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AN ACT relating to the Kentucky Prescription Drug Affordability Board and 1
making an appropriation therefor. 2
Be it enacted by the General Assembly of the Commonwealth of Kentucky: 3
SECTION 1. A NEW SECTION OF KRS CHAPTER 194A IS CREATED TO 4
READ AS FOLLOWS: 5
As used in Sections 1 to 6 of this Act: 6
(1) "Affordability review" means the review required under Section 5 of this Act; 7
and 8
(2) "Board" means the Kentucky Prescription Drug Affordability Board established 9
in Section 2 of this Act. 10
SECTION 2. A NEW SECTION OF KRS CHAPTER 194A IS CREATED TO 11
READ AS FOLLOWS: 12
(1) There is hereby created and established the Kentucky Prescription Drug 13
Affordability Board, whose duties shall be to: 14
(a) Collect and review information relating to the cost of prescription drugs 15
sold in this state; 16
(b) Conduct affordability reviews of prescription drugs; and 17
(c) Make the legislative recommendations and reports relating to the cost of 18
prescription drugs in this state required under Section 6 of this Act and any 19
other law. 20
(2) (a) The board shall consist of: 21
1. Nine (9) members, who: 22
a. Are residents of this state; 23
b. Have expertise in: 24
i. Health care economies and finance; or 25
ii. Pharmaceutical economies and finance; and 26
c. Are not employees, board members, or consultants of: 27 UNOFFICIAL COPY 24 RS BR 1056
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i. A manufacturer that sells, or offers for sale, prescription 1
drugs; 2
ii. A wholesale distributor that sells, or offers for sale, 3
prescription drugs; 4
iii. A health insurer; 5
iv. A pharmacy benefit manager or any other administrator of 6
prescription drug benefits; or 7
v. Any trade association related to any person referenced 8
under subpart i., ii. iii., or iv. of this subdivision; and 9
2. Three (3) alternate members who: 10
a. Meet the requirements of subparagraph 1.a. to c. of this 11
paragraph; and 12
b. Shall be designated by the chair of the board to participate in 13
any activity or vote of the board for which a member is recused. 14
(b) At least one (1) of the members of the board shall also have expertise in the 15
340B Program established under Section 340B of the Public Health Service 16
Act, Pub. L. No. 78-410. 17
(c) 1. Members of the board shall: 18
a. Be appointed, and subject to removal by, the Governor for four 19
(4) year terms; 20
b. Be subject to Senate confirmation in accordance with KRS 21
11.160; 22
c. Be eligible to succeed themselves if the member continues to be 23
qualified under paragraph (a) of this subsection; and 24
d. To the extent practicable and consistent with federal and state 25
law, reflect the racial, ethnic, and gender diversity of the state. 26
2. In making appointments to the board, the Governor shall consider 27 UNOFFICIAL COPY 24 RS BR 1056
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conflicts of interests disclosed by prospective members under 1
subsection (2) of Section 3 of this Act shall be considered in making 2
appointments to the board. 3
3. The Governor may remove a member of the board for malfeasance in 4
office, failure to regularly attend meetings, or any cause that renders 5
the member incapable or unfit to discharge the duties of the member. 6
Removal from the board under this subparagraph shall not be subject 7
to review. 8
(3) (a) The board: 9
1. Shall select one (1) of its members as a chairperson and another as a 10
vice chairperson; 11
2. Shall determine the terms, duties, and powers necessary for the 12
performance of the functions of the offices held under subparagraph 13
1. of this paragraph; 14
3. Shall meet at least once every six (6) weeks unless the board does not 15
have a prescription drug to review under Section 5 of this Act; and 16
4. May meet more frequently than as required under subparagraph 3. of 17
this paragraph upon the call of the chair. 18
(b) A majority of members shall constitute a quorum. 19
(4) (a) The board shall be a budgetary unit of the Office of Data Analytics, which 20
shall: 21
1. Pay all of the board's necessary operating expenses; 22
2. Furnish all office space, personnel, equipment, supplies, and technical 23
or administrative services required by the board in the performance of 24
the board's functions; and 25
3. Maintain a webpage on its public website for the board to use for its 26
purposes, including but not limited to publishing disclosures under 27 UNOFFICIAL COPY 24 RS BR 1056
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subsection (4)(a) of Section 3 of this Act. 1
(b) Members of the board shall not receive compensation for services, but shall 2
receive actual and necessary travel expenses associated with attending 3
meetings in accordance with state administrative regulations relating to 4
travel reimbursement. 5
(5) The board: 6
(a) Shall appoint an executive director with knowledge and demonstrated 7
