2020 -- S 2318

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LC003958

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     STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2020

____________

A N   A C T

     RELATING TO FOOD AND DRUGS - DRUG COST TRANSPARENCY ACT

     

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

     Date Introduced: February 05, 2020

     Referred To: Senate 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

DRUG COST TRANSPARENCY ACT

5

     21-38-1. Short title.

6

     This chapter shall be known and may be cited as the "Drug Cost Transparency Act".

7

     21-38-2. Definitions.

8

     As used in this chapter:

9

     (1) "Animal health product" means a medical product approved and licensed for use in

10

animal or veterinary medicine, including a pharmaceutical, a biologic, an insecticide, and a

11

parasiticide.

12

     (2) "Director" means the director of the Rhode Island department of health.

13

     (3) "Department" means the Rhode Island department of health.

14

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

15

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

16

repackaging, labeling, or distributing a drug. The term "pharmaceutical drug manufacturer" does

17

not include a wholesale distributor or retailer of prescription drugs or a pharmacist licensed under

18

chapter 19.1 of title 5.

19

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

 

1

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

2

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

3

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

4

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

5

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

6

     21-38-3. Disclosure of drug pricing information.

7

     (a) On or before February 1, 2021 and every February 1 of each year thereafter, a

8

pharmaceutical drug manufacturer shall submit a report to the director stating the current

9

wholesale acquisition cost information for the United States Food and Drug Administration-

10

approved drugs sold in or offered for sale in this state by that manufacturer.

11

     (b) The director shall develop an Internet website to provide to the general public drug

12

price information submitted under subsection (a) of this section. The Internet website shall be

13

made available on the department of health's Internet website with a dedicated link that is

14

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

15

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

16

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

17

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

18

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

19

(15%) or more in the preceding calendar year in the wholesale acquisition cost of a drug to which

20

this subsection applies, a pharmaceutical drug manufacturer shall submit a report to the director.

21

The report must include the following information:

22

     (1) The name of the drug;

23

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

24

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

25

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

26

for which final audit data is available;

27

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

28

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

29

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

30

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

31

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

32

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

33

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

34

manufacturer submits to the director under subsection (c) of this section must be consistent with

 

LC003958 - Page 2 of 13

1

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

2

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

3

public disclosure.

4

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

5

(c) of this section, the director shall publish the report on the department of health's Internet

6

website described by subsection (b) of this section.

7

     (f) The director shall promulgate any and all rules and regulations deemed necessary for

8

the implementation of this chapter.

9

     SECTION 2. Chapter 27-18 of the General Laws entitled "Accident and Sickness

10

Insurance Policies" is hereby amended by adding thereto the following section:

11

     27-18-85. Drug cost transparency.

12

     (a) The following definitions as used in this section shall apply:

13

     (1) "Animal health product" means a medical product approved and licensed for use in

14

animal or veterinary medicine, including a pharmaceutical, a biologic, an insecticide, and a

15

parasiticide.

16

     (2) "Commissioner" or "health insurance commissioner" means that individual appointed

17

pursuant to § 42-14.5-1.

18

     (3) "Health benefit plan" has the same meaning as § 27-18-1.1.

19

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

20

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

21

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

22

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

23

repackaging, labeling, or distributing a drug. The term "pharmaceutical drug manufacturer" does

24

not include a wholesale distributor or retailer of prescription drugs or a pharmacist licensed under

25

chapter 19.1 of title 5.

26

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

27

contracts to administer or manage prescription-drug benefits on behalf of any carrier that provides

28

prescription-drug benefits to residents of this state.

29

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

30

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

31

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

32

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

33

by the pharmaceutical drug manufacturer.

34

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

 

LC003958 - Page 3 of 13

1

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

2

Services.

3

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

4

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

5

services, procedures, or settings.

