and Utah requiring reporting of WAC increases and related information such as drug‐specific information and research and development costs ¹⁰ ), and 3) both price increase and launch price reporting (e.g., New Jersey requiring reporting of price increase information for drugs with a WAC of at least $10 and launch price information for new drugs with WAC exceeding a given threshold ¹¹ ).

A few states including Colorado and Louisiana require reporting for all prescription drugs, but most states specify reporting thresholds for the WAC of the drug and the percentage WAC increase. These thresholds range from $10 to $400 minimum WAC (per 30‐day supply or course of treatment lasting fewer than 30 days) and 10% to 50% annual WAC increase. Some states like Nevada and Vermont publish lists of high‐cost drugs that require reporting by manufacturers. Nearly all laws specify a reporting timeline, such as 60 days prior to the proposed price increase or by a specified date each year. Most laws require states to publish data from manufacturer reporting on a public website and specify monetary penalties for manufacturers’ failure to comply.

Many states require reporting of basic manufacturer financial information that may be available through Securities and Exchange Commission (SEC) reports of publicly traded companies as well as information would be available through nonmanufacturer sources, including WAC, patent expiration date, length of time on market, highest government‐negotiated prices of the drug in other countries, and the Food and Drug Administration (FDA) designation of the drug. By contrast, 19 states (all except Colorado and Louisiana) require manufacturers to report information that might otherwise be kept internal, such as explanations of reasons for the WAC increase, descriptions of marketing and pricing plans, and extent of financial assistance provided to patients.

State Implementation of Drug Price Transparency Laws

Summary of Public Data Reporting Across States

Table 2 provides a snapshot of public reporting of drug price data across the 21 states that have passed transparency laws imposing reporting requirements on manufacturers. Seventeen states (81%) publish data obtained from manufacturer drug price reporting on a public website. Of these states, 13 (76%) present data in a nonaggregated way that allows for the identification of individual manufacturers.

Table 2.

State Public Reporting From Drug Price Transparency Laws

State	Does the State Publish Data on a Public Web Page?	Are Data Presented in a Nonaggregate Way?	Does the State Publish a Report on the Implementation of the Law?	Does the State Publish a Report on the Impact of the Law?
California	Y	Y	Y	Y
Colorado	Y	Y	N	N
Connecticut	Y	Y	N	N
Florida	Y	Y	N	N
Louisiana	N	N	N	N
Maine	Y	Y	N	Y
Massachusetts	N	N	N	N
Minnesota	Y	Y	Y	Y
Nevada	Y	N	N	N
New Hampshire	Y	Y	N	N
New Jersey	Y	Y	N	N
New Mexico	N	N	N	N
New York	N	N	N	N
North Dakota	Y	Y	N	N
Oregon	Y	Y	Y	Y
Texas	Y	Y	N	N
Utah	Y	N	N	N
Vermont	Y	Y	Y	N
Virginia	Y	N	Y	N
Washington	Y	N	Y	N
West Virginia	Y	Y	N	N

N, no; Y, yes.

Many state drug price transparency websites contain data visualizations to show WAC and WAC increases for different types of drugs (see, e.g., Prescription Drug Cost Transparency Public Reporting). ¹² , ¹³ Other information reported on state drug pricing websites includes the number of drugs meeting the price increase thresholds, retail spending without rebates, the number of prescriptions, drugs losing patent exclusivity and their revenue, research and development costs by manufacturer, rationales for WAC increases, average wholesale price, and the number of drug pricing reports expected from each manufacturer compared with the number of reports actually received. ¹⁴ , ¹⁵ , ¹⁶ , ¹⁷ Texas's price transparency web page is distinct in containing a table displaying compliance actions taken against manufacturers, specifying the manufacturers and the actions taken against them. ¹⁸ California, North Dakota, Oregon, and Texas, among others, allow viewers to download comma‐separated values (CSV) files containing raw data reported by manufacturers. ¹² , ¹⁷ , ¹⁹ , ²⁰ Such files can be used to review details that may not be captured in data presented. Many states share factors that manufacturers have identified as contributing to price increases, including inflation, supply chain disruptions, increased manufacturing and advertising expenses, increased competitive value, high demand for patient assistance programs, high rebate demands from pharmacy benefit managers, and post–FDA approval regulatory commitments. ²¹ , ²² , ²³

