2021 -- S 0494 SUBSTITUTE A

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     STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2021

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A N   A C T

RELATING TO INSURANCE

     Introduced By: Senators Ruggerio, McCaffrey, Goodwin, Miller, and Coyne

     Date Introduced: March 04, 2021

     Referred To: Senate Health & Human Services

     It is enacted by the General Assembly as follows:

     SECTION 1. Title 27 of the General Laws entitled “INSURANCE” is hereby amended by

adding thereto the following chapter:

CHAPTER 82

THE DRUG COST TRANSPARENCY ACT 

     27-82-1. Definitions.

     As used in this chapter:

     (1) "Health plan" or "health benefit plan" means health insurance coverage and a group

health plan, including coverage provided through an association plan if it covers Rhode Island

residents. Except to the extent specifically provided by the federal Affordable Care Act, the term

"health plan" shall not include a group health plan to the extent state regulation of the health plan

is preempted under section 514 [29 U.S.C. § 1144] of the federal Employee Retirement Income

Security Act of 1974. The term also shall not include:

     (i) Coverage only for accident, or disability income insurance, or any combination thereof;

     (ii) Coverage issued as a supplement to liability insurance;

     (iii) Liability insurance, including general liability insurance and automobile liability

insurance;

     (iv) Workers' compensation or similar insurance;

     (v) Automobile medical payment insurance;

     (vi) Credit-only insurance;

     (vii) Coverage for on-site medical clinics; or

     (viii) Other similar insurance coverage, specified in federal regulations issued pursuant to

Pub. L. No. 104-191, the federal Health Insurance Portability and Accountability Act of 1996

("HIPAA"), under which benefits for medical care are secondary or incidental to other insurance

benefits.

     (2) "Health benefit plan issuer" means a health insurance company, health insurance

carrier, a health maintenance organization, or a hospital and medical service corporation.

     (3) "Office of the health insurance commissioner" or "office" means the office created

pursuant to § 42-14.5-1.

     (4) "Prescription drug" and "drug" means a drug as defined in 21 U.S.C. § 321, except that

the term prescription drug or drug does not include a device or an animal health product.

     (5) "Pharmacy benefit manager" means an entity doing business in this state that contracts

to administer or manage prescription-drug benefits on behalf of any health benefit plan issuer that

provides prescription-drug benefits to residents of this state.

     (6) "Pharmaceutical drug manufacturer" means a person engaged in the business of

producing, preparing, propagating, compounding, converting, processing, packaging, repackaging,

labeling, or distributing a drug. The term "pharmaceutical drug manufacturer" does not include a

wholesale distributor or retailer of prescription drugs or a pharmacist licensed under chapter 19.1

of title 5.

     (7) "Rebate" means a discount or concession that affects the price of a prescription drug to

a pharmacy benefit manager or health benefit plan issuer for a prescription drug manufactured by

the pharmaceutical drug manufacturer.

     (8) "Specialty drug" means a prescription drug covered under Medicare Part D that exceeds

the specialty tier cost threshold established by the Centers for Medicare and Medicaid Services.

     (9) "Utilization management" means a set of formal techniques designed to monitor the use

of, or evaluate the medical necessity, appropriateness, efficacy, or efficiency of, health care

services, procedures, or settings.

     (10) "Wholesale acquisition cost" means, with respect to a drug, the pharmaceutical drug

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

States, as reported in wholesale price guides or other publications of drug pricing data. The cost

does not include any rebates, prompt pay or other discounts, or other reductions in price.

     27-82-2. Disclosure of pharmaceutical drug manufacturer information.

     (a)(1) On or before July 1, 2022 and every July 1 of each year thereafter, each

pharmaceutical drug manufacturer shall submit a report to the office of the health insurance

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commissioner stating the current wholesale acquisition cost information for the United States Food

and Drug Administration approved drugs sold in or offered for sale in this state by that

manufacturer.

     (2) The office of the health insurance commissioner shall develop a website to provide to

the general public drug price information submitted under subsection (a)(1) of this section. The

website shall be made available on the office’s website with a dedicated link that is prominently

displayed on the home page or by a separate easily identifiable Internet address.