6

     (b) On or before February 1, 2021 and every February 1 of each year thereafter, each

7

pharmacy benefit manager shall file a report with the commissioner. The report must state for the

8

immediately preceding calendar year:

9

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

10

collected from pharmaceutical drug manufacturers; and

11

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

12

other payments collected from pharmaceutical drug manufacturers that were:

13

     (i) Passed to:

14

     (A) A health benefit plan issuer; or

15

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

16

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

17

     (c) Notwithstanding subsection (b) of this section, the report due after February 1, 2021,

18

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

19

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

20

subsection (c) of this section shall not apply to any report required after February 1, 2021.

21

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

22

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

23

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

24

or class of prescription drugs.

25

     (e) On or before February 1, 2021 and every February 1 of each year thereafter, each

26

health benefit plan issuer shall submit to the commissioner a report that states for the immediately

27

preceding calendar year:

28

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

29

across all plans;

30

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

31

     (3) The percent increase in premiums that were attributable to prescription drugs across

32

all plans;

33

     (4) The percentage of specialty drugs with utilization management requirements across

34

all plans; and

 

LC003958 - Page 4 of 13

1

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

2

management.

3

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

4

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

5

prescription drugs.

6

     (g) On or before May 1 of each year, the commissioner shall collaborate with the Rhode

7

Island department of health to publish the aggregated data from all reports for that year required

8

by this section in an appropriate location on an Internet website created pursuant to § 21-38-3(b).

9

The combined aggregated data from the reports must be published in a manner that does not

10

disclose or tend to disclose proprietary or confidential information of any pharmacy benefit

11

manager or health benefit plan issuer.

12

     (h) The commissioner shall promulgate any and all rules and regulations deemed

13

necessary for the implementation of this section.

14

     SECTION 3. Chapter 27-19 of the General Laws entitled "Nonprofit Hospital Service

15

Corporations" is hereby amended by adding thereto the following section:

16

     27-19-77. Drug cost transparency.

17

     (a) The following definitions as used in this section shall apply:

18

     (1) "Animal health product" means a medical product approved and licensed for use in

19

animal or veterinary medicine, including a pharmaceutical, a biologic, an insecticide, and a

20

parasiticide.

21

     (2) "Commissioner" or "health insurance commissioner" means that individual appointed

22

pursuant to § 42-14.5-1.

23

     (3) "Health benefit plan" has the same meaning as § 27-18-1.1.

24

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

25

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

26

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

27

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

28

repackaging, labeling, or distributing a drug. The term "pharmaceutical drug manufacturer" does

29

not include a wholesale distributor or retailer of prescription drugs or a pharmacist licensed under

30

chapter 19.1 of title 5.

31

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

32

contracts to administer or manage prescription-drug benefits on behalf of any carrier that provides

33

prescription-drug benefits to residents of this state.

34

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

 

LC003958 - Page 5 of 13

1

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

2

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

3

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

4

by the pharmaceutical drug manufacturer.

5

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

6

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

7

Services.

8

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

9

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

10

services, procedures, or settings.

11

     (b) On or before February 1, 2021 and every February 1 of each year thereafter, each

12

pharmacy benefit manager shall file a report with the commissioner. The report must state for the

13

immediately preceding calendar year:

14

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

15

collected from pharmaceutical drug manufacturers; and

16

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

17

other payments collected from pharmaceutical drug manufacturers that were:

18

     (i) Passed to:

19

     (A) A health benefit plan issuer; or

20

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

21

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

22

     (c) Notwithstanding subsection (b) of this section, the report due on or before February 1,

23

2021, under that subsection must state the required information for the immediately preceding

24

three (3) calendar years in addition to stating the required information for the preceding calendar

25

year. This subsection (c) of this section shall not apply to any report required after February 1,

26

2021.

27

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

28

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

29

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

30

or class of prescription drugs.