Some states’ drug price dashboards appear to be populated with data from other sources than manufacturer reports received through the drug price transparency program. For example, Colorado's law (HB 1131) requires manufacturers to report data to prescribers rather than the state (defined in the statute as health care providers authorized to prescribe controlled substances or prescription drugs). ⁶ Colorado's Division of Insurance publishes a drug affordability dashboard, but it displays data such as patient count, change in WAC, and total paid for eligible drugs, which are not provided to the state through the transparency program. ²⁴ Likewise, the Florida Agency for Healthcare Administration MyFloridaRX dashboard, based on data for 300 commonly used prescription drugs, does not appear to be based on Florida's transparency law (SB 1550). ²⁵ The dashboard contains an interactive map showing differences in retail drug prices in pharmacies across Florida's counties. ²⁵ SB 1550 requires reporting on WAC, not retail prices, and it is unclear if the WAC data are reported in a publicly accessible manner. The Massachusetts Health Policy Commission annual cost trend report, which includes data on prescription drug costs, notes that drug pricing data were obtained through the Massachusetts Center for Health Information and Analysis, not from manufacturers under that state's transparency law (HB 4000). ²⁶ New Jersey's drug price registry web page also contains data on retail prices charged to consumers rather than WAC that does not appear to be based solely on data reported by manufacturers. ²⁷

Comparing drug pricing data among states is complicated by a number of factors. States have different reporting thresholds for prices or price increases, state transparency legislation covers different drugs, and drugs qualify for reporting in some states based on percentage increases in others because of absolute increases. For example, six states report data on increases in individual drug WACs. (Although 13 states reported nonaggregated data, we only identified six that reported WAC increases for individual drugs—some states that reported nonaggregated data reported manufacturer‐level data or data on individual drugs with highest prices or spending, and one state reported raw data in separate files for each manufacturer without a list identifying drugs with the highest WAC increase. Also, it should be noted that some states identified the highest WAC increases in absolute dollar values, whereas some used percentages. 2023 was selected as the year to allow for consistency across states because some states have not yet reported data from 2024 or 2025.) Although WACs themselves do not vary across states, variations in state reporting requirements led each state to report a different top three for 2023—California's were Tafinlar ($999), Imbruvica ($993), and Fragmin ($99) ²⁸ ; Colorado's were Nerlynx (68%), Emflaza (64%), and Braftovi (64%) ²⁴ ; Minnesota's were hydrocodone/acetaminophen (75%), Matrix‐Associated Autologous Chondrocyte Implantation (55%), and Copiktra (10%) ²⁹ ; Oregon's were Aquasol A (379%), gemcitabine (257%), and cisplatin (107%) ³⁰ ; Vermont's were temazepam (112%), aqueous vitamin D (104%), and acetaminophen (100%) ²¹ ; and Virginia's were amphetamine (126%), albuterol sulfate (55%), and fluticasone propionate (24%). ¹⁶

Key Themes From State Reporting on Implementation

Six states (California, Minnesota, Oregon, Vermont, Virginia, and Washington) published reports about the implementation of their drug price transparency laws, covering the process by which the law was implemented and/or strengths and challenges of implementation. These six states were among the 17 that published data on a public website, but two of them published only aggregated data.

Some states reported on specific steps they had taken in implementing the transparency programs, which could be useful for other states earlier in the implementation process. For example, Minnesota's report discusses the measures taken to prioritize timely access to high‐quality reported data, including engaging with stakeholders, building new program functions such as drug market analytics, providing technical assistance to manufacturers, creating opportunities for stakeholders to provide comments on reporting guidance, contacting manufacturers regarding unsubmitted reports, and improving internal review processes to identify and resolve data quality issues. ³¹

Several states noted challenges with enforcing manufacturer reporting requirements. For example, the California Department of Health Care Access and Information, between January 1, 2019, and December 3, 2021, fined 49 manufacturers over $72 million for failure to report price increases. ³² Nearly all this amount was appealed by manufacturers, and the department has only collected $6.7 million in penalties by 2024. ³² States have also reported challenges in identifying the drug manufacturers subject to reporting, which is essential for enforcement. California, Minnesota, and Oregon used the Wolters Kluwer MediSpan database to identify WAC increases for which they should have expected a report, but for new drugs, it was more difficult to identify missing reports. ²³ , ³¹ , ³² Minnesota noted that the state received 68.7% of the expected price increase reports and 61.7% of the expected new drug reports. ³¹