experience in pharmacoeconomics, pharmacology, health policy, health 8
services research, or a related field or discipline; 9
(b) May employ consultants, investigators, and other staff for the operation of 10
the board; and 11
(c) 1. May enter into a contract with a qualified independent third party for 12
any service necessary to carry out the powers and duties of the board. 13
2. Unless otherwise authorized by the board in writing, a third party that 14
has entered into a contract under subparagraph 1. of this paragraph 15
shall not release, publish, or otherwise use any information to which 16
the third party has access under the contract. 17
(6) In order to carry out its duties under Sections 1 to 6 of this Act, the board may: 18
(a) Collect and review publicly available information, including but not limited 19
to data regarding: 20
1. Prescription drug manufacturers; 21
2. Prescription drug wholesale distributors; 22
3. Insurers; and 23
4. Pharmacy benefit managers and other administrators of pharmacy 24
benefits; 25
(b) Enter into memorandums of understanding with states that require 26
reporting on the cost of prescription drugs; 27 UNOFFICIAL COPY 24 RS BR 1056
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(c) Access available prescription drug pricing information from state agencies; 1
and 2
(d) Subscribe to any one (1) or more prescription drug pricing files. 3
(7) (a) To the extent there is not sufficient information available under subsection 4
(6) of this section to carry out the board's duties under Sections 1 to 6 of 5
this Act, including conducting affordability reviews, the board may request 6
pricing information for any prescription drug identified under subsection 7
(2) of Section 5 of this section from any prescription drug wholesale 8
distributor, insurer, pharmacy benefit manager, or other administrator of 9
pharmacy benefits. 10
(b) The failure of a prescription drug manufacturer, prescription drug 11
wholesale distributor, insurer, pharmacy benefit manager, or other 12
administrator of pharmacy benefits to provide pricing information under 13
paragraph (a) of this subsection shall not affect the authority of the board to 14
conduct a review. 15
(8) The board may promulgate any administrative regulations, in accordance with 16
KRS Chapter 13A, necessary to carry out its duties under Sections 1 to 6 of this 17
Act. 18
SECTION 3. A NEW SECTION OF KRS CHAPTER 194A IS CREATED TO 19
READ AS FOLLOWS: 20
(1) As used in this section: 21
(a) "Conflict of interest": 22
1. Means any financial or personal association that has a potential to 23
bias, or have the appearance of biasing, a person's decisions in 24
matters related to the board or its activities; 25
2. Includes any instance in which a person, the person's immediate 26
family member, including a spouse, parent, child, or other legal 27 UNOFFICIAL COPY 24 RS BR 1056
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dependent, or any in-law of any of the preceding individuals, has 1
received, or could receive: 2
a. A direct or indirect financial benefit of any amount deriving 3
from the results or findings of a decision or determination of the 4
board; or 5
b. A financial benefit from any person that owns or manufactures a 6
prescription drug that is, or could be, reviewed by the board 7
under Section 5 of this Act; and 8
3. Does not include the ownership of securities if the securities are: 9
a. Part of a diversified mutual or exchange-traded fund; or 10
b. In a tax-deferred or tax-exempt retirement account that is 11
administered by an independent trustee; 12
(b) Except as provided in paragraph (a)3. of this subsection, "financial 13
benefit" includes: 14
1. Honoraria; 15
2. Fees; 16
3. Stock; 17
4. Increases to the value of existing stock holdings; and 18
5. Any other compensation; and 19
(c) "Third-party contractor" means any person who has contracted with the 20
board, or the office on behalf of the board, to provide services or goods. 21
(2) Prior to any person accepting an appointment, employment, or contractual 22
agreement in connection with the board, the person shall disclose any conflict of 23
interest to the applicable appointing, hiring, or contracting authority. 24
(3) (a) A board member, staff member of the board, or third-party contractor shall: 25
1. Disclose, in accordance with paragraph (b) of this subsection, any 26
conflict of interest relating to any board activity or vote; and 27 UNOFFICIAL COPY 24 RS BR 1056
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2. Recuse himself or herself from any board activity or vote in which the 1
member, staff member, or contractor has a conflict of interest. 2
(b) A conflict of interest shall be disclosed to the board by the earlier of: 3
1. Prior to the first meeting after the conflict is identified; or 4
2. Within five (5) days after the conflict is identified. 5
(4) (a) Except as provided in paragraph (b) of this subsection, the board shall 6