     (b)(1) This subsection applies only to a drug with a wholesale acquisition cost of at least

one hundred dollars ($100) for a thirty (30) day supply before the effective date of an increase

described by this subsection. Not later than the thirtieth day after the effective date of an increase

of forty percent (40%) or more over the preceding three (3) calendar years or fifteen percent (15%)

or more in the preceding calendar year in the wholesale acquisition cost of a drug to which this

subsection applies, a pharmaceutical drug manufacturer shall submit a report to the office. The

report must include the following information:

     (i) The name of the drug;

     (ii) Whether the drug is a brand name or a generic;

     (iii) The effective date of the change in wholesale acquisition cost;

     (iv) Aggregate, company-level research and development costs for the most recent year for

which final audit data is available;

     (v) The name of each of the manufacturer's prescription drugs approved by the United

States Food and Drug Administration in the previous three (3) calendar years;

     (vi) The name of each of the manufacturer's prescription drugs that lost patent exclusivity

in the United States in the previous three (3) calendar years; and

     (vii) A statement regarding the factor or factors that caused the increase in the wholesale

acquisition cost and an explanation of the role of each factor's impact on the cost.

     (2) The quality and types of information and data that a pharmaceutical drug manufacturer

submits to the office under subsection (b)(1) of this section must be consistent with the quality and

types of information and data that the manufacturer includes in the manufacturer's annual

consolidated report on Securities and Exchange Commission Form 10-K or any other public

disclosure.

     (c) Not later than the sixtieth day after receipt of the report submitted under subsection (a)

of this section, the office of the health insurance commissioner shall publish the report on the

office’s website described by subsection (a)(2) of this section.

     (d) A manufacturer shall notify the commissioner in writing if it is introducing a new

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prescription drug to market at a wholesale acquisition cost that exceeds a wholesale acquisition

cost of at least one hundred dollars ($100) for a thirty (30) day supply. The manufacturer shall

provide the written notice within three (3) calendar days following the release of the drug in the

commercial market. A manufacturer may make the notification pending approval by the United

States Food and Drug Administration (FDA) if commercial availability is expected within three (3)

calendar days following the approval.

     (e) The office of the health insurance commissioner shall promulgate any and all rules and

regulations deemed necessary for the implementation of this section.

     27-82-3. Disclosure of pharmacy benefit management information.

     (a) On or before July 1, 2022 and every July 1 of each year thereafter, each pharmacy

benefit manager shall file a report with the office of the health insurance commissioner. The report

must state for the immediately preceding calendar year:

     (1) The aggregated rebates, fees, price protection payments, and any other payments

collected from pharmaceutical drug manufacturers; and

     (2) The aggregated dollar amount of rebates, fees, price protection payments, and any other

payments collected from pharmaceutical drug manufacturers that were:

     (i) Passed to:

     (A) A health benefit plan issuer; or

     (B) Enrollees at the point of sale of a prescription drug; or

     (ii) Retained as revenue by the pharmacy benefit manager.

     (b) Notwithstanding subsection (a) of this section, the report due after July 1, 2022, under

that subsection must state the required information for the immediately preceding three (3) calendar

years in addition to stating the required information for the preceding calendar year. Subsection

(b) of this section shall not apply to any report required after July 1, 2022.

     (c) A report submitted by a pharmacy benefit manager may not disclose the identity of a

specific health benefit plan or enrollee, the price charged for a specific prescription drug or class

of prescription drugs, or the amount of any rebate or fee provided for a specific prescription drug

or class of prescription drugs.

     (d) Not later than the sixtieth day after receipt of the report submitted under subsection (a)

of this section, the office of the health insurance commissioner shall publish the report on the

office’s website developed under § 27-82-2(a)(2).

     (e) The office of the health insurance commissioner shall promulgate any and all rules and

regulations deemed necessary for the implementation of this section.

     27-82-4. Disclosure of health benefit plan issuer information.