Another challenge is that the quality of data submitted by manufacturers was highly variable, with some manufacturers refusing to provide information and others offering detailed rationales for their price increases. ²³ Oregon reported frequently having to send requests for additional information to companies to obtain more complete information and sometimes receiving no response or incomplete responses, resulting in notices of noncompliance. ²³ Minnesota reported on specific data quality issues including: 1) reported data not matching reference data, 2) data reporting at an aggregate level rather than at the drug‐specific level required by the statute, 3) incomplete required data fields, and 4) explanations of factors contributing to price increases lacking meaningful, drug‐specific information. ³¹

Even if manufacturers reported on price increases, nearly all state laws allowed manufacturers to opt to not explain the rationales for price increases—manufacturers could claim that such information was not public, and states were typically not able to verify these claims. ³² In California, over 96% of price increases reported did not list a major improvement to the drug that justified the increase. ³² Minnesota noted that “a significant number of data elements reported” were designated as nonpublic information or trade secrets and that many of these assertions by manufacturers lacked the substantiation required under the law. ³¹

Some states, however, pointed to improvements in enforcement over the course of implementing their transparency laws. California noted that since the enactment of SB 17, the number of manufacturers submitting late reports declined. ³² Oregon identified an increase in the number of new specialty drug reports they received from 2021 to 2023. ³² States also noted evolution in their enforcement capabilities and strategy. Oregon's compliance efforts for the transparency program initially focused on education and outreach but then progressed to issuing noncompliance and warning notices and, if manufacturers did not comply following the notices, referring the file to the enforcement unit. ²³

Some states reported on the next steps relating to the implementation of their transparency laws. Minnesota highlighted continuing work with manufacturers on data quality and compliance and engaging stakeholders and the public to obtain feedback on the approach for reporting on drug pricing. ³¹ They also stated they will “continue to advance the use and impact of these data on public understanding of prescription drug pricing” but did not specify future uses or anticipated impacts of the data. ³¹

Oregon was the only state that discussed legal challenges to implementation. ³³ Oregon noted that because of a court order suspending the requirement for drug manufacturers to report annual price increases, the state could no longer provide certain types of analyses in their report including comparison of generics versus brand‐name drugs, comparison of drug price increases to inflation, categorization by most common drug classes, and tracking trends over time. ²³

Some states proposed improvements to transparency programs in their annual reports, with California providing the most in‐depth discussion of program improvements. California Research Bureau recommended that the state expand reporting requirements to other entities in the supply chain besides drug manufacturers and insurers; require all pharmaceutical manufacturers to provide cost increase justifications, even when they asserted the information was a trade secret; expand the Department of Health Care Access and Information's authority to perform additional analyses on WAC data to distill the complex data to a level useful for legislative action; and collaborate with the National Academy for State Health Policy. ³² They also proposed internal improvements to the transparency program such as requiring manufacturers to select from a fixed number of cost justifications (rather than having manufacturers write the justifications); differentiating groups of drugs to avoid overlapping categories of generic drugs, dividing the category of “WAC > $10,000” into smaller categories given that it included a huge range; and requiring manufacturers to send 60‐day price increase notices on a template rather than in narrative form. ³²

Oregon noted that its transparency law's patient assistance program reporting was poorly matched to the market landscape and only resulted in a fraction of patient assistance initiatives being reported. ²³ Oregon proposed changes to the structure of their reporting program that could allow comprehensive data to be collected on the use of patient assistance that would better help develop future policy. ²³ Oregon also proposed broader policy recommendations based on findings from the drug price transparency program, such as expanding Oregon's bulk purchasing authority to help make drugs more affordable and centralizing state Medicaid drug purchasing. ²³

Takeaways From State Reporting on Impact

Only four states (California, Maine, Minnesota, and Oregon) published a report on the impact of their drug price transparency laws. We defined impact reporting as discussing the implications of the law (e.g., influencing drug pricing, public understanding, policymaking) beyond reporting on the findings from data obtained by the law (e.g., drugs with the greatest price increases).

