EXPLANATION: CAPITALS INDICATE MAT TER ADDED TO EXISTIN G LAW.
[Brackets] indicate matter deleted from existing law.
*hb0424*
HOUSE BILL 424
J1, J5 5lr2044
CF SB 357
By: Delegates Cullison and White Holland
Introduced and read first time: January 16, 2025
Assigned to: Health and Government Operations
A BILL ENTITLED
AN ACT concerning 1
Prescription Drug Affordability Board – Authority for Upper Payment Limits 2
(Lowering Prescription Drug Costs for All Marylanders Now Act) 3
FOR the purpose of requiring the Prescription Drug Affordability Board, under certain 4
circumstances, to establish a process for setting upper payment limits for all 5
purchases and payor reimbursements of prescription drug products in the State that 6
the Board determines have led or will lead to affordability challenges; authorizing 7
the Board to reconsider an upper payment limit for a drug that becomes a current 8
shortage; altering requirements related to the setting of upper payment limits by the 9
Board; prohibiting the Board from taking certain actions related to upper payment 10
limits; and generally relating to the Prescription Drug Affordability Board. 11
BY repealing and reenacting, with amendments, 12
Article – Health – General 13
Section 21–2C–01, 21–2C–13, and 21–2C–14 14
Annotated Code of Maryland 15
(2023 Replacement Volume and 2024 Supplement) 16
BY repealing and reenacting, without amendments, 17
Article – Health – General 18
Section 21–2C–11(a) 19
Annotated Code of Maryland 20
(2023 Replacement Volume and 2024 Supplement) 21
BY repealing 22
Article – Health – General 23
Section 21–2C–11(d) and 21–2C–16 24
Annotated Code of Maryland 25
(2023 Replacement Volume and 2024 Supplement) 26
BY adding to 27 2 HOUSE BILL 424
Article – Health – General 1
Section 21–2C–16 2
Annotated Code of Maryland 3
(2023 Replacement Volume and 2024 Supplement) 4
SECTION 1. BE IT ENACTED BY THE GENERAL ASSEMBLY OF MARYLAND, 5
That the Laws of Maryland read as follows: 6
Article – Health – General 7
21–2C–01. 8
(a) In this subtitle the following words have the meanings indicated. 9
(b) “Biologic” means a drug that is produced or distributed in accordance with a 10
biologics license application approved under 42 C.F.R. § 447.502. 11
(c) “Biosimilar” means a drug that is produced or distributed in accordance with 12
a biologics license application approved under 42 U.S.C. § 262(k)(3). 13
(d) “Board” means the Prescription Drug Affordability Board. 14
(e) (1) “Brand name drug” means a drug that is produced or distributed in 15
accordance with an original new drug application approved under 21 U.S.C. § 355(c). 16
(2) “Brand name drug” does not include an authorized generic as defined 17
by 42 C.F.R. § 447.502. 18
(F) “CURRENT SHORTAGE ” MEANS A DRUG : 19
(1) LISTED AS CURRENT ON THE FEDERAL FOOD AND DRUG 20
ADMINISTRATION ’S DRUG SHORTAGE DATABASE; OR 21
(2) OTHERWISE DETERMINED BY THE BOARD TO BE IN SHORT 22
SUPPLY IN THE STATE. 23
[(f)] (G) “Generic drug” means: 24
(1) A retail drug that is marketed or distributed in accordance with an 25
abbreviated new drug application, approved under 21 U.S.C. § 355(j); 26
(2) An authorized generic as defined by 42 C.F.R. § 447.502; or 27
(3) A drug that entered the market before 1962 that was not originally 28
marketed under a new drug application. 29
HOUSE BILL 424 3
[(g)] (H) “Manufacturer” means an entity that: 1
(1) (i) Engages in the manufacture of a prescription drug product; or 2
(ii) Enters into a lease with another manufacturer to market and 3
distribute a prescription drug product under the entity’s own name; and 4
(2) Sets or changes the wholesale acquisition cost of the prescription drug 5
product it manufactures or markets. 6
[(h)] (I) “Prescription drug product” means a brand name drug, a generic drug, 7
a biologic, or a biosimilar. 8
[(i)] (J) “Stakeholder Council” means the Prescription Drug Affordability 9
Stakeholder Council. 10
21–2C–11. 11
(a) In this section, “Fund” means the Prescription Drug Affordability Fund. 12
[(d) (1) The Board shall be established using special or general funds, which 13
shall be repaid to the State with the funds from the Fund. 14
(2) If the Board receives funding from the Maryland Health Care 15
Commission under paragraph (1) of this subsection, the Board shall repay the funds to the 16
