2023 -- H 5431

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LC000376

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     STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2023

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A N   A C T

RELATING TO FOOD AND DRUGS -- PRESCRIPTION DRUG COST PROTECTION

     

     Introduced By: Representatives Tanzi, Henries, and Cortvriend

     Date Introduced: February 08, 2023

     Referred To: House Health & Human Services

     It is enacted by the General Assembly as follows:

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     SECTION 1. Title 21 of the General Laws entitled "FOOD AND DRUGS" is hereby

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amended by adding thereto the following chapter:

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CHAPTER 38

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PRESCRIPTION DRUG COST PROTECTION

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     21-38-1. Definitions.

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     For the purposes of this chapter:

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     (1) "ERISA plan" means a plan qualified under the Employee Retirement Income Security

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Act of 1974.

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     (2) "Health plan" means health insurance coverage or a plan providing coverage pursuant

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to the provision of chapters 18.5, 18.6, 19 and 20 of title 27.

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     (3) "Participating ERISA plan" means an ERISA plan that has elected to participate in the

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requirements and restrictions of this chapter as described in § 21-38-3.

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     (4) "Prescription drug" or "drug" has the same meaning as the term "drug" as defined in §

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5-19.1-2.

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     (5) "Referenced drugs" means prescription drugs subjected to a referenced rate.

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     (6) "Referenced rate" means the maximum rate established by the health insurance

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commissioner utilizing the wholesale acquisition cost and other pricing data pursuant to § 21-38-

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4.

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     (7) "State entity" means any agency of state government that purchases prescription drugs

 

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on behalf of the state for a person whose health care is paid for by the state, including any agent,

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vendor, fiscal agent, contractor, or other party acting on behalf of the state. State entity does not

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include the medical assistance program established under 42 U.S.C. § 1396 et seq.

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     (8) "Wholesale acquisition cost" means, with respect to a drug or biological, the

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manufacturer's list price for the drug or biological to wholesalers or direct purchasers in the United

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States, not including prompt pay or other discounts, rebates or reductions in price, for the most

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recent month for which the information is available, as reported in wholesale price guides or other

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publications of drug or biological pricing data.

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     21-38-2. Payment in excess of referenced rate -- prohibited.

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     (a) It is a violation of this chapter for a state entity or health plan or participating ERISA

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plan to purchase referenced drugs to be dispensed or delivered to a consumer in the state, whether

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directly or through a distributor, for a cost higher than the referenced rate as determined in § 21-

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38-4.

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     (b) It is a violation of this chapter for a retail pharmacy licensed in this state to purchase

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for sale or distribution referenced drugs for a cost that exceeds the referenced rate to a person whose

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health care is provided by a state entity or health plan or participating ERISA plan.

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     21-38-3. ERISA plan opt-in.

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     An ERISA plan may elect to participate in the provisions of this chapter. Any ERISA plan

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that desires its purchase of prescription drugs to be subject to the prohibition described in § 21-38-

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2 shall notify the health insurance commissioner in writing by February 1 of each year.

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      21-38-4. Referenced drugs determined.

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     (a) As of March 1 of each calendar year, the director of the state employee health insurance

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plan shall transmit to the health insurance commissioner a list of the two hundred fifty (250) most

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costly prescription drugs based upon net price multiplied utilization. For each of these prescription

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drugs, the director of the state employee health insurance plan shall also provide the total net spent

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on each of those prescription drugs for the previous calendar year.

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     (b) Utilizing this information provided in subsection (a) of this section, as of May 1 of each

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calendar year the health insurance commissioner shall create and publish a list of two hundred fifty

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(250) referenced drugs that shall be subject to the referenced rate.

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     (c) The health insurance commissioner shall determine the referenced rate by comparing

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the wholesale acquisition cost to the cost from the:

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     (1) Ontario ministry of health and long-term care and most recently published on the

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Ontario drug benefit formulary;

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     (2) Régie de L'Assurance Maladie du Québec and most recently published on the Québec

 

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public drug programs list of medications.

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     (3) British Columbia ministry of health and most recently published on the British

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Columbia pharmacare formulary; and

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     (4) Alberta ministry of health and most recently published on the Alberta drug benefit list.

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     (d) The referenced rate for each prescription drug shall be calculated as the lowest cost

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among those resources and the wholesale acquisition cost. If a specific referenced drug is not

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included within resources described in subsection (c) of this section, the health insurance

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commissioner shall utilize for the purpose of determining the referenced rate ceiling price for drugs

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as reported by the government of Canada patented medicine prices review board.

