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 | |
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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: | |
1 | SECTION 1. Title 21 of the General Laws entitled "FOOD AND DRUGS" is hereby |
2 | amended by adding thereto the following chapter: |
3 | CHAPTER 38 |
4 | PRESCRIPTION DRUG COST PROTECTION |
5 | 21-38-1. Definitions. |
6 | For the purposes of this chapter: |
7 | (1) "ERISA plan" means a plan qualified under the Employee Retirement Income Security |
8 | Act of 1974. |
9 | (2) "Health plan" means health insurance coverage or a plan providing coverage pursuant |
10 | to the provision of chapters 18.5, 18.6, 19 and 20 of title 27. |
11 | (3) "Participating ERISA plan" means an ERISA plan that has elected to participate in the |
12 | requirements and restrictions of this chapter as described in § 21-38-3. |
13 | (4) "Prescription drug" or "drug" has the same meaning as the term "drug" as defined in § |
14 | 5-19.1-2. |
15 | (5) "Referenced drugs" means prescription drugs subjected to a referenced rate. |
16 | (6) "Referenced rate" means the maximum rate established by the health insurance |
17 | commissioner utilizing the wholesale acquisition cost and other pricing data pursuant to § 21-38- |
18 | 4. |
19 | (7) "State entity" means any agency of state government that purchases prescription drugs |
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1 | on behalf of the state for a person whose health care is paid for by the state, including any agent, |
2 | vendor, fiscal agent, contractor, or other party acting on behalf of the state. State entity does not |
3 | include the medical assistance program established under 42 U.S.C. § 1396 et seq. |
4 | (8) "Wholesale acquisition cost" means, with respect to a drug or biological, the |
5 | manufacturer's list price for the drug or biological to wholesalers or direct purchasers in the United |
6 | States, not including prompt pay or other discounts, rebates or reductions in price, for the most |
7 | recent month for which the information is available, as reported in wholesale price guides or other |
8 | publications of drug or biological pricing data. |
9 | 21-38-2. Payment in excess of referenced rate -- prohibited. |
10 | (a) It is a violation of this chapter for a state entity or health plan or participating ERISA |
11 | plan to purchase referenced drugs to be dispensed or delivered to a consumer in the state, whether |
12 | directly or through a distributor, for a cost higher than the referenced rate as determined in § 21- |
13 | 38-4. |
14 | (b) It is a violation of this chapter for a retail pharmacy licensed in this state to purchase |
15 | for sale or distribution referenced drugs for a cost that exceeds the referenced rate to a person whose |
16 | health care is provided by a state entity or health plan or participating ERISA plan. |
17 | 21-38-3. ERISA plan opt-in. |
18 | An ERISA plan may elect to participate in the provisions of this chapter. Any ERISA plan |
19 | that desires its purchase of prescription drugs to be subject to the prohibition described in § 21-38- |
20 | 2 shall notify the health insurance commissioner in writing by February 1 of each year. |
21 | 21-38-4. Referenced drugs determined. |
22 | (a) As of March 1 of each calendar year, the director of the state employee health insurance |
23 | plan shall transmit to the health insurance commissioner a list of the two hundred fifty (250) most |
24 | costly prescription drugs based upon net price multiplied utilization. For each of these prescription |
25 | drugs, the director of the state employee health insurance plan shall also provide the total net spent |
26 | on each of those prescription drugs for the previous calendar year. |
27 | (b) Utilizing this information provided in subsection (a) of this section, as of May 1 of each |
28 | calendar year the health insurance commissioner shall create and publish a list of two hundred fifty |
29 | (250) referenced drugs that shall be subject to the referenced rate. |
30 | (c) The health insurance commissioner shall determine the referenced rate by comparing |
31 | the wholesale acquisition cost to the cost from the: |
32 | (1) Ontario ministry of health and long-term care and most recently published on the |
33 | Ontario drug benefit formulary; |
34 | (2) Régie de L'Assurance Maladie du Québec and most recently published on the Québec |
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1 | public drug programs list of medications. |
2 | (3) British Columbia ministry of health and most recently published on the British |
3 | Columbia pharmacare formulary; and |
4 | (4) Alberta ministry of health and most recently published on the Alberta drug benefit list. |
5 | (d) The referenced rate for each prescription drug shall be calculated as the lowest cost |
6 | among those resources and the wholesale acquisition cost. If a specific referenced drug is not |
7 | included within resources described in subsection (c) of this section, the health insurance |
8 | commissioner shall utilize for the purpose of determining the referenced rate ceiling price for drugs |
9 | as reported by the government of Canada patented medicine prices review board. |
10 | (e) The health insurance commissioner shall calculate annually the savings that are |
11 | expected to be achieved by subjecting prescription drugs to the referenced rate. In making this |
12 | determination the health insurance commissioner shall consult with the director of the state |