Commission from the Fund over a 3–year period beginning June 1, 2021.] 17
21–2C–13. 18
(a) If, under § 21–2C–07 of this subtitle, the Board finds that it is in the best 19
interest of the State to establish a process for setting upper payment limits for prescription 20
drug products that it determines have led or will lead to an affordability challenge, the 21
Board, in conjunction with the Stakeholder Council, shall draft a plan of action for 22
implementing the process [that includes the criteria the Board shall use to set upper 23
payment limits] IN ACCORDANCE WITH T HE REQUIREMENTS OF T HIS SECTION. 24
(b) The criteria for setting upper payment limits shall include consideration of: 25
(1) The cost of administering the prescription drug product; 26
(2) The cost of delivering the prescription drug product to consumers; [and] 27
(3) THE EFFECT THE UPPER PAYM ENT LIMIT WILL HAVE ON 28
PROVIDERS OF 340B DRUGS; AND 29
4 HOUSE BILL 424
[(3)] (4) Other relevant administrative costs related to the prescription 1
drug product. 2
[(c) The process for setting upper payment limits shall: 3
(1) Prohibit the application of an upper payment limit for a prescription 4
drug product that is on the federal Food and Drug Administration prescription drug 5
shortage list; and 6
(2) Require the Board to: 7
(i) Monitor the availability of any prescription drug product for 8
which it sets an upper payment limit; and 9
(ii) If there becomes a shortage of the prescription drug product in 10
the State, reconsider or suspend the upper payment limit.] 11
(C) (1) IF THE BOARD PREVIOUSLY SET AN UPPER PAYMENT LIM IT FOR A 12
DRUG THAT BECOMES A CURRENT SHORTAGE , THE BOARD MAY RECONSIDER THE 13
PREVIOUSLY SET UPPER PAYMENT LIMIT . 14
(2) THE BOARD MAY NOT : 15
(I) ESTABLISH A NEW UPPER PAYMENT LIMIT FOR A CURRENT 16
SHORTAGE; 17
(II) ENFORCE AN UPPER PAYM ENT LIMIT AGAINST PR OVIDER 18
OR PHARMACY REIMBURS EMENT REQUIREMENTS F OR MEDICARE PART C OR PART 19
D PLANS; OR 20
(III) COUNT A PHARMACY DISP ENSING FEE TOWARD OR 21
SUBJECT A PHARMACY D ISPENSING FEE TO AN UPPER PAYMENT LIMIT . 22
(d) (1) If a plan of action is drafted under subsection (a) of this section, the 23
Board shall submit the plan of action to the Legislative Policy Committee of the General 24
Assembly, in accordance with § 2–1257 of the State Government Article, for its approval. 25
(2) The Legislative Policy Committee shall have 45 days to approve the 26
plan of action. 27
(3) If the Legislative Policy Committee does not approve the plan of action, 28
the Board shall submit the plan to the Governor and the Attorney General for approval. 29
(4) The Governor and the Attorney General shall have 45 days to approve 30
the plan of action. 31 HOUSE BILL 424 5
(5) The Board may not set upper payment limits unless the plan is 1
approved, in accordance with this subsection, by: 2
(i) The Legislative Policy Committee; or 3
(ii) 1. The Governor; and 4
2. The Attorney General. 5
21–2C–14. 6
[(a) If a plan of action is approved under § 21–2C–13(d) of this subtitle] IN 7
ACCORDANCE WITH THE PLAN OF ACTION APPRO VED BY THE LEGISLATIVE POLICY 8
COMMITTEE ON OCTOBER 22, 2024, the Board may set upper payment limits for 9
prescription drug products that are: 10
(1) Purchased or paid for by a unit of State or local government or an 11
organization on behalf of a unit of State or local government, including: 12
(i) State or county correctional facilities; 13
(ii) State hospitals; and 14
(iii) Health clinics at State institutions of higher education; 15
(2) Paid for through a health benefit plan on behalf of a unit of State or 16
local government, including a county, bicounty, or municipal employee health benefit plan; 17
or 18
(3) Purchased for or paid for by the Maryland State Medical Assistance 19
Program. 20
[(b) The upper payment limits set under subsection (a) of this section shall: 21
(1) Be for prescription drug products that have led or will lead to an 22
affordability challenge; and 23
(2) Be set in accordance with the criteria established in regulations 24
adopted by the Board. 25
(c) (1) The Board shall: 26
(i) Monitor the availability of any prescription drug product for 27
which it sets an upper payment limit; and 28
6 HOUSE BILL 424
(ii) If there becomes a shortage of the prescription drug product in 1