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     (e) The health insurance commissioner shall calculate annually the savings that are

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expected to be achieved by subjecting prescription drugs to the referenced rate. In making this

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determination the health insurance commissioner shall consult with the director of the state

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employee health insurance plan and the chair of the state board of pharmacy.

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     (f) The health insurance commissioner shall have the authority to promulgate regulations

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under § 42-14-5 to fully implement the requirements of this chapter.

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     21-38-5. Registered agent and office within the state.

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     Any entity that sells, distributes, delivers or offers for sale any prescription drug in the state

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shall be required to maintain a registered agent and office within the state.

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      21-38-6. Use of savings.

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     (a) Any savings generated as a result of implementation and compliance with the provisions

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of this chapter shall be used to reduce costs to consumers. Any state entity, health plan or

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participating ERISA plan shall calculate such savings and utilize such savings directly to reduce

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costs for its members.

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     (b) No later than April 1 of each calendar year, each state entity, health plan and

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participating ERISA plan subject to this chapter shall submit to the health insurance commissioner

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a report describing the savings achieved for each referenced drug for the previous calendar year

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and how those savings were used to achieve the requirements of lower cost prescription prices.

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     21-38-7. Prohibition on withdrawal of referenced drugs for sale.

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     (a) It shall be a violation of this chapter for any manufacturer or distributor of a referenced

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drug to withdraw that drug from sale or distribution within this state for the purpose of avoiding

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the impact of the rate limitations set forth in § 21-38-2.

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     (b) Any manufacturer that intends to withdraw a referenced drug from sale or distribution

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from within the state shall provide a notice of withdrawal in writing to the health insurance

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commissioner and to the attorney general one hundred eighty (180) days prior to withdrawal.

 

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     (c) The health insurance commissioner shall assess a penalty on any manufacturer or

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distributor that it determines has withdrawn a referenced drug from distribution or sale in the state

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in violation of § 21-38-7(a). With respect to each referenced drug for which the health insurance

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commissioner has determined the manufacturer or distributor has withdrawn from the market, the

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penalty shall be equal to five hundred thousand dollars ($500,000) or the amount of annual savings

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determined by the health insurance commissioner as described in § 21-38-4(e), whichever is

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greater.

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     (d) It shall be a violation of this chapter for any manufacturer or distributor of a referenced

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drug to refuse to negotiate in good faith with any payer or seller of prescription drugs a price that

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is within the referenced rate as determined in §21-38-4.

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     (e) The health insurance commissioner shall assess a penalty on any manufacturer or

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distributor that it determines has failed to negotiate in good faith in violation of subsection (d) of

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this section. With respect to each referenced drug for which the health insurance commissioner has

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determined the manufacturer or distributor has failed to negotiate in good faith, the penalty shall

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be equal to five hundred thousand dollars ($500,000) or the amount of annual savings determined

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by the health insurance commissioner as described in § 21-38-4(e), whichever is greater.

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     21-38-8. Enforcement.

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     (a) Each violation of § 21-38-2 shall be subject to a fine of one thousand dollars ($1,000).

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Every individual transaction in violation of § 21-38-2 is determined to be a separate violation.

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     (b) The attorney general is authorized to enforce the provisions of this statute on behalf of

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any state entity or consumers of prescription drugs. The refusal of a manufacturer or distributor to

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negotiate in good faith as described in § 21-38-7(d) shall be a valid affirmative defense in any

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enforcement action for a violation of § 21-38-2.

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     21-38-9. Severability.

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     If any provision of this chapter or its application to any person or circumstances is held

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invalid, the invalidity shall not affect other provisions or applications of the chapter which can be

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given effect without the invalid provision or application, and to this end the provisions of this

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chapter are declared to be severable.

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     SECTION 2. This act shall take effect upon passage.

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EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N   A C T

RELATING TO FOOD AND DRUGS -- PRESCRIPTION DRUG COST PROTECTION

***

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     This act would prohibit the state, participating ERISA or any health plan from purchasing

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referenced drugs for a cost higher than the referenced rate. The referenced rate will have two

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hundred fifty (250) of the most costly prescription drugs based upon the net price multiplied by

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utilization and the referenced rate shall be determined by comparing wholesale acquisition cost to

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the cost from various Canadian drug lists. Any manufacturer or distributor who fails to comply

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with the purchase standards shall be subject to a penalty equal to five hundred thousand dollars

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($500,000) or the amount of annual savings determined by the superintendent, whichever if greater.

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Additionally, any manufacturer or distributor who fails to negotiate in good faith shall be subject

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to a penalty of five hundred thousand dollars ($500,000) or the amount of annual savings

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determined by the health insurance commissioner, whichever is greater.

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     This act would take effect upon passage.

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