Introduction Sidley Austin LLP’s Global Life Sciences Team is pleased to provide you with this Global Pricing Newsletter, the third issue in a periodic series updating clients and friends of the Firm on laws and regulations impacting prices for pharmaceutical and biologic products around the world. In this third issue, we provide updates on key developments over the past year in Brazil, Canada, China, the European Union (“EU”), France, India, the United Kingdom (“UK”) and the United States (“U.S.”). Brazil Expansion of Drugs Covered by Private Payors On October 21, 2013, Brazil’s National Agency of Supplemental Health enacted Normative Resolution 388, which mandated that all private healthcare insurance carriers cover 37 oncological oral drugs for treatment in the home, effective January 2, 2014. Under the prior regime, private payors provided coverage only for drugs administered during hospitalization. In 2014, however, each private payor is responsible for identifying its own procedures for delivering the aforementioned cancer drugs in a home care setting. For example, the insurance provider may purchase the medicines to be distributed directly to the patients. Alternatively, the patient can buy the medicine from pharmacies affiliated with the payor and receive reimbursement for the drug costs. Overall, the new resolution provides patients with more flexibility in care settings, and it is anticipated that the list of drugs requiring private coverage will grow in the future. Potential New Opportunities for Branded Generic Drugs On January 16, 2014, Brazil’s National Health Surveillance Agency (“ANVISA”) sought public comments on a proposal to allow branded biosimilar drugs to be considered interchangeable with reference products. Under current law, solely non-branded generic products are eligible for securing “interchangeable” status, and patients can obtain branded biosimilar drugs only when prescribed such drugs specifically. Under the proposed regulation, however, pharmacists would be able to substitute reference products with either branded or non-branded generic products, including biosimilar products. Manufacturers would be required to identify branded interchangeable products with the acronym “EQ,” thereby enabling both consumers and providers to easily identify products that perform the same therapeutic function as the reference product and have demonstrated clinical equivalence. Currently, non-branded interchangeable drugs are priced at 35 percent lower than the reference drug product. If the proposed regulation is finalized, Brazil’s Minister of Health has indicated that he will work with ANVISA’s Chamber of Drug Market Regulation (“CMED”) division (the government entity responsible for drug pricing) to ensure that the same pricing rules apply to branded interchangeable products. Canada Provinces Implement New Cost-Saving Measures Targeted at Drugs On January 14, 2013, Quebec’s Régie de l’assurance maladie (“RAMQ”), the Quebecois agency responsible for administering the province’s public health and prescription drug insurance plans, eliminated certain components of what was known as “BAP‑15,” a policy that had been in effect since 1994. Under BAP‑15, Quebec’s public drug plan would reimburse manufacturers on utilization of brand name drugs for a period of 15 years after the products were first listed on the provincial formulary, even if less expensive generic equivalents were available. At the same time, manufacturers could offer their products under Quebec public plans only at “best available prices,” in other words, prices equal to or less than those offered under other provincial plans. Notably, the January 2013 revision to BAP‑15 eliminated the 15‑year extended reimbursement period that branded manufacturers previously enjoyed, but did not lift the requirement to offer products at best available prices. Quebec has promised to increase certain tax credits, namely those related to research and development, to offset certain disadvantages that result from eliminating BAP‑15; however, it is unclear if these tax credits will address the resulting reduction in reimbursement. In March 2013, RAMQ implemented another cost-saving measure under which it would impose maximum payable prices (“MPP”) for certain Proton Pump Inhibitor (“PPI”) class drugs provided to publicly-covered individuals. Under the MPP measure, publicly-covered patients will be permitted to continue their existing drug therapies, but if the cost of a given drug exceeds the MPP, the patient must pay the difference out of pocket, likely placing downward pressure on the prices for such products. The measure went into effect October 1, 2013. On April 1, 2013, British Columbia implemented new regulations to reduce prices for generic pills and tablets covered by BC PharmaCare, British Columbia’s income-based insurance program. The regulations initially reduced the cost of certain generic products covered by BC PharmaCare to 25 percent of the brand name price, and by April, 2014, they will reduce them to 20 percent. Importantly, the BC PharmaCare price reductions are limited in scope in that they apply only to pills and capsules and do not affect brand name drugs or generics not covered by BC PharmaCare. In addition, the new relegations permit some generic drug manufacturers to apply for exemptions for certain types of drugs that incur substantial manufacturing-related costs. China Pricing Caps Lowered on Many Drugs and Essential Drug List Expanded On January 8, 2013, following a series of price reductions implemented