EXPLANATION: CAPITALS INDICATE MAT TER ADDED TO EXISTIN G LAW.
[Brackets] indicate matter deleted from existing law.
Underlining indicates amendments to bill.
Strike out indicates matter stricken from the bill by amendment or deleted from the law by
amendment.
*hb0424*
HOUSE BILL 424
J1, J5 5lr2044
CF SB 357
By: Delegates Cullison and White Holland, White Holland, Alston, Bagnall,
Bhandari, Guzzone, Hill, S. Johnson, Kaiser, Kerr, Lopez, Martinez,
Pena–Melnyk, Rosenberg, Taveras, Woods, and Woorman
Introduced and read first time: January 16, 2025
Assigned to: Health and Government Operations
Committee Report: Favorable with amendments
House action: Adopted
Read second time: February 19, 2025
CHAPTER ______
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; requiring the Board to confer with the Maryland Medical Assistance Program 10
before establishing an upper payment limit that applies to the Program; prohibiting 11
the Board from taking certain actions related to upper payment limits; and generally 12
relating to the Prescription Drug Affordability Board. 13
BY repealing and reenacting, with amendments, 14
Article – Health – General 15
Section 21–2C–01, 21–2C–13, and 21–2C–14 16
Annotated Code of Maryland 17
(2023 Replacement Volume and 2024 Supplement) 18
BY repealing and reenacting, without amendments, 19
Article – Health – General 20
Section 21–2C–11(a) 21 2 HOUSE BILL 424
Annotated Code of Maryland 1
(2023 Replacement Volume and 2024 Supplement) 2
BY repealing 3
Article – Health – General 4
Section 21–2C–11(d) and 21–2C–16 5
Annotated Code of Maryland 6
(2023 Replacement Volume and 2024 Supplement) 7
BY adding to 8
Article – Health – General 9
Section 21–2C–16 10
Annotated Code of Maryland 11
(2023 Replacement Volume and 2024 Supplement) 12
SECTION 1. BE IT ENACTED BY THE GENERAL ASSEMBLY OF MARYLAND, 13
That the Laws of Maryland read as follows: 14
Article – Health – General 15
21–2C–01. 16
(a) In this subtitle the following words have the meanings indicated. 17
(b) “Biologic” means a drug that is produced or distributed in accordance with a 18
biologics license application approved under 42 C.F.R. § 447.502. 19
(c) “Biosimilar” means a drug that is produced or distributed in accordance with 20
a biologics license application approved under 42 U.S.C. § 262(k)(3). 21
(d) “Board” means the Prescription Drug Affordability Board. 22
(e) (1) “Brand name drug” means a drug that is produced or distributed in 23
accordance with an original new drug application approved under 21 U.S.C. § 355(c). 24
(2) “Brand name drug” does not include an authorized generic as defined 25
by 42 C.F.R. § 447.502. 26
(F) “CURRENT SHORTAGE ” MEANS A DRUG : 27
(1) LISTED AS CURRENT ON THE FEDERAL FOOD AND DRUG 28
ADMINISTRATION ’S DRUG SHORTAGE DATABASE; OR 29
(2) OTHERWISE DETERMINED BY THE BOARD TO BE IN SHORT 30
SUPPLY IN THE STATE. 31
HOUSE BILL 424 3
[(f)] (G) “Generic drug” means: 1
(1) A retail drug that is marketed or distributed in accordance with an 2
abbreviated new drug application, approved under 21 U.S.C. § 355(j); 3
(2) An authorized generic as defined by 42 C.F.R. § 447.502; or 4
(3) A drug that entered the market before 1962 that was not originally 5
marketed under a new drug application. 6
[(g)] (H) “Manufacturer” means an entity that: 7
(1) (i) Engages in the manufacture of a prescription drug product; or 8
(ii) Enters into a lease with another manufacturer to market and 9
distribute a prescription drug product under the entity’s own name; and 10
(2) Sets or changes the wholesale acquisition cost of the prescription drug 11
product it manufactures or markets. 12