31

     (e) On or before February 1, 2021 and every February 1 of each year thereafter, each

32

health benefit plan issuer shall submit to the commissioner a report that states for the immediately

33

preceding calendar year:

34

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

 

LC003958 - Page 6 of 13

1

across all plans;

2

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

3

     (3) The percent increase in premiums that were attributable to prescription drugs across

4

all plans;

5

     (4) The percentage of specialty drugs with utilization management requirements across

6

all plans; and

7

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

8

management.

9

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

10

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

11

prescription drugs.

12

     (g) On or before May 1 of each year, the commissioner shall collaborate with the Rhode

13

Island department of health to publish the aggregated data from all reports for that year required

14

by this section in an appropriate location on an Internet website created pursuant to § 21-38-3(b).

15

The combined aggregated data from the reports must be published in a manner that does not

16

disclose or tend to disclose proprietary or confidential information of any pharmacy benefit

17

manager or health benefit plan issuer.

18

     (h) The commissioner shall promulgate any and all rules and regulations deemed

19

necessary for the implementation of this section.

20

     SECTION 4. Chapter 27-20 of the General Laws entitled "Nonprofit Medical Service

21

Corporations" is hereby amended by adding thereto the following section:

22

     27-20-72. Drug cost transparency.

23

     (a) The following definitions as used in this section shall apply:

24

     (1) "Animal health product" means a medical product approved and licensed for use in

25

animal or veterinary medicine, including a pharmaceutical, a biologic, an insecticide, and a

26

parasiticide.

27

     (2) "Commissioner" or "health insurance commissioner" means that individual appointed

28

pursuant to § 42-14.5-1.

29

     (3) "Health benefit plan" has the same meaning as § 27-18-1.1.

30

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

31

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

32

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

33

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

34

repackaging, labeling, or distributing a drug. The term "pharmaceutical drug manufacturer" does

 

LC003958 - Page 7 of 13

1

not include a wholesale distributor or retailer of prescription drugs or a pharmacist licensed under

2

chapter 19.1 of title 5.

3

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

4

contracts to administer or manage prescription-drug benefits on behalf of any carrier that provides

5

prescription-drug benefits to residents of this state.

6

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

7

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

8

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

9

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

10

by the pharmaceutical drug manufacturer.

11

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

12

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

13

Services.

14

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

15

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

16

services, procedures, or settings.

17

     (b) On or before February 1, 2021 and every February 1 of each year thereafter, each

18

pharmacy benefit manager shall file a report with the commissioner. The report must state for the

19

immediately preceding calendar year:

20

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

21

collected from pharmaceutical drug manufacturers; and

22

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

23

other payments collected from pharmaceutical drug manufacturers that were:

24

     (i) Passed to:

25

     (A) A health benefit plan issuer; or

26

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

27

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

28

     (c) Notwithstanding subsection (b) of this section, the report due on or before February 1,

29

2021, under that subsection must state the required information for the immediately preceding

30

three (3) calendar years in addition to stating the required information for the preceding calendar

31

year. This subsection (c) of this section shall not apply to any report required after February 1,

32

2021.

33

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

34

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

 

LC003958 - Page 8 of 13

1

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

2

or class of prescription drugs.

3

     (e) On or before February 1, 2021 and every February 1 of each year thereafter, each

4

health benefit plan issuer shall submit to the commissioner a report that states for the immediately

5

preceding calendar year:

6

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

7

across all plans;

8

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

9

     (3) The percent increase in premiums that were attributable to prescription drugs across

10

all plans;

11

     (4) The percentage of specialty drugs with utilization management requirements across

12

all plans; and

13

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

14

management.

15

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

16

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

17

prescription drugs.

18

     (g) On or before May 1 of each year, the commissioner shall collaborate with the Rhode

19

Island department of health to publish the aggregated data from all reports for that year required

20

by this section in an appropriate location on an Internet website created pursuant to § 21-38-3(b).

21

The combined aggregated data from the reports must be published in a manner that does not

22

disclose or tend to disclose proprietary or confidential information of any pharmacy benefit

23

manager or health benefit plan issuer.