in late 2012, China’s National Development and Reform Commission (“NDRC”) announced another set of price reductions, this time for 20 classes of drugs that include, among others, respiratory remedies, pain relievers and certain specialty pharmaceutical products. The reduction, effective February 1, 2013, was the fourth reduction implemented since 2011 and impacted more than 400 drugs by an average of 15 percent, though prices for certain higher-end products were reduced by an average of 20 percent. These measures were part of NDRC’s continuous efforts to reduce healthcare costs as the country has been expanding coverage to a rapidly aging population. Officials have indicated that NDRC will continue to adopt new methods to help regulate drug prices in the country and that it has been engaged in ongoing discussions with the National Health and Family Planning Commission (“NHFPC”) regarding potential reforms. While retail ceiling prices will likely remain in effect for the foreseeable future, other cost-containment reforms contemplated by NDRC may include caps on distribution margin and sales and marketing costs. In addition, since July 2013, NDRC has initiated investigations against both local and multinational pharmaceutical companies on issues related to ex‑factory price, import landing price, as well as distribution margins of their drugs marketed in China. The outcome of the investigations may likely lead to further NDRC regulations on those price components, which it has been deliberating in the last few years. In other efforts to expand affordable care, on March 15, 2013, China’s Ministry of Health (“Ministry”) released an updated Essential Drug List (“EDL”), a list of drugs reimbursed by the Basic Medical Insurance plan, China’s social insurance plan, and guaranteed to be made available at reasonable prices to nonprofit healthcare providers. The updates to the EDL increased the number of medicines listed from 307 to 520, including various pediatric drugs, human insulin products and other commonly prescribed products. Notably, pharmaceutical companies with drugs listed on the EDL may see an overall increase in their sales volume as a result of the updated EDL, although it may also be more difficult for those companies to maintain their prices given that the government establishes the retail prices for EDL drugs and often purchases them in bulk. Likewise, companies that have not yet entered but have the option of entering the EDL system face the dilemma of either losing their chance at the guaranteed sales volume or contending with the pricing regulations imposed by the EDL. Drugs listed on the 2009 EDL have experienced price decreases of roughly 30 percent since its release in 2009. European Union Revised Proposal for New “Transparency Directive” in Pharmaceutical Pricing and Reimbursement On March 20, 2013, the European Commission released a revised proposal for a new “Transparency Directive,” scheduled to replace the 1989 Directive that currently governs EU Member States’ pharmaceutical pricing and reimbursement. Many of the changes in the revised proposal are based on specific amendments recommended by the European Parliament in a February 2013 report, discussed in Volume Two. For example, the revised proposal requires Member States to make their pricing and coverage criteria publicly available. It also mandates that pricing and coverage decisions be made within 90 days for branded products and 30 days for generics, rather than adopting the shorter timeline originally proposed by the Commission (i.e., 60 days and 15 days, respectively). These timeframes are intended to account for all aspects of the decision-making process, including health technology assessments where needed. In the event that coverage decisions are not released in accordance with this timeline, Member States must ensure that remedies are made available to pharmaceutical company applicants. However, the revised proposal allows Member States greater discretion to determine the substance of such remedies and how they will be implemented. The amended proposal also requires Member States to provide civil society organizations, including patient and consumer groups, and other interested parties the opportunity to comment on proposed legislation related to pharmaceutical pricing or reimbursement prior to adoption or amendment. Noticeably absent from the revised proposal is the European Parliament’s recommendation that Member States be required to make reasonable use of external reference pricing. Despite the approval of the European Parliament, the adoption of the Commission’s proposal is not expected soon. Several Member States objected to the proposal, and in June 2013, the Council of Ministers issued a report stating that further discussions — with particular focus on the issue of voluntary contractual agreements and the time limits for decisions on pricing and reimbursement, especially for generic medicinal products — would be needed. It remains to be seen whether the discussions will be revived after the European Parliament elections and the appointment of the new European Commission. European Commission Sponsors Report Examining External Reference Pricing of Medicinal Products In December 2013, the European Commission released a final report entitled “External reference pricing of medicinal products: simulation-based considerations for cross-country coordination” (“Final Report”) that analyzes the parameters that impact drug price dynamics within reference pricing systems. The Final Report acknowledges