[(h)] (I) “Prescription drug product” means a brand name drug, a generic drug, 13
a biologic, or a biosimilar. 14
[(i)] (J) “Stakeholder Council” means the Prescription Drug Affordability 15
Stakeholder Council. 16
21–2C–11. 17
(a) In this section, “Fund” means the Prescription Drug Affordability Fund. 18
[(d) (1) The Board shall be established using special or general funds, which 19
shall be repaid to the State with the funds from the Fund. 20
(2) If the Board receives funding from the Maryla nd Health Care 21
Commission under paragraph (1) of this subsection, the Board shall repay the funds to the 22
Commission from the Fund over a 3–year period beginning June 1, 2021.] 23
21–2C–13. 24
(a) If, under § 21–2C–07 of this subtitle, the Board finds that it is in the best 25
interest of the State to establish a process for setting upper payment limits for prescription 26
drug products that it determines have led or will lead to an affordability challenge, the 27
Board, in conjunction with the Stakeholder Council, shall draft a plan of action for 28
implementing the process [that includes the criteria the Board shall use to set upper 29
payment limits] IN ACCORDANCE WITH T HE REQUIREMENTS OF T HIS SECTION. 30
4 HOUSE BILL 424
(b) The criteria for setting upper payment limits shall include consideration of: 1
(1) The cost of administering the prescription drug product; 2
(2) The cost of delivering the prescription drug product to consumers; [and] 3
(3) THE EFFECT THE UPPER PAYMENT LIMIT WILL H AVE ON 4
PROVIDERS OF 340B DRUGS; AND 5
[(3)] (4) Other relevant administrative costs related to the prescription 6
drug product. 7
[(c) The process for setting upper payment limits shall: 8
(1) Prohibit the application of an upper payment limit for a prescription 9
drug product that is on the federal Food and Drug Administration prescription drug 10
shortage list; and 11
(2) Require the Board to: 12
(i) Monitor the availability of any prescription drug product for 13
which it sets an upper payment limit; and 14
(ii) If there becomes a shortage of the prescription drug product in 15
the State, reconsider or suspend the upper payment limit.] 16
(C) (1) IF THE BOARD PREVIOUSLY SET AN UPPER PAYMENT LIM IT FOR A 17
DRUG THAT BECOMES A CURRENT SHORTAGE , THE BOARD MAY RECONSIDER THE 18
PREVIOUSLY SET UPPER PAYMENT LIMIT . 19
(2) THE BOARD MAY NOT : 20
(I) ESTABLISH A NEW UPPER PAYMENT LIMIT FOR A CURRENT 21
SHORTAGE; 22
(II) ENFORCE AN UPPER PAYM ENT LIMIT AGAINST PR OVIDER 23
OR PHARMACY REIMBURS EMENT REQUIREMENTS F OR MEDICARE PART C OR PART 24
D PLANS; OR 25
(III) COUNT A PHARMACY DI SPENSING FEE TOWARD OR 26
SUBJECT A PHARMACY D ISPENSING FEE TO AN UPPER PAYMENT LIMIT . 27
(d) (1) If a plan of action is drafted under subsection (a) of this section, the 28
Board shall submit the plan of action to the Legislative Policy Committee of the General 29
Assembly, in accordance with § 2–1257 of the State Government Article, for its approval. 30
HOUSE BILL 424 5
(2) The Legislative Policy Committee shall have 45 days to approve the 1
plan of action. 2
(3) If the Legislative Policy Committee does not approve the plan of action, 3
the Board shall submit the plan to the Governor and the Attorney General for approval. 4
(4) The Governor and the Attorney General shall have 45 days to approve 5
the plan of action. 6
(5) The Board may not set upper payment limits unless the plan is 7
approved, in accordance with this subsection, by: 8
(i) The Legislative Policy Committee; or 9
(ii) 1. The Governor; and 10
2. The Attorney General. 11
21–2C–14. 12