State reports indicated that manufacturer reporting requirements in price transparency laws can enable the identification of high‐cost drugs that create affordability barriers for patients and payers. For example, over the past 4 years in Oregon, anti‐inflammatory biologics have been responsible for more spending than any other drug class. ²³ A high proportion of this spending has been for adalimumab (Humira), which, for the past 6 years, has accounted for more spending than any other drug. ²³ Other states, including Maine and Washington, have also noted that anti‐inflammatory biologics are among the highest priced drugs. ³⁴

States have reported that their transparency laws have enabled health insurers, state agencies, and other organizations to make more informed decisions by providing transparency on drug pricing. ²³ , ³⁴ Minnesota noted a high interest in prescription drug price transparency, with over 6,500 visits to its price transparency website and over 1,100 downloads of data files in 2023. ³¹

Health plans in California have found the 60‐day notices of WAC increases and new drug launches useful, allowing them to receive the information in a timely fashion, ³² and health plans in Minnesota have also noted that they derive value from the data the state posts publicly. ³¹ Data from states with robust reporting programs have also been used by other states or national organizations. For example, Washington used California's WAC data to identify 197 additional drugs that may have required reporting to Washington's drug affordability board. The National Academy for State Health Policy used California's data to create model legislation penalizing manufacturers for price increases that are not supported by clinical evidence. ³¹

Some states have drawn correlations between the enactment of their laws and changes to drug pricing. California's 2022 report noted that SB 17 has coincided with some improvements in drug pricing—from quarter 1 (Q1) 2019 to Q3 2021, the total number of WAC increases reported has slightly decreased, and the median cumulative WAC percentage increases are slightly lower in 2021 than 2020. ³¹ Maine's 2023 report noted that the percentage of drugs that increased in price has declined from 13.52% in 2018 to 10.44% in 2022, and the average percentage increase for price increases has decreased over time. ³⁵ However, the 2022 average percentage price increase of 10.79% remains above the consumer price index of 6.5%. ³⁵ Also, the number of drugs that have increased in price in Maine has risen over the past 2 years. ³⁵

Of course, these correlations do not necessarily demonstrate causation. Although reporting requirements created by these laws may discourage some manufacturers from increasing prices, the laws do not directly control pricing, nor do they set standards for what constitutes an unjustified increase or require policy actions to be taken based on the pricing data. ³⁵ Thus, it is unclear whether they actually contribute to reducing drug prices. It is also possible that manufacturers have responded to price transparency laws by setting higher launch prices to take the place of some later price increases, ³² and drug launch prices have continued to rise during the years that these laws have been in place. ³⁶ Manufacturers may have also tried to implement smaller, more frequent price increases to avoid reporting thresholds. ³⁶ Such price increases would not be captured in state data.

Another limitation of transparency laws acknowledged by states is that these laws focus on WAC, which only represents the price manufacturers list to wholesalers, not the price that payers and consumers pay. ³⁶ Although there is a positive correlation between WAC increases and increases to average amounts paid by payers (noting “a relative correlation between average WAC increase amounts [7.72%] and increases to average amounts paid by payers [9.37%] after WAC increases took place”]), ³⁵ the WAC does not take into account manufacturer rebates to pharmacy benefit managers and other factors that affect net retail price. ³² Therefore, the data obtained from transparency reporting do not provide a full picture of the manufacturers’ impact on drug pricing.