that, notwithstanding the use of reference pricing as a widely accepted cost-containment tool, the practice has generated a number of criticisms related to patient access and industry sustainability. The European Commission sponsored the Final Report to identify and assess cross-country reference pricing coordination issues, while acknowledging the need to maintain and balance public finances and quality healthcare. The findings of the Final Report, which are based on a simulation model that examines fictitious and certain real life scenarios, explicitly acknowledge the following observations: • Reference pricing drives prices down as does the frequency of price revisions; • Applying specific launch sequences starting in high GDP countries might minimize price decreases; • The types of price used as reference and source of pricing are critical; • Generics might induce important price decreases for brand drugs; and • Different distribution margins might impact reference prices. The Final Report can be accessed here. France Competition Authority Inquiry May Spark New Regulation In February 2013, the French Competition Authority (“FCA”), the French government agency responsible for monitoring and enforcing anti-competitive business practices, initiated a pharmaceutical sector investigation into the distribution of medicines in France. The FCA investigated whether industry practices interfere with recent regulatory and economic developments in the pharmaceutical sector aimed at promoting generic entry (increased public support for generics, opting-forgenerics measures for patients, and regulation of online sales of medicines). The FCA also examined the entire distribution chain for drugs in France, focusing on company pricing policies, wholesaler arrangements, pharmacists’ behaviors concerning generics and overthe- counter products, and the impact of cross-border online sales on competition. Of particular importance to manufacturers was the FCA’s concern as to whether prices for pharmaceutical products are competitive and how producers, wholesalers, and pharmacists determine the prices for pharmaceutical products. Specifically, the FCA examined price formation processes for reimbursable drugs to determine whether such processes were sufficiently flexible to permit adequate competition between manufacturers, wholesale distributors and pharmacists. The FCA also considered potential barriers to lower prices for nonreimbursable drugs whose prices are freely set. In July 2013, following the conclusion of the investigation, the FCA released an interim report that identifies concerns regarding anticompetitive practices and abuses of authority at each level within the pharmaceutical chain of distribution. With respect to the sector’s pricing practices, the interim report noted that, in order to promote non-reimbursable medicinal products, manufacturers would give “disguised” rebates to pharmacists in the form of sales compensation, thereby causing total rebates to exceed the maximum rebate permitted by law. The interim report also questioned the high prices of medicinal products originating in France and noted the potential for collusion that may occur during price negotiations between generic manufacturers and the Economic Committee for Healthcare Products, the agency responsible for establishing reimbursement amounts for pharmaceuticals. In December 2013, the FCA issued a final report that follows its preliminary findings and calls for more competition throughout the distribution chain. While FCA reports are not binding, they are influential and may trigger new pricing regulations. Biosimilar Substitution Permitted On December 23, 2013, the French Parliament enacted a framework law on social security financing for 2014 (available here), which encourages the prescribing and dispensing of biosimilars. According to Article 47 of the law, a biosimilar can be granted a market authorization (“MA”) before the expiration of intellectual property rights on the reference product, and once the MA has been granted, the biosimilar product has to be put on a reference list, the contents of which are to be drawn up by a future Council of State decree. The provision on substitution permits pharmacists, beginning January 1, 2014, to substitute a prescribed reference product for its biosimilar, provided that certain conditions are met. For example, the product must be on the reference list, and the prescriber must not have marked the prescription as “nonsubstitutable.” Although several members of Parliament and senators submitted objections to the Constitutional Court regarding the law, arguing that biosimilar substitution was unlikely to have direct financial benefit for the French health insurance system, the court disagreed, finding that the law encourages the use of biosimilars with prices that are, on average, 20 to 30 percent lower than their reference products. Germany Legislative Proposal to Report Drug Prices In late February 2014, Germany’s parliament approved proposed legislation that will result in the disclosure of previously confidential pharmaceutical product discounts negotiated between pharmaceutical manufacturers and insurers by requiring manufacturers to report their rebated prices rather than the previously reported retail prices. The law, which went into effect April 1, 2014, is significant because it could place downward pressure on prices in other jurisdictions that use German prices as a reference for their own. In light of this issue, Germany’s second chamber of parliament (Bundesrat) has adopted