promptly publish, on the webpage maintained under subsection (4) of 7
Section 2 of this Act, any conflict of interest disclosed to the board under 8
subsection (3)(a) of this section, including the type, nature, and magnitude 9
of the conflict of interest. 10
(b) A conflict of interest disclosed by a staff member of the board or a third-11
party contractor relating to a personal association shall remain 12
confidential. 13
(5) A board member, staff member of the board, or third-party contractor shall not 14
accept any gift, bequeath, or donation of services or property that: 15
(a) Suggests a conflict of interest; or 16
(b) Otherwise has the appearance of creating bias in the activities or votes of 17
the board. 18
SECTION 4. A NEW SECTION OF KRS CHAPTER 194A IS CREATED TO 19
READ AS FOLLOWS: 20
(1) The Kentucky Prescription Drug Affordability Board fund is hereby created in 21
the State Treasury. 22
(2) The following shall be deposited into the fund: 23
(a) Any assessments collected under subsection (6) of this section; and 24
(b) Any grants received under subsection (5) of this section. 25
(3) Notwithstanding KRS 45.229, moneys in the fund not expended at the close of a 26
fiscal year shall not lapse but shall be carried forward to the next fiscal year. Any 27 UNOFFICIAL COPY 24 RS BR 1056
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interest earnings of the fund shall become part of the fund and shall not lapse. 1
(4) Moneys in the fund are hereby appropriated by the General Assembly, and shall 2
be available to the office to implement Sections 1 to 6 of this Act. 3
(5) The executive director of the board shall be authorized to seek and accept any 4
grants available to support the activities of the board. 5
(6) The Office of Data Analytics shall assess and collect an annual fee, in an amount 6
sufficient to cover the costs of implementing Sections 1 to 6 of this Act, on: 7
(a) Manufacturers or wholesale distributors that offer for sale or sell 8
prescription drugs in this state; 9
(b) Pharmacy benefit managers licensed in this state; 10
(c) Health insurers authorized to transact insurance in this state; and 11
(d) Any other administrator of prescription drug benefits in this state. 12
(7) The Office of Data Analytics may coordinate collection activities with the 13
Department of Revenue under KRS 131.560 for any fee that is assessed but not 14
collected by the office. 15
SECTION 5. A NEW SECTION OF KRS CHAPTER 194A IS CREATED TO 16
READ AS FOLLOWS: 17
(1) As used in this section: 18
(a) "FDA" means the United States Food and Drug Administration; 19
(b) "Health utility" means a measure of the degree to which having a 20
particular form of disease or disability, or having a particular functional 21
limitation, negatively impacts the quality of life as compared to a state of 22
perfect health, expressed as a number between zero (0) and one (1); and 23
(c) "Quality-adjusted life-year" means the product of a health utility multiplied 24
by the extra months or years of life that a patient may gain as a result of 25
treatment. 26
(2) (a) The board shall review, in accordance with this section, a minimum of ten 27 UNOFFICIAL COPY 24 RS BR 1056
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(10) prescription drugs per year to determine whether use of each 1
prescription drug consistent with the labeling approved for the drug by the 2
FDA, or with standard medical practice, is unaffordable for Kentucky 3
consumers. 4
(b) At least one (1) insulin drug shall be reviewed per year under this section. 5
(c) A drug that is designated by the secretary of the FDA as a drug for a rare 6
disease or condition under 21 U.S.C. sec. 360bb, as amended, shall not be 7
subject to review under this section. 8
(3) (a) The board shall identify the following prescription drugs for review under 9
subsection (4)(a) of this section: 10
1. A brand-name drug or biological product that, as adjusted annually 11
for inflation, has: 12
a. An initial wholesale acquisition cost of thirty thousand dollars 13
($30,000) or more for: 14
i. A twelve (12) month supply; or 15
ii. A course of treatment that is less than twelve (12) months 16
in duration; or 17
b. An increase in the wholesale acquisition cost of ten percent 18
(10%) or more during the immediately preceding twelve (12) 19
months for: 20
i. A twelve (12) month supply; or 21
ii. A course of treatment that is less than twelve (12) months 22
in duration; 23
2. A biosimilar drug that has an initial wholesale acquisition cost that is 24
not at least fifteen percent (15%) lower than the corresponding 25
biological product; and 26
3. A generic drug: 27 UNOFFICIAL COPY 24 RS BR 1056
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a. That, as adjusted annually for inflation, has a wholesale 1
acquisition cost of one hundred dollars ($100) or more for: 2
i. A thirty (30) day supply or less, based on the recommended 3
dosage approved for labeling by the FDA; or 4