Lawsuits Challenging State Drug Price Transparency Laws

Several states have faced lawsuits challenging the constitutionality of their drug price transparency laws. These lawsuits have focused on three states with robust reporting requirements (California, Nevada, and Oregon). State laws that simply require public disclosure of WAC have not yet been challenged. ³⁷ California, Nevada, and Oregon's laws require manufacturers to report WAC increases for drugs above given thresholds, along with related information including explanations for the price increases (amending SB 17, 2017 General Assembly, Regular Session [California 2017]; SB 539, 2018 General Assembly, Regular Session [Nevada 2018]; and HB 4005, 2018 General Assembly, Regular Session [Oregon 2018], respectively). ³⁸ , ³⁹ , ⁴⁰ California and Oregon require 60‐day advance notification of WAC increases, whereas Nevada requires annual reporting of existing WAC increases. ³⁸ , ³⁹ , ⁴⁰ All three states allow the data to be publicly shared in a nonaggregated manner. ³⁸ , ³⁹ , ⁴⁰ Although California, like most other states, allows manufacturers to withhold data claimed to comprise trade secrets from being shared with the state or released publicly, ³⁹ in Oregon, trade secret assertions are not taken at face value, and manufacturers bear the burden of proving that the information is a trade secret. ⁴⁰ Prior to 2024, Oregon's law required the state to publish data—even if it was a trade secret—if the disclosure was in the public interest. ⁴⁰ As part of Nevada's transparency law, the legislature revised the state trade secret law to exclude information for which the drug transparency law required disclosure. ³⁷

The plaintiff in all three lawsuits was Pharmaceutical Research and Manufacturers of America (PhRMA), the primary lobbying organization of the US pharmaceutical industry. The legal claims put forth against these laws include violations of federal trade secret and patent laws, the commerce clause, the First Amendment, the Fifth Amendment's takings clause, and the Fourteenth Amendment's due process clause. As of April 2024, the California case was on remand and the Nevada lawsuit had been dropped. PhRMA prevailed on some claims in its Oregon lawsuit, resulting in suspensions to the law's price increase reporting requirement and modification of the trade secret provisions.

The commerce clause challenges were not successful, as PhRMA did not provide sufficient evidence that the price increase notifications required by these laws directly impacted drug prices. The First Amendment claim was unsuccessful in California under the substantial government interest test, but the court reached the opposite conclusion in Oregon, granting summary judgment to PhRMA. PhRMA also obtained summary judgment on its takings clause claim in Oregon, whereas Oregon was granted summary judgment on the federal trade secrets preemption challenge, as the courts held that the law was not preempted by federal trade secrets law.

California

In Pharmaceutical Research and Manufacturers of America v David, ⁴¹ PhRMA sought a declaration that California's initial drug price transparency bill (SB 17) was unconstitutional and sought a permanent injunction to prevent its implementation. PhRMA argued that section 4 of SB 17 violated the dormant commerce clause because the 60‐day notice requirement for manufacturers to report WAC increases created a de facto 60‐day price freeze on qualifying drugs that served to unduly burden the interstate sale of drugs. ⁴¹ PhRMA also alleged that the law violated the First Amendment by requiring manufacturers to justify their price increases as well as the Fourteenth Amendment's due process clause for being unconstitutionally vague about the retroactive application of some provisions. ⁴¹ The California District Court denied PhRMA's motion for summary judgment in December 2021. ⁴² The court held that SB 17 was a notice statute rather than a price control statute and thus did not clearly impact out‐of‐state prices or burden interstate commerce. ⁴² As to the First Amendment claim, the court also held that PhRMA failed to show that the state lacked a substantial interest or that its interests were unrelated to SB 17's requirements. ⁴²

PhRMA appealed this decision. The Ninth Circuit affirmed the District Court's denial of the dormant commerce clause challenge and did not reach the First Amendment claim. ⁴³ The Court of Appeals noted that WAC is a nationwide list price set by manufacturers that did not affect the transaction price, undermining PhRMA's assertion that providing notice about WAC increases impacted drug prices. ⁴³ The court also held that genuine disputes of material fact exist as to whether SB 17 directly regulated interstate commerce, stating, “PhRMA fails to identify a single party unable to increase the WAC on a pharmaceutical drug due to SB 17's advance notice requirement.” ⁴³ As of April 2024, the case was on remand, giving PhRMA the opportunity to present evidence of the direct effect of SB 17 on interstate commerce.

Nevada

In Pharmaceutical Research and Manufacturers of America v Sandoval, PhRMA sought a declaration that SB 539 was preempted by federal law and thus unconstitutional. ⁴⁴ PhRMA alleged that SB 539 conflicted with federal trade secret law, violated the dormant commerce clause, functioned as a regulatory taking, and interfered with Congress's authority to set national patent policy.