a motion for a resolution stating that disclosures to other countries that use Germany as a reference for pharmaceutical pricing could limit access to pharmaceutical products within Germany while providing little positive effect on the country’s budget. This resolution is non-binding and does not set aside the wording of the law, however. The new law also extends the existing price freeze on reimbursed medicinal products at the level of August 1, 2009 until December 31, 2017. In addition, it increases the mandatory rebate on reimbursed products from the current 6 percent to 7 percent and abolishes the legal provision that enabled the Joint Federal Committee to assess the benefit of drugs for those already on the German market, which was introduced by the AMNOG. India Expanded Price Controls Under Market-Based Pricing On May 15, 2013, the Indian government published its latest Drug Price Control Order (“DPCO 2013”), increasing the list of drugs under government price control from 74 to 348. This order authorized the National Pharmaceutical Pricing Authority (“NPPA”) to set price controls on drugs listed on the National List of Essential Medicines (“NLEM”) based on the new marketbased pricing (“MBP”) system, under which the ceiling price of a particular drug is calculated based on the weighted average price of all branded drugs with more than 1 percent market share within that drug’s segment. As a result, prices of drugs on India’s NLEM are expected to fall an average of 10 to 15 percent. However, oncology, cardiovascular, and anti-HIV drug prices may fall as much as 88 percent, according to some predictions. Meanwhile, manufacturers of drugs not listed on the NLEM have been permitted to increase their prices on drugs up to 10 percent each year. Although the DPCO 2013 went into effect on May 15, 2013, the MBP system continues to be a subject of contention in the All India Drug Action Network (“AIDAN”) public interest lawsuit currently before the India Supreme Court. On August 6, 2013, the Supreme Court held a hearing in response to a new application filed by AIDAN that sought to strike down the DPCO 2013 on the grounds that the MBP system actually increases pharmaceutical prices. Although the Supreme Court has historically favored cost-based pricing (“CBP”), as discussed in Volume Two, on October 3, 2013, the Court requested that AIDAN provide a comparative statistical analysis identifying the impact of the new policy on the ceiling price of drugs. The case is scheduled for hearing in 2014. Challenges to Patented Drugs In February 2013, the Department of Pharmaceuticals issued the Report of the Committee on Price Negotiations for Patented Drugs, recommending that India employ a CBP scheme for patented pharmaceuticals with no therapeutic equivalent, and reference pricing for patented drugs that either improve upon or have a similar therapeutic equivalent in India or abroad. In setting a reference price, the committee recommended paying particular attention to nations whose governments have strong bargaining power in their price negotiations with pharmaceutical companies, specifically the UK, Canada, France, Australia and New Zealand. On April 1, 2013, the Supreme Court also addressed the status of patented drugs in India. After years of litigation and appeals, the Supreme Court rejected a patent application for a cancer drug under the rationale that such treatment was not sufficiently innovative, notwithstanding the fact that the earlier patented formulation had been abandoned and never went to market. In combination with India’s compulsory licensing regulations that grant licenses just 3 years after sealing of the patent, this ruling will likely facilitate Indian manufacturers’ production of generic competitors to patented drugs. Stalled Plans for Free Medicine In 2012, the government announced a nationwide plan to provide free medicine to more than 50 percent of India’s population by April 2017. However, this plan appears to have stalled due to a lack of funding. According to a health ministry official, the government’s new approach will be to encourage individual states to implement free medicine programs using their own state funding. Thus far, the Tamil Nadu, Rajasthan, and Madhya Pradesh governments have adopted state-sponsored free medicine plans, making generic medications available at no cost in local government hospitals. United Kingdom Clarification of New Value-Based Pricing System On January 1, 2014, an updated version of the Pharmaceutical Price Regulation Scheme (“PPRS”), jointly issued by the UK Department of Health and the Association of the British Pharmaceutical Industry (“ABPI”), went into effect. Although the UK government had considered replacing the PPRS with a value-based pricing (“VBP”) system, it elected to maintain the voluntary PPRS for 5 more years, albeit with substantial changes. The new PPRS establishes a limit on growth in the overall spend on branded medicines purchased by the National Health Service (“NHS”) from PPRS members. The “allowed growth rate” for 2014 and 2015 has been set at 0 percent, followed by 1.8, 1.8 and 1.9 percent, respectively, for each subsequent year. Importantly, PPRS members are required to make payments to the Department of Health in quarterly installments based on the difference between the allowed percentage growth and actual percentage growth in NHS expenditures on branded medicines, subject to certain exemptions. For example, an exemption exists for small manufacturers with sales of PPRS products of less than £5 million in the