24

     (h) The commissioner shall promulgate any and all rules and regulations deemed

25

necessary for the implementation of this section.

26

     SECTION 5. Chapter 27-41 of the General Laws entitled "Health Maintenance

27

Organizations" is hereby amended by adding thereto the following section:

28

     27-41-90. Drug cost transparency.

29

     (a) The following definitions as used in this section shall apply:

30

     (1) "Animal health product" means a medical product approved and licensed for use in

31

animal or veterinary medicine, including a pharmaceutical, a biologic, an insecticide, and a

32

parasiticide.

33

     (2) "Commissioner" or "health insurance commissioner" means that individual appointed

34

pursuant to § 42-14.5-1.

 

LC003958 - Page 9 of 13

1

     (3) "Health benefit plan" has the same meaning as § 27-18-1.1.

2

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

3

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

4

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

5

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

6

repackaging, labeling, or distributing a drug. The term "pharmaceutical drug manufacturer" does

7

not include a wholesale distributor or retailer of prescription drugs or a pharmacist licensed under

8

chapter 19.1 of title 5.

9

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

10

contracts to administer or manage prescription-drug benefits on behalf of any carrier that provides

11

prescription-drug benefits to residents of this state.

12

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

13

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

14

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

15

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

16

by the pharmaceutical drug manufacturer.

17

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

18

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

19

Services.

20

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

21

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

22

services, procedures, or settings.

23

     (b) On or before February 1, 2021 and every February 1 of each year thereafter, each

24

pharmacy benefit manager shall file a report with the commissioner. The report must state for the

25

immediately preceding calendar year:

26

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

27

collected from pharmaceutical drug manufacturers; and

28

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

29

other payments collected from pharmaceutical drug manufacturers that were:

30

     (i) Passed to:

31

     (A) A health benefit plan issuer; or

32

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

33

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

34

     (c) Notwithstanding subsection (b) of this section, the report due on or before February 1,

 

LC003958 - Page 10 of 13

1

2021, under that subsection must state the required information for the immediately preceding

2

three (3) calendar years in addition to stating the required information for the preceding calendar

3

year. This subsection (c) of this section shall not apply to any report required after February 1,

4

2021.

5

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

6

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

7

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

8

or class of prescription drugs.

9

     (e) On or before February 1, 2021 and every February 1 of each year thereafter, each

10

health benefit plan issuer shall submit to the commissioner a report that states for the immediately

11

preceding calendar year:

12

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

13

across all plans;

14

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

15

     (3) The percent increase in premiums that were attributable to prescription drugs across

16

all plans;

17

     (4) The percentage of specialty drugs with utilization management requirements across

18

all plans; and

19

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

20

management.

21

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

22

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

23

prescription drugs.

24

     (g) On or before May 1 of each year, the commissioner shall collaborate with the Rhode

25

Island department of health to publish the aggregated data from all reports for that year required

26

by this section in an appropriate location on an Internet website created pursuant to § 21-38-3(b).

27

The combined aggregated data from the reports must be published in a manner that does not

28

disclose or tend to disclose proprietary or confidential information of any pharmacy benefit

29

manager or health benefit plan issuer.

30

     (h) The commissioner shall promulgate any and all rules and regulations deemed

31

necessary for the implementation of this section.

 

LC003958 - Page 11 of 13

1

     SECTION 6. This act shall take effect upon passage.

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LC003958

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LC003958 - Page 12 of 13

EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N   A C T

     RELATING TO FOOD AND DRUGS - DRUG COST TRANSPARENCY ACT

***

1

     This act would require pharmaceutical drug manufacturers to provide wholesale drug

2

acquisition cost information to the department of health (DOH) and pharmacy benefit managers

3

to provide information relating to drug prices, rebates, fees and drug sales to the health insurance

4

commissioner on a yearly basis on or before February 1, 2021 and thereafter.

5

     This act would take effect upon passage.

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LC003958

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LC003958 - Page 13 of 13