ii. One (1) dose if the labeling approved by the FDA does not 5
recommend a finite dosage; and 6
b. For which the wholesale acquisition cost increased by two 7
hundred percent (200%) or more during the immediately 8
preceding twelve (12) months, as determined by comparing the 9
current wholesale acquisition cost to the average wholesale 10
acquisition cost reported during the immediately preceding 11
twelve (12) months. 12
(b) The board may identify prescription drugs not described in paragraph (a) of 13
this subsection for review under subsection (4)(a) of this section if the 14
prescription drug may impose costs that create a significant affordability 15
challenge for the state health care system or patients. 16
(4) (a) The board shall determine whether to conduct an affordability review for 17
each prescription drug identified under subsection (3) of this section. 18
(b) When making the determination required under paragraph (a) of this 19
subsection, the board shall: 20
1. Evaluate the class of the drug and whether any therapeutically 21
equivalent prescription drugs are available for sale; 22
2. Evaluate aggregated data; 23
3. Seek and consider input about the drug from stakeholders: 24
4. Consider the average patient's out-of-pocket cost for the drug; and 25
5. Consider any other criteria established by the board in administrative 26
regulation. 27 UNOFFICIAL COPY 24 RS BR 1056
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(5) (a) In conducting an affordability review of a prescription drug, the board: 1
1. Shall consider the following, to the extent practicable: 2
a. The number of residents in this state prescribed the drug; 3
b. The price of the drug, including: 4
i. The wholesale acquisition cost; and 5
ii. Any other relevant prescription drug cost index for the 6
drug; 7
c. The relevant factors contributing to the price of the drug, 8
including the wholesale acquisition cost, discounts, rebates, or 9
other price concessions; 10
d. The price and availability of therapeutic alternatives to the drug 11
that are sold in this state; 12
e. The relevant factors contributing to the price paid for the 13
therapeutic equivalents of the drug, including the wholesale 14
acquisition cost, discounts, rebates, or other price concessions 15
for the therapeutic equivalent; 16
f. The cost to health insurance contracts, policies, certificates, or 17
plans based on patient use of the drug that is consistent with: 18
i. The labeling approved by the FDA; and 19
ii. Recognized standard medical practice; 20
g. The impact on patient access to the drug based on standard 21
prescription drug benefit designs in health insurance contracts, 22
policies, certificates, and plans offered in this state; 23
h. The dollar value and accessibility of patient assistance programs 24
offered by the manufacturer of the drug; 25
i. The relative financial impacts to health, medical, or social 26
services costs as can be quantified and compared to the costs of 27 UNOFFICIAL COPY 24 RS BR 1056
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existing therapeutic alternatives; 1
j. The effect of the price of the drug on Kentucky consumers' 2
access to the drug; 3
k. The average patient copayment or other cost sharing that is 4
associated with the drug and typically required pursuant to 5
health insurance policies, certificates, plans, and contracts 6
issued by insurers in the state; 7
l. The impact on safety net providers if the drug is available 8
through Section 340B of the Public Health Service Act, Pub. L. 9
No. 78-410; 10
m. Orphan drug status; 11
n. Input from: 12
i. Patients and caregivers affected by the condition or disease 13
that is treated by the prescription drug; and 14
ii. Individuals who possess scientific and medical training 15
with respect to the condition or disease treated by the 16
prescription drug; and 17
o. Any other information that a manufacturer, insurer, pharmacy 18
benefit manager, other administrator of pharmacy benefits, or 19
other entity chooses to provide to the board; and 20
2. May consider: 21
a. Any documents or information relating to the manufacturer's 22
selection of the initial price, or price increase, of the prescription 23
drug, including documents and information relating to: 24
i. Life-cycle management; 25
ii. The average cost of the drug in the state; 26
iii. Market competition and context; 27 UNOFFICIAL COPY 24 RS BR 1056
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iv. Projected revenue; and 1
v. Off-label usage of the drug; and 2
b. Any additional factors established by the board in administrative 3
regulation. 4
(b) If the board determines that the cost-effectiveness of a prescription drug 5
shall be considered as an additional factor under paragraph (a)2.b. of this 6
subsection, the board shall: 7
1. Not use quality-adjusted life years, or similar formulas that consider a 8
patient's age, severity of illness, or disability to identify subpopulations 9