previous calendar year. Additionally, although the UK government refrained from transitioning altogether to a new VBP system, the PPRS incorporates VBP principles into the National Institute for Health and Clinical Excellence (“NICE”) assessment process for new medicines. In addition to utilizing the terms of reference provided by the UK government in its value assessments, NICE is also developing methods for value assessment that will allow it to consider a wider array of factors in a more systematic and transparent manner and, in March 2014, announced that it will begin a period of public consultation on proposed changes to the way it makes recommendations on new medicines and other treatments for use in the NHS. If implemented, the proposals would more systematically account for the severity of a disease, as well as the effect that diseases and conditions have on society. Although NICE does not technically negotiate or publicly establish pharmaceutical prices, it is assumed that PPRS members will set prices for new medicines at a level that aligns with the medicines’ expected value, as determined by NICE. While the new PPRS differs in significant ways from its 2009 predecessor, as explained above, it has retained two important mechanisms for pharmaceutical pricing, namely “flexible pricing” and Patient Access Schemes (“PAS”). Under the flexible pricing system, PPRS members can apply for an increase or decrease in a product’s original list price as further evidence or new indications for the medicine emerge. Where NICE’s value assessment is unlikely to support the list price for a product, manufacturers may propose a PAS program to the Department of Health to facilitate patient access to the medicine, notwithstanding the assessment. PAS programs exist in various forms, but a simple discount scheme is the government’s preferred model, as such arrangements reportedly place the least burden on the NHS and manufacturers. United States Exclusion of Orphan Drugs from Ceiling Price Program Narrowed On July 22, 2013, the U.S. Health Resources and Services Administration (“HRSA”) issued a Final Rule impacting the provision of orphan drugs under the 340B Program, which enables healthcare organizations that care for underserved people to purchase outpatient drugs at discounted prices (“340B ceiling prices”). Originally created in 1992, the 340B Program requires manufacturers participating in the Medicaid Drug Rebate Program (“MDRP”) to extend 340B ceiling prices on covered outpatient drugs to certain “Covered Entity” providers. With the passage of the Affordable Care Act (“ACA”) in 2010, the 340B statute was amended in several significant ways, including, among other changes, ways that involved: (i) expanding the list of Covered Entities eligible for 340B ceiling prices to include free-standing cancer hospitals, critical access hospitals, rural referral centers, and sole community hospitals; and (ii) exempting of “orphan drugs” from 340B ceiling prices for these newly eligible Covered Entity types. Specifically, the 340B statute now provides that for these newly eligible Covered Entity types, drugs designated for certain rare diseases or conditions are not eligible for 340B ceiling prices. However, HRSA’s July 22, 2013 Final Rule implements the orphan drug exclusion in a narrow, “indication-specific” manner. Specifically, under the Final Rule, the statutory exclusion for orphan drugs applies only where the drug (when purchased by an affected Covered Entity) is used “for the rare condition or disease for which that orphan drug was designated” under the relevant section of the Federal Food Drug and Cosmetic Act. Accordingly, non-orphan uses of orphan drugs are still eligible for 340B ceiling prices. Many in the pharmaceutical industry believe HRSA’s narrow implementation of the orphan drug exclusion is inconsistent with Congress’ clear intent in the statute, and as a result, the Pharmaceutical Research and Manufacturers of America (“PhRMA”), an industry trade group, has filed a lawsuit against the administration seeking to enjoin the implementation of HRSA’s File Rule. Department of Health and Human Services Requires Coverage of Standardized Essential Health Benefits On February 25, 2013, the U.S. Department of Health and Human Services (“HHS”), released a Final Rule governing the provision of “essential health benefits” (“EHBs”) under health plans providing coverage in the individual and small group markets, including plans available for purchase through the American Health Benefit Exchanges (“Exchanges”), which are competitive health insurance marketplaces established by the ACA. Beginning with the first day of any plan year, beginning on or after January 1, 2014, health plans in the individual and small group markets, excluding certain existing plans known as “grandfathered plans,” were required to ensure coverage of the EHB Package, which must include coverage of 10 statutorily required categories of care (including drugs), limit costsharing, and satisfy certain actuarial value requirements. In addition, EHB plans must meet standardized benefits provided for in a state-established EHB benchmark plan. Due to delays in the implementation of the EHB requirements, certain businesses have been permitted to renew their existing small group coverage and will not be subject to the EHB and cost-sharing requirements until 2016. The EHB requirements governing prescription drug benefits impose certain restrictions on all EHB plans, while still allowing for a certain amount of flexibility with respect