PhRMA argued that the federal Defend Trade Secrets Act (DTSA) of 2016 set a floor for trade secret protection and because SB 539 would require the state to disclose information that companies considered to be trade secrets, DTSA preempted changes to trade secret law. ³⁷ Many state and federal freedom of information acts allow disclosure of trade secrets when such disclosure is in the public interest (see, e.g., O'Grady v Superior Court, 139 California Court of Appeals 4th 1423, 1475–1476 (2006); upholding a newspaper's right to publish trade secrets on the grounds that when “free and open disclosure of ideas” conflicts with “legal protections for commercial trade secrets,” the latter must give way) ⁴⁵ ; therefore, it is unlikely that a court would agree with PhRMA's preemption claim, particularly after the outcome of litigation in Oregon (discussed below). ³³

PhRMA also alleged that Nevada's transparency law conflicted with federal patent law, as it “burden[s] a patent holder's right to price its product in a manner reflecting the economic incentives the federal patent laws are intended to ensure.” ³³ , ⁴⁶ This claim was derived from Biotechnology Industry Organization v District of Columbia, in which the court struck down a statute on the grounds that “penalizing high prices … limit[s] the full exercise of the exclusionary power that derives from a patent … [thereby] chang[ing] federal patent policy.” ⁴⁷ PhRMA's analogy to Biotechnology Industry Organization v District of Columbia was questionable because Nevada's law did not prevent manufacturers from selling drugs at high prices but simply required disclosure. ³⁷

Additionally, PhRMA asserted that requiring manufacturers to share detailed financial information if they increased WAC above a threshold functioned as a penalty for price increases and thus violated the dormant commerce clause for limiting a manufacturer's ability to increase prices for drugs bought and sold outside of Nevada. ⁴⁶ However, considering that Nevada's law did not actually restrict drug prices, courts may not find disclosures of information alone to unduly burden interstate commerce. ³⁷

PhRMA dropped the lawsuit in 2018 less than a month after Nevada approved regulations that protect drug manufacturers from being required to disclose drug pricing information that could violate federal trade secret law. ⁴⁸

Oregon

In Pharmaceutical Research and Manufacturers of America v Stolfi, ³³ PhRMA sued Oregon's Department of Consumer and Business Services, seeking a declaratory judgment that HB 4005 was unconstitutional. PhRMA once again alleged that the law violated the dormant commerce clause and the First Amendment, affected the taking of members’ trade secrets without just compensation in violation of the Fifth Amendment, and was preempted by federal trade secret law (the DTSA). ³³

The court held that PhRMA was entitled to summary judgment on its takings claim because 1) HB 4005 did not specify how the state determines when the public interest requires publication of a trade secret, which “places an extremely low burden on Oregon,” 2) disclosure of the trade secret would “destroy its value” and thus have a harmful economic impact for the manufacturer, and 3) manufacturers were entitled to protection of their “reasonable investment‐backed expectation that the state will maintain the secrecy of information that qualifies for trade secret protection.” ³³ The court also granted PhRMA summary judgment on its First Amendment claim, holding that Oregon did not show how its restriction of commercial speech directly advanced “a substantial governmental interest,” nor did they demonstrate that HB 4005 is “narrowly tailored to advance its stated goals.” ³³

The court granted summary judgment to Oregon on PhRMA's preemption claim, holding that HB 4005 does not conflict with federal trade secret law. ³³ The court stated that “the DTSA does not appear to be intended to cabin the ability of states to impose reporting requirements.” ³³ The court did not rule on the dormant commerce clause claim, stating it “cannot determine the practical effect of HB 4005 on interstate commerce.” ³³

In response to the court's order, the Department of Consumer and Business Services suspended the law's price increase reporting requirement. ⁴⁹ Manufacturers are still required to provide reports on new drugs and information about their contribution to patient assistance programs. ⁴⁹ The department can also now no longer publish manufacturers’ trade secrets even if doing so is in the public interest, but they can still determine whether information that the manufacturer claims is truly a trade secret. ⁴⁹ The department believes that the court's order was entered in error and has appealed the case to the Ninth Circuit. ²³

Discussion

Drug price transparency laws have been passed in numerous states in the last decade, which provide the opportunity for increased public understanding of drug prices and more informed policy solutions to address high drug prices. These laws require manufacturers to report the WAC of new drugs above a certain threshold or drugs when the prices are increased above a certain margin, along with other information. Many states require reporting of data available through nonmanufacturer sources (e.g., financial information shared through SEC reports, length of time on market) as well as material that would otherwise be kept internal (e.g., explanations of reasons for WAC increases, marketing plans).