for which a prescription drug would be less cost-effective; and 10
2. For any drug that extends life, weigh the value of the quality of life 11
equally for all patients, regardless of the patient's age, severity of 12
illness, or disability. 13
SECTION 6. A NEW SECTION OF KRS CHAPTER 194A IS CREATED TO 14
READ AS FOLLOWS: 15
By September 1 of each year, the board shall submit the following information to the 16
Legislative Research Commission, for referral to the Interim Joint Committees on 17
Health Services and Banking and Insurance: 18
(1) Price trends for the prescription drugs identified under subsection (3) of Section 19
5 of this Act. 20
(2) Prescription drugs for which the board conducted an affordability review and the 21
results of the review; and 22
(3) Recommendations, if any, for legislative changes necessary to make prescription 23
drugs more affordable in this state. 24
Section 7. KRS 304.2-100 is amended to read as follows: 25
(1) The commissioner shall personally supervise the operations of the department. 26
(2) The commissioner shall examine and inquire into violations of this code, shall 27 UNOFFICIAL COPY 24 RS BR 1056
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enforce the provisions of this code with impartiality and shall execute the duties 1
imposed upon him or her by this code. 2
(3) The commissioner shall have the powers and authority expressly conferred upon 3
him or her by or reasonably implied from the provisions of this code. 4
(4) The commissioner may conduct such examinations and investigations of insurance 5
matters, in addition to examinations and investigations expressly authorized, as the 6
commissioner may deem proper upon reasonable and probable cause to determine 7
whether any person has violated any provisions of this code or to secure 8
information useful in the lawful administration of any such provision. The cost of 9
such additional examinations and investigations shall be borne by the state. 10
(5) The commissioner may establish and maintain such branch offices in this state as 11
may be reasonably required for the efficient administration of this code. 12
(6) The commissioner shall have such additional powers and duties as may be provided 13
by other laws of this state. 14
(7) The commissioner shall assist the Office of [Health ]Data [and ]Analytics in 15
carrying out: 16
(a) Subtitle 17B of this chapter;[ and ] 17
(b) KRS 194A.099; and 18
(c) Sections 1 to 6 of this Act. 19
Section 8. By September 1, 2024, the Kentucky Prescription Drug Affordability 20
Board established under Section 2 of this Act shall submit the following to the 21
Legislative Research Commission, for referral to the Interim Joint Committees on Health 22
Services and Banking and Insurance: 23
(1) A report on the legality, obstacles, and benefits of setting upper payment 24
limits on purchases and payor reimbursements of prescription drugs in this state; 25
(2) Recommendations regarding whether the General Assembly should pass 26
legislation to expand the authority of the board to set upper payment limits for purchases 27 UNOFFICIAL COPY 24 RS BR 1056
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and payor reimbursements of prescription drug in this state; and 1
(3) A plan for establishing upper payment limits on purchases and payor 2
reimbursements of prescription drugs that are subject to an affordability review under 3
Section 5 of this Act, which shall include: 4
(a) A methodology for establishing upper payment limits; 5
(b) An analysis of: 6
1. The resources needed by the board to implement the plan; 7
2. How an upper payment limit would be enforced; 8
3. How an upper payment limit could be implemented with respect to: 9
a. Prescription drug benefits provided under KRS 18A.225, KRS 18A.2254, and 10
Chapter 205; 11
b. Health insurance policies, certificates, plans, and contracts; and 12
c. To the extent permitted by federal law, other forms of insurance that provide 13
prescription drug benefits; 14
4. Any potential savings or costs associated with implementing the plan with 15
respect to: 16
a. The state; 17
b. Insurers; 18
c. Hospitals; and 19
d. Consumers. 20
Section 9. (1) The initial appointments to the Kentucky Prescription Drug 21
Affordability Board established under Section 2 of this Act, shall be made within 180 22
days of the effective date of this Act. 23
(2) Notwithstanding subsection (2)(c)1. of Section 2 of this Act, the initial 24
appointments to the Kentucky Prescription Drug Affordability Board established in 25
Section 2 of this Act shall be staggered as follows: 26
(a) Three appointments shall be for a term of two years; 27 UNOFFICIAL COPY 24 RS BR 1056
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(b) Three appointments shall be for a term of three years; and 1
(c) Three appointments shall be for a term of four years. 2
(3) The first meeting of the board shall take place within 30 days of the 3
appointment of all members. 4