[(a) If a plan of action is approved under § 21–2C–13(d) of this subtitle] IN 13
ACCORDANCE WITH THE PLAN OF ACTION APPRO VED BY THE LEGISLATIVE POLICY 14
COMMITTEE ON OCTOBER 22, 2024, the Board may set upper payment limits for 15
prescription drug products that are: 16
(1) Purchased or paid for by a unit of State or local government or an 17
organization on behalf of a unit of State or local government, including: 18
(i) State or county correctional facilities; 19
(ii) State hospitals; and 20
(iii) Health clinics at State institutions of higher education; 21
(2) Paid for through a health benefit plan on behalf of a unit of State or 22
local government, including a county, bicounty, or municipal employee health benefit plan; 23
or 24
(3) Purchased for or paid for by the Maryland State Medical Assistance 25
Program. 26
[(b) The upper payment limits set under subsection (a) of this section shall: 27
(1) Be for prescription drug products that have led or will lead to an 28
affordability challenge; and 29
6 HOUSE BILL 424
(2) Be set in accordance with the criteria established in regulations 1
adopted by the Board. 2
(c) (1) The Board shall: 3
(i) Monitor the availability of any prescription drug product for 4
which it sets an upper payment limit; and 5
(ii) If there becomes a shortage of the prescription drug product in 6
the State, reconsider whether the upper payment limit should be suspended or altered. 7
(2) An upper payment limit set under subsection (a) of this section may not 8
be applied to a prescription drug product while the prescription drug product is on the 9
federal Food and Drug Administration prescription drug shortage list.] 10
[21–2C–16. 11
On or before December 1, 2026, the Board, in consultation with the Stakeholder 12
Council, shall report to the Senate Finance Committee and the House Health and 13
Government Operations Committee, in accordance with § 2–1257 of the State Government 14
Article, on: 15
(1) The legality, obstacles, and benefits of setting upper payment limits on 16
all purchases and payor reimbursements of prescription drug products in the State; and 17
(2) Recommendations regarding whether the General Assembly should 18
pass legislation to expand the authority of the Board to set upper payment limits to all 19
purchases and payor reimbursements of prescription drug products in the State.] 20
21–2C–16. 21
(A) (1) THE BOARD, IN CONSULTATION WITH THE STAKEHOLDER 22
COUNCIL, SHALL DETERMINE WHETH ER, IN ADDITION TO SETTI NG UPPER PAYMENT 23
LIMITS IN ACCORDANCE WITH § 21–2C–14 OF THIS SUBTITLE , IT IS IN THE BEST 24
INTEREST OF THE STATE FOR THE BOARD TO ESTABLISH A PROCESS FOR SETTING 25
UPPER PAYMENT LIMITS FOR ALL PURCHASES AND PAYOR REIMBURSEMENTS OF 26
PRESCRIPTION DRUG PR ODUCTS IN THE STATE THAT THE BOARD DETERMINES 27
HAVE LED OR WILL LEA D TO AN AFFORDABILIT Y CHALLENGE . 28
(2) WHEN MAKING A DETERMI NATION UNDER PARAGRA PH (1) OF 29
THIS SUBSECTION , THE BOARD SHALL CONSIDER, IF APPLICABLE: 30
(I) CONTRACT AND BUDGET D ATA PROVIDED TO THE BOARD 31
THAT DEMONSTRATES SA VINGS TO THE STATE OR LOCAL GOVERN MENTS AS A 32
RESULT OF UPPER PAYM ENT LIMITS SET IN AC CORDANCE WITH § 21–2C–14 OF THIS 33
SUBTITLE; 34 HOUSE BILL 424 7
(II) SUCCESS OF SETTING UPPER PAYMENT LIMITS IN OTHER 1
STATES; AND 2
(III) EXPECTED SAVINGS FROM MEDICARE MAXIMUM FAIR 3
PRICES SET BY THE CENTERS FOR MEDICARE AND MEDICAID SERVICES. 4
(B) (1) IF THE BOARD MAKES AN AFFIRM ATIVE DETERMINATION UNDER 5
SUBSECTION (A) OF THIS SECTION , THE BOARD, IN CONSULTATION WITH THE 6
STAKEHOLDER COUNCIL, SHALL ESTABLISH A PR OCESS FOR SETTING UP PER 7
PAYMENT LIMITS FOR ALL PURCHASES AND PAYOR REIMBURSEMENTS OF 8