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     (a) On or before July 1, 2022 and every July 1 of each year thereafter, each health benefit

plan issuer shall submit to the office of the health insurance commissioner a report that states for

the immediately preceding calendar year:

     (1) The names of the twenty-five (25) most frequently prescribed prescription drugs across

all plans;

     (2) The names of the ten (10) highest-cost hospital procedures across all plans regulated by

the state;

     (3) The names of the hospitals with the highest payment rates for the procedures listed in

subsection (a)(2) of this section;

     (4) The percent increase in annual net spending for prescription drugs across all plans;

     (5) The annual spending for hospital services compared to other components of the health

care premium across all plans;

     (6) The percent increase in premiums that were attributable to outpatient prescription drugs

across all plans in the aggregate amount and in each of the following categories: brand name;

generic drugs; and specialty drugs;

     (7) The percent increase in premiums that were attributable to inpatient prescription drugs

across all plans in the aggregate amount and in each of the following categories: brand name;

generic drugs; and specialty drugs;

     (8) The percentage of premiums that were attributable to hospitals compared to other

components of the health care premium across all plans;

     (9) The percentage of specialty drugs, and hospital procedures listed in subsection (a)(2)

of this section, with utilization management requirements across all plans; and

     (10) The premium reductions that were attributable to specialty drug utilization

management.

     (b) If the health benefit plan issuer is nonprofit or tax-exempt, the report required under

subsection (a) of this section shall contain the following information for the preceding calendar

year:

     (1) Premium reductions due to tax-exempt status;

     (2) Percentage of plans provided free or below cost to the general public;

     (3) List and explain the impact of social welfare programs on improving health and

lowering health care costs;

     (4) Amount of reserves in dollars; and

     (5) Amount of reserves as a percentage of the minimum required by the state of Rhode

Island.

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     (c) Not later than the sixtieth day after receipt of the report submitted under subsection (a)

of this section, the office of the health insurance commissioner shall publish the report on the

office’s website developed under § 27-82-2(a)(2).

     (d) A report submitted by a health benefit plan issuer may not disclose the identity of a

specific health benefit plan or the price charged for a specific prescription drug or class of

prescription drugs.

     (e) The office of the health insurance commissioner shall promulgate any and all rules and

regulations deemed necessary for the implementation of this section.

     27-82-5. Disclosure of hospital pricing information.

     (a) On or before July 1, 2022 and every July 1 of each year thereafter, each hospital

identified in § 27-82-4(a)(3) shall submit a report to the office. The report shall contain the

following information for the immediately preceding calendar year:

     (1) All factors used to establish and justify the chargemaster price for the procedure;

     (2) The percentage of the chargemaster price attributable to each factor;

     (3) An explanation of the role of each factor in establishing the chargemaster price;

     (4) The number and percentage of patients for whom adverse information was reported to

consumer credit reporting agencies or credit bureaus; and

     (5) The number of patients against whom the hospital filed medical debt lawsuits or took

other legal action.

     (b) If the hospital is nonprofit or tax-exempt, the report required under subsection (a) shall

contain the following information for the most recent calendar year with auditable data:

     (1) The number of patients for whom the hospital limited the amount charged to the patient

for an emergency or other medically necessary care pursuant to 26 U.S.C § 501(r)(5) of the federal

Internal Revenue Code;

     (2) The average dollar amount by which charges were limited per patient by the hospital

pursuant to 26 U.S.C. § 501(r)(5) of the federal Internal Revenue Code; and

     (3) The number of patients the hospital determined were eligible for assistance under the

hospital organization’s financial assistance policy pursuant to 26 U.S.C. § 501(r)(4)(A) of the

federal Internal Revenue Code before engaging in extraordinary collection actions against that

individual pursuant to 26 U.S.C. § 501(r)(6) of the federal Internal Revenue Code.

     (c) Not later than the sixtieth day after receipt of the report submitted under subsection (a)

of this section, the office of the health insurance commissioner shall publish the report on the

office’s website developed under § 27-82-2(a)(2).

     (d) The office of the health insurance commissioner shall promulgate any and all rules and

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regulations deemed necessary for the implementation of this section.

     27-82-6. Severability.

     If any provisions of this chapter or the application of this chapter to any person or

circumstances is held invalid, the invalidity shall not affect other provisions or applications of this

chapter which can be given effect without the invalid provision or application, and to this end, the

provisions of this chapter are declared severable.

     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 INSURANCE

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     This act would require that pharmaceutical companies disclose to the office of the health

insurance commissioner acquisition costs of drugs approved by the Federal Drug Administration,

if the acquisition cost is at least one hundred dollars ($100) for a thirty (30) day supply. This also

requires the disclosure of pharmacy benefit management information to include rebates, price

protection payments and other payments that are saved by the pharmacy, health plan issuer or

enrollees at the point of sale of the drug.

     This act would take effect upon passage.

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