13 | employee health insurance plan and the chair of the state board of pharmacy. |
14 | (f) The health insurance commissioner shall have the authority to promulgate regulations |
15 | under § 42-14-5 to fully implement the requirements of this chapter. |
16 | 21-38-5. Registered agent and office within the state. |
17 | Any entity that sells, distributes, delivers or offers for sale any prescription drug in the state |
18 | shall be required to maintain a registered agent and office within the state. |
19 | 21-38-6. Use of savings. |
20 | (a) Any savings generated as a result of implementation and compliance with the provisions |
21 | of this chapter shall be used to reduce costs to consumers. Any state entity, health plan or |
22 | participating ERISA plan shall calculate such savings and utilize such savings directly to reduce |
23 | costs for its members. |
24 | (b) No later than April 1 of each calendar year, each state entity, health plan and |
25 | participating ERISA plan subject to this chapter shall submit to the health insurance commissioner |
26 | a report describing the savings achieved for each referenced drug for the previous calendar year |
27 | and how those savings were used to achieve the requirements of lower cost prescription prices. |
28 | 21-38-7. Prohibition on withdrawal of referenced drugs for sale. |
29 | (a) It shall be a violation of this chapter for any manufacturer or distributor of a referenced |
30 | drug to withdraw that drug from sale or distribution within this state for the purpose of avoiding |
31 | the impact of the rate limitations set forth in § 21-38-2. |
32 | (b) Any manufacturer that intends to withdraw a referenced drug from sale or distribution |
33 | from within the state shall provide a notice of withdrawal in writing to the health insurance |
34 | commissioner and to the attorney general one hundred eighty (180) days prior to withdrawal. |
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1 | (c) The health insurance commissioner shall assess a penalty on any manufacturer or |
2 | distributor that it determines has withdrawn a referenced drug from distribution or sale in the state |
3 | in violation of § 21-38-7(a). With respect to each referenced drug for which the health insurance |
4 | commissioner has determined the manufacturer or distributor has withdrawn from the market, the |
5 | penalty shall be equal to five hundred thousand dollars ($500,000) or the amount of annual savings |
6 | determined by the health insurance commissioner as described in § 21-38-4(e), whichever is |
7 | greater. |
8 | (d) It shall be a violation of this chapter for any manufacturer or distributor of a referenced |
9 | drug to refuse to negotiate in good faith with any payer or seller of prescription drugs a price that |
10 | is within the referenced rate as determined in §21-38-4. |
11 | (e) The health insurance commissioner shall assess a penalty on any manufacturer or |
12 | distributor that it determines has failed to negotiate in good faith in violation of subsection (d) of |
13 | this section. With respect to each referenced drug for which the health insurance commissioner has |
14 | determined the manufacturer or distributor has failed to negotiate in good faith, the penalty shall |
15 | be equal to five hundred thousand dollars ($500,000) or the amount of annual savings determined |
16 | by the health insurance commissioner as described in § 21-38-4(e), whichever is greater. |
17 | 21-38-8. Enforcement. |
18 | (a) Each violation of § 21-38-2 shall be subject to a fine of one thousand dollars ($1,000). |
19 | Every individual transaction in violation of § 21-38-2 is determined to be a separate violation. |
20 | (b) The attorney general is authorized to enforce the provisions of this statute on behalf of |
21 | any state entity or consumers of prescription drugs. The refusal of a manufacturer or distributor to |
22 | negotiate in good faith as described in § 21-38-7(d) shall be a valid affirmative defense in any |
23 | enforcement action for a violation of § 21-38-2. |
24 | 21-38-9. Severability. |
25 | If any provision of this chapter or its application to any person or circumstances is held |
26 | invalid, the invalidity shall not affect other provisions or applications of the chapter which can be |
27 | given effect without the invalid provision or application, and to this end the provisions of this |
28 | chapter are declared to be severable. |
29 | 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 | |
*** | |
1 | This act would prohibit the state, participating ERISA or any health plan from purchasing |
2 | referenced drugs for a cost higher than the referenced rate. The referenced rate will have two |
3 | hundred fifty (250) of the most costly prescription drugs based upon the net price multiplied by |
4 | utilization and the referenced rate shall be determined by comparing wholesale acquisition cost to |
5 | the cost from various Canadian drug lists. Any manufacturer or distributor who fails to comply |
6 | with the purchase standards shall be subject to a penalty equal to five hundred thousand dollars |
7 | ($500,000) or the amount of annual savings determined by the superintendent, whichever if greater. |
8 | Additionally, any manufacturer or distributor who fails to negotiate in good faith shall be subject |
9 | to a penalty of five hundred thousand dollars ($500,000) or the amount of annual savings |
10 | determined by the health insurance commissioner, whichever is greater. |
11 | This act would take effect upon passage. |
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