Some states have released reports on the execution of transparency programs, challenges with enforcing reporting requirements, best practices, next steps, and proposed improvements, which offer insight into how these laws have been implemented. Some states have also reported on impacts of these programs, noting that they can enable the identification of high‐cost drugs and impact policymakers’ decision making.

In contrast to the benefits from state drug price transparency laws, it is not clear whether they play any role in mitigating unjustified price increases of prescription drugs. Over the time that these laws were enacted, some states have reported a reduction in the number of drug price increases that trigger reporting requirements under these laws. ³⁶ The need to report sensitive company information may make manufacturers less inclined to take a price increase, or data obtained through transparency programs can facilitate state government negotiations with drug manufacturers. ³⁴ State agencies including Massachusetts's Executive Office of Health and Human Services and New York's Medicaid program negotiate directly with drug makers and thus can benefit from detailed price information provided through transparency programs. ³⁴ However, there is no evidence that manufacturers have responded to the existence of price transparency laws by changing their pricing strategies, and reductions observed in drugs subject to price spikes over the last decade might be caused by numerous other factors happening in the drug market at the same time. In addition, drug launch prices and overall drug spending have continued to increase over the same period. ³⁴

Academic literature on the impacts of drug price transparency laws is also extremely limited. A 2023 systematic review of studies published between 2004 and 2019 that evaluated policies promoting drug price transparency identified only two studies for inclusion out of more than 30,000 screened. ⁵⁰ Neither study examined programs in the United States. ⁵⁰ One involved interventions that included elements of price control, making it difficult to isolate the effects of transparency alone. ⁵⁰ The other, which focused on public price disclosure, found that drug prices decreased in the short term, and manufacturer accountability improved ⁵⁰ but did not find effects on drug volume, availability, or affordability. ⁵⁰ There is overall scant evidence regarding the impact of these laws on drug prices. ⁵¹

Insights into the impact of drug price transparency laws can be drawn from the more developed body of research on the health care market. Some studies have found that price transparency initiatives reduced prices for health care services, which ultimately reduced patient costs. ⁵² However, one study found that although price transparency regulations led hospitals to lower prices by approximately 5% to mitigate reputational harm associated with overcharging, they also reduced discounts, which offset any potential consumer savings. ⁵³ We should similarly expect drug manufacturers to offset steps to avoid reputational risks from transparency by implementing strategies that increase costs to consumers in other ways. Additionally, research on health care price transparency has highlighted its role in fostering patient choice and empowerment as well as competition among companies. ⁵² Yet, drug price transparency laws are less likely to meaningfully impact patient price shopping or competition among brand‐name manufacturers because they focus on WAC, a pre‐rebate price that often does not directly reflect the price charged to patients.

Data collected from these laws can inform policymakers’ efforts to lower drug prices. Since 2019, the Institute for Clinical and Economic Review has published annual reports on unsupported price increases across the United States (see, e.g., Rind and colleagues). ⁵⁴ From the ten drugs assessed in the 2023 report based on high price increases, the authors concluded that eight had price increases that were not justified by clinical evidence and that these increases amounted to $1.27 billion in incremental costs in 2022. Analysis of the basis and rationale of price increases can support initiatives that address excessive prices. One such initiative is the creation of prescription drug affordability review boards in seven states. ³⁴ In Maine, New Hampshire, and Oregon, the boards are empowered to use drug pricing data to conduct affordability reviews that inform policy recommendations, whereas the boards in Colorado, Maryland, Minnesota, and Washington can use the data to eventually establish upper payment limits on qualifying drugs. ³⁴ In some states like Oregon, the board is housed by the same agency that manages the transparency reporting program, which can enable the sharing of data and expertise. ³⁶

Drug price transparency laws have been challenged in three lawsuits, with mixed results for various claims. The recent success of PhRMA's lawsuit that resulted in the suspension of Oregon's price increase reporting requirement suggests that similar legal challenges could arise in other states. New York and Washington, which also have 60‐day price increase reporting requirements, may now be vulnerable to comparable litigation. However, the Oregon decision is subject to appeal, so it is unclear how the courts will ultimately rule.