to plan design. More specifically, individual plans may limit coverage in ways that differ from the EHBbenchmark plan provided that covered benefits and limitations remain substantially equal to the benefits in the EHB-benchmark. With respect to prescription drug benefits, EHB plans must cover at least the greater of: (i) one drug in every U.S. Pharmacopeia category and class, or (ii) the same number of drugs in each category and class as the EHB-benchmark plan in that state. Thus, provided that the benefits offered in an individual EHB plan are substantially equal to those of the benchmark plan, issuers have some flexibility to structure their own prescription drug benefit design, although many manufacturers suspect that mostly older, lower-cost products will receive formulary status. Nevertheless, given that EHB plans must meet a standardized set of benefits, it is possible that, as plans begin to compete with one another, price will emerge as a distinguishing feature for consumers and, thus, for plans as they negotiate manufacturer rebates. Indeed, if the Exchanges ultimately operate as intended, competition will suppress the costs of coverage, including the prices for prescription drugs. One open question surrounding the Exchanges is whether price concessions to plans in the Exchanges will be exempt from consideration under different government price reporting calculations (namely “Best Price” under the MDRP and “Average Sales Price” under Medicare Part B). On October 30, 2013, HHS announced that plans offered through the Exchanges are not “Federal health care programs,” as defined by the Federal Anti-Kickback Statute (“AKS”). While this announcement answered an important question involving the AKS and other fraud and abuse laws, it did not specifically address how price concessions to plans in the Exchanges should be treated by pharmaceutical manufacturers in the government price reporting calculations, a topic which could be addressed in the Medicaid final rule anticipated to be promulgated in the summer of 2014. Transparency Corner New Code in Europe Issued on Disclosure of Transfers of Value On June 24, 2013, the General Assembly of the European Federation of Pharmaceutical Industries and Associations (“EFPIA”) issued the Code on Disclosure of Transfers of Value from Pharmaceutical Companies to Healthcare Professionals and Healthcare Organisations (the “Code”), requiring manufacturers to report certain “transfers of value” provided to health care professionals and organizations with primary places of practice in Europe. Under the Code, which applies to EFPIA’s Member Companies and national pharmaceutical Member Associations, disclosures for payments made in 2015 are to be reported by June 2016 on the Member Company’s website or other publicly available central platform. Importantly, enforcement of the Code is delegated to the national Member Associations, which lack the tools available to most state authorities for penalizing failure to comply. The Code also does not specify the particular sanctions to be imposed for violation of the Code’s requirements. Thus, to help achieve its intended objective of increased transparency, the Code requires Member Associations to provide to the EFPIA Code Committee an annual report summarizing efforts undertaken to implement, develop, and enforce the Code. The EFPIA Code Committee must, in turn, monitor Member Associations’ adoption of the national codes. Although it remains unclear how such self-regulation and industry monitoring will impact transparency in the absence of national law, the Code adds to the growing international patchwork of transparency and pricing requirements with which pharmaceutical manufacturers must comply. Delay in Data Submission Under the U.S. Physician Payments Sunshine Act The U.S. Centers for Medicare and Medicaid Services (“CMS”) announced on February 7, 2014, that Physician Payments Sunshine Act registration and data submission for applicable manufacturers and group purchasing organizations (“GPOs”) will be executed in two phases. During what CMS characterized as Phase 1, which ends March 31, 2014, applicable manufacturers and GPOs will be able to register and submit “aggregate 2013 payment data,” a term which CMS has not defined, using CMS’s Enterprise Portal. Registration must be completed by an executive-level officer (“authorized official”) or a designated representative who must then submit the manufacturer’s or GPO’s corporate profile information and aggregate 2013 payment data into CMS’s Enterprise Portal. If any data elements are missing or improperly formatted, CMS will provide the manufacturer with additional instructions for correction. Phase 2 will begin in “approximately” May 2014 and will extend for no fewer than 30 days according to the announcement. Phase 2 requires the authorized official to: (i) register the company and himself/herself in the Open Payments system; (ii) confirm the accuracy of the manufacturer’s entity profile data based on the information submitted in Phase 1; and (iii) submit and attest to the accuracy of the “detailed 2013 payment data.” Review and correction phases are scheduled to begin by August 1, and guidance on these processes will be announced in the spring of 2014. In the same announcement, CMS also declared that it will not enforce penalties for non-compliance in reporting until after Phase 2 registration and data submission are closed. The announcement is significant in part because it delays data submission to May 2014, rather than March 31, as required by statute.