PRESCRIPTION DRUG PR ODUCTS IN THE STATE THAT THE BOARD DETERMINES 9
HAVE LED OR WILL LEA D TO AN AFFORDABILITY CHALLENG E. 10
(2) THE PROCESS ESTABLISH ED UNDER PARAGRAPH (1) OF THIS 11
SUBSECTION SHALL : 12
(I) TO THE EXTENT APPROPR IATE, USE THE PLAN OF ACTI ON 13
APPROVED UNDER § 21–2C–13(D) OF THIS SUBTITLE; AND 14
(II) OTHERWISE COMPLY WITH THE REQUIREMENTS FOR 15
SETTING UPPER PAYMEN T LIMITS ESTABLISHED UNDER THIS SUBTITLE . 16
(3) BEFORE ESTABLISHING A N UPPER PAYMENT LIMI T THAT APPLIES 17
TO THE MARYLAND MEDICAL ASSISTANCE PROGRAM, THE BOARD SHALL CONFER 18
WITH THE MARYLAND MEDICAL ASSISTANCE PROGRAM TO APPROVE TH E 19
APPLICATION OF THE U PPER PAYMENT LIMIT B Y ASSESSING WHETHER THE 20
PROPOSED UPPER PAYME NT LIMIT WILL: 21
(I) CONFLICT WITH THE MEDICAID DRUG REBATES 22
PROGRAM, THE COVERED OUTPATIENT DRUG RULE (CMS–2345–FC), OR ANY 23
OTHER FEDERAL REQUIR EMENTS AS APPLICABLE ; AND 24
(II) REQUIRE ADDITIONAL FU NDING TO BE ALLOCATE D TO THE 25
MARYLAND MEDICAL ASSISTANCE PROGRAM BUDGET . 26
SECTION 2. AND BE IT FURTHER ENACTED, That the Laws of Maryland read 27
as follows: 28
Article – Health – General 29
21–2C–16. 30
(C) (1) IF SUBJECT TO PARAGRAPH (2) OF THIS SUBSECTION , IF THE 31
BOARD ESTABLISHES A P ROCESS UNDER SUBSECT ION (B) OF THIS SECTION , THE 32 8 HOUSE BILL 424
BOARD SHALL SET UPPER PAYMENT LIMITS FOR ALL PURCHASES AND PAYOR 1
REIMBURSEMENTS OF PR ESCRIPTION DRUG PROD UCTS IN THE STATE IN 2
ACCORDANCE WITH THE PROCESS. 3
(2) THIS SUBSECTION DOES NOT APPLY WITH RESPE CT TO: 4
(I) PAYOR REIMBURSEMENTS UNDER MEDICARE PART C AND 5
D PLANS; 6
(II) PURCHASES UNDER THE F EDERAL 340B DRUG PRICING 7
PROGRAM; AND 8
(III) PURCHASES AND PAYOR R EIMBURSEMENTS UNDER 9
FEDERAL PROGRAMS THAT ARE PR EEMPTED BY FEDERAL L AW INCLUDING : 10
1. THE DEPARTMENT OF DEFENSE; 11
2. THE DEPARTMENT OF VETERANS AFFAIRS; 12
3. THE PUBLIC HEALTH SERVICE; 13
4. THE UNITED STATES COAST GUARD; 14
5. TRICARE; 15
6. THE FEDERAL EMPLOYEES HEALTH BENEFIT PLAN; 16
AND 17
7. ANY OTHER EXCLUSIVE F EDERAL PROGRAM AS 18
APPLICABLE. 19
SECTION 3. AND BE IT FURTHER ENACTED, That: 20
(a) Section 2 of this Act is contingent on the Prescription Drug Affordability Board 21
setting upper payment limits on two prescription drugs in accordance with § 21–2C–14 of 22
the Health – General Article, as enacted by Section 1 of this Act, and each upper payment 23
limit being in effect for 1 year. 24
(b) Within 5 days after the conditions described in subsection (a) of this section 25
are met, the Prescription Drug Affordability Board shall notify the Department of 26
Legislative Services. 27
(c) If notice is received by the Department of Legislative Services in accordance 28
with subsection (b) of this section on or before September 31 September 30, 2030, Section 2 29 HOUSE BILL 424 9
of this Act shall take effect on the date the notice is received by the Department of 1
Legislative Services. 2
(d) If notice is not received by the Department of Legislative Services on or before 3
December 31 September 30, 2030, Section 2 of this Act, with no further action required by 4
the General Assembly, shall be null and void. 5
SECTION 4. AND BE IT FURTHER ENACTED, That, subject to Section 3 of this 6
Act, this Act shall take effect October 1, 2025. 7
Approved:
________________________________________________________________________________
Governor.
________________________________________________________________________________
Speaker of the House of Delegates.
________________________________________________________________________________
President of the Senate.