Oregon is the only state that independently evaluates trade secret claims rather than accepting manufacturers’ assertions at face value. Considering the outcome of the Oregon lawsuit, other states may continue allowing manufacturers to limit disclosures to publicly available information. California's lawsuit underscores states’ strong interest in drug price transparency, which could help them withstand challenges such as First Amendment claims—though Oregon's case resulted in the opposite outcome on this issue. With the Oregon District Court ruling that the DTSA does not restrict states from imposing reporting requirements, states may now be more likely to prevail against legal challenges relating to federal trade secret laws. Until the Supreme Court rules on these issues, the law may continue to vary across jurisdictions.

Analyzing the successes and challenges of state drug price transparency initiatives can help identify best practices that can inform future programs across the country. Strong enforcement is essential given that not all manufacturers submit required reports, and the quality of submissions varies. Effective enforcement strategies adopted across states include issuing warning notices, establishing an internal review process to address data quality issues, assisting manufacturers with compliance, and soliciting feedback from stakeholders.

The National Academy for State Health Policy has developed model legislation for a comprehensive drug price transparency program, incorporating essential elements for success based on state transparency programs. ⁵⁵ The model legislation requires manufacturers to report price increases above a given threshold and new drugs with prices exceeding a given threshold, which is the most common reporting structure across states. ⁵⁵ Beyond WAC, it mandates reporting additional data such as drug identification information, sales volume, revenue, and costs, ⁵⁵ which is an important best practice to provide necessary context for WAC analysis.

Although the model legislation requires price increases to be reported 30 days in advance, ⁵⁵ following the suspension of Oregon's advance price increase notice requirement, more states may continue to require notification at the time of the price increase instead. The model legislation also allows states to impose a civil penalty of up to $30,000 for each day of noncompliance. ⁵⁵ Including enforcement mechanisms within the law and making strong efforts to implement them are critical for the effectiveness of transparency programs. As some states have struggled to collect penalties, this is an area in which states can continue to improve. Additionally, the legislation mandates public reporting and annual hearings, which are both crucial for ensuring that manufacturer‐reported data enhance public understanding of drug pricing. ⁵⁵

It is important to acknowledge the potential limitations of drug price transparency laws. Requiring public disclosure of nonaggregated data could allow manufacturers to access their competitors’ pricing information, potentially facilitating horizontal collusion and coordinated pricing strategies that reduce competition. This risk has been identified by both the European Commission and the Organization for Economic Cooperation and Development. ⁵⁵ Manufacturers have also raised concerns about the quality of some disclosed data, such as research and development costs of a specific drug. ⁵⁵ Additionally, manufacturers may struggle to explain price increases without revealing trade secrets or proprietary information, creating a trade‐off between protecting confidential data to encourage innovation and ensuring sufficient transparency for public understanding. ⁵⁵

Our analysis highlights several areas for which future research is needed. One line of investigation could evaluate manufacturer‐submitted data across states to identify geographic or temporal pricing trends for specific drugs and manufacturers. Particularly for states that publish raw data, such analysis could reveal patterns and insights at the national level. Although some states report on the impact of their laws, these reports often lack reflections on their successes and failures and do not seek to measure their effects on drug pricing. There is also limited comparative research on which state laws have been most effective.

Conclusion

State drug price transparency laws facilitate the collection and dissemination of price data to establish accountability around drug pricing and to enable state policymakers to develop legislative and policy solutions to address high prices. States vary widely in the requirements of their transparency laws and in the extent of their implementation of these laws. Initial findings suggest that these laws may have contributed toward informing policymaking based on newly available public information, but they do not appear to have affected drug prices.

Funding/Support

A.S.K.’s work was supported by Arnold Ventures and the Commonwealth Fund. A.S.K. also reports funding from the National Academy for State Health Policy to assist in the development of Prescription Drug Affordability Boards, as well as serving as an expert witness for the Federal Trade Commission in a case against pharmaceutical benefit managers and for a group of state attorneys general and payors in a case against generic drug manufacturers related to alleged price fixing.

Conflict of Interest Disclosures

No disclosures were reported.

Supporting information

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