the State, reconsider whether the upper payment limit should be suspended or altered. 2
(2) An upper payment limit set under subsection (a) of this section may not 3
be applied to a prescription drug product while the prescription drug product is on the 4
federal Food and Drug Administration prescription drug shortage list.] 5
[21–2C–16. 6
On or before December 1, 2026, the Board, in consultation with the Stakeholder 7
Council, shall report to the Senate Finance Committee and the House Health and 8
Government Operations Committee, in accordance with § 2–1257 of the State Government 9
Article, on: 10
(1) The legality, obstacles, and benefits of setting upper payment limits on 11
all purchases and payor reimbursements of prescription drug products in the State; and 12
(2) Recommendations regarding whether the General Assembly should 13
pass legislation to expand the authority of the Board to set upper payment limits to all 14
purchases and payor reimbursements of prescription drug products in the State.] 15
21–2C–16. 16
(A) (1) THE BOARD, IN CONSULTATION WITH THE STAKEHOLDER 17
COUNCIL, SHALL DETERMINE WHET HER, IN ADDITION TO SETTI NG UPPER PAYMENT 18
LIMITS IN ACCORDANCE WITH § 21–2C–14 OF THIS SUBTITLE , IT IS IN THE BEST 19
INTEREST OF THE STATE FOR THE BOARD TO ESTABLISH A PROCESS FOR SETTI NG 20
UPPER PAYMENT LIMITS FOR ALL PURCHASES AN D PAYOR REIMBURSEMEN TS OF 21
PRESCRIPTION DRUG PR ODUCTS IN THE STATE THAT THE BOARD DETERMINES 22
HAVE LED OR WILL LEA D TO AN AFFORDABILIT Y CHALLENGE . 23
(2) WHEN MAKING A DETERMI NATION UNDER PARAGRA PH (1) OF 24
THIS SUBSECTION, THE BOARD SHALL CONSIDER , IF APPLICABLE: 25
(I) CONTRACT AND BUDGET D ATA PROVIDED TO THE BOARD 26
THAT DEMONSTRATES SA VINGS TO THE STATE OR LOCAL GOVERN MENTS AS A 27
RESULT OF UPPER PAYM ENT LIMITS SET IN AC CORDANCE WITH § 21–2C–14 OF THIS 28
SUBTITLE; 29
(II) SUCCESS OF SETTING UP PER PAYMENT LIMITS I N OTHER 30
STATES; AND 31
(III) EXPECTED SAVINGS FROM MEDICARE MAXIMUM FAIR 32
PRICES SET BY THE CENTERS FOR MEDICARE AND MEDICAID SERVICES. 33
HOUSE BILL 424 7
(B) (1) IF THE BOARD MAKES AN AFFIRM ATIVE DETERMINATION UNDER 1
SUBSECTION (A) OF THIS SECTION , THE BOARD, IN CONSULTATION WITH THE 2
STAKEHOLDER COUNCIL, SHALL ESTABLISH A PR OCESS FOR SETTING UP PER 3
PAYMENT LIMITS FOR A LL PURCHASES AND PAY OR REIMBURSEMENTS OF 4
PRESCRIPTION DRUG PR ODUCTS IN THE STATE THAT THE BOARD DETERMINES 5
HAVE LED OR WILL LEAD TO A N AFFORDABILITY CHAL LENGE. 6
(2) THE PROCESS ESTABLISH ED UNDER PARAGRAPH (1) OF THIS 7
SUBSECTION SHALL : 8
(I) TO THE EXTENT APPROPR IATE, USE THE PLAN OF ACTI ON 9
APPROVED UNDER § 21–2C–13(D) OF THIS SUBTITLE; AND 10
(II) OTHERWISE COMP LY WITH THE REQUIREM ENTS FOR 11
SETTING UPPER PAYMEN T LIMITS ESTABLISHED UNDER THIS SUBTITLE . 12
SECTION 2. AND BE IT FURTHER ENACTED, That the Laws of Maryland read 13
as follows: 14
Article – Health – General 15
21–2C–16. 16
(C) IF THE BOARD ESTABLISHES A P ROCESS UNDER SUBSECT ION (B) OF 17
THIS SECTION , THE BOARD SHALL SET UPPER PAYMENT LIMITS FOR A LL 18
PURCHASES AND PAYOR REIMBURSEMENTS OF PR ESCRIPTION DRUG PROD UCTS IN 19
THE STATE IN ACCORDANCE W ITH THE PROCESS . 20
SECTION 3. AND BE IT FURTHER ENACTED, That : 21
(a) Section 2 of this Act is contingent on the Prescription Drug Affordability Board 22
setting upper payment limits on two prescription drugs in accordance with § 21–2C–14 of 23
the Health – General Article, as enacted by Section 1 of this Act, and each upper payment 24
limit being in effect for 1 year. 25
(b) Within 5 days after the conditions described in subsection (a) of this section 26
are met, the Prescription Drug Affordability Board shall notify the Department of 27
Legislative Services. 28
(c) If notice is received by the Department of Legislative Services in accordance 29
with subsection (b) of this section on or before September 31, 2030, Section 2 of this Act 30
shall take effect on the date the notice is received by the Department of Legislative Services. 31
8 HOUSE BILL 424
(d) If notice is not received by the Department of Legislative Services on or before 1
December 31, 2030, Section 2 of this Act, with no further action required by the General 2
Assembly, shall be null and void. 3
SECTION 4. AND BE IT FURTHER ENACTED, That , subject to Section 3 of this 4
Act, this Act shall take effect October 1, 2025. 5