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Rhode Island Senate Bill S0098

Rhode Island 2023 Regular Session

Rhode Island Senate Bill S0098 Compare Versions

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99 S TATE OF RHODE IS LAND
1010 IN GENERAL ASSEMBLY
1111 JANUARY SESSION, A.D. 2023
1212 ____________
1313
1414 A N A C T
1515 RELATING TO FOOD AND DRUGS -- PRESCRIPTION DRUG COST PROTECTION
1616 Introduced By: Senators DiPalma, Miller, Pearson, DiMario, Valverde, and Goodwin
1717 Date Introduced: February 01, 2023
1818 Referred To: Senate Health & Human Services
1919
2020
2121 It is enacted by the General Assembly as follows:
22-SECTION 1. Legislative Intent. 1
23-(1) The purpose of this chapter is to protect the safety, health, and economic well-being of 2
24-Rhode Island residents by safeguarding them from the negative and harmful impact of excessive 3
25-and unconscionable prices for prescription drugs. In enacting this act, the legislature finds that 4
26-access to prescription drugs is necessary for Rhode Island residents to maintain or achieve good 5
27-health: 6
28-(i) Excessive prices negatively impact the ability of Rhode Island residents to obtain 7
29-prescription drugs and price increases that exceed reasonable levels thereby endanger the health 8
30-and safety of Rhode Island residents to maintain or achieve good health; 9
31-(ii) Excessive prices for prescription drugs threaten the economic well-being of Rhode 10
32-Island residents and endanger their ability to pay for other necessary and essential goods and 11
33-services including housing, food and utilities; 12
34-(iii) Excessive prices for prescription drugs contribute significantly to a dramatic and 13
35-unsustainable rise in health care costs and health insurance that threaten the overall ability of Rhode 14
36-Island residents to obtain health coverage and maintain or achieve good health; 15
37-(iv) Excessive prices for prescription drugs contribute significantly to rising state costs for 16
38-health care provided and paid for through health insurance programs for public employees, 17
39-including employees of the state, municipalities and counties, school districts, institutions of higher 18
40-education, and retirees whose health care costs are funded by public programs, thereby threatening 19
22+SECTION 1. Title 21 of the General Laws entitled "FOOD AND DRUGS" is hereby 1
23+amended by adding thereto the following chapter: 2
24+CHAPTER 38 3
25+PRESCRIPTION DRUG COST PROTECTION 4
26+21-38-1. Definitions. 5
27+For the purposes of this chapter: 6
28+(1) "ERISA plan" means a plan qualified under the Employee Retirement Income Security 7
29+Act of 1974. 8
30+(2) "Health plan" means health insurance coverage or a plan providing coverage pursuant 9
31+to the provision of chapters 18.5, 18.6, 19 and 20 of title 27. 10
32+(3) "Participating ERISA plan" means an ERISA plan that has elected to participate in the 11
33+requirements and restrictions of this chapter as described in § 21-38-3. 12
34+(4) "Prescription drug" or "drug" has the same meaning as the term "drug" as defined in § 13
35+5-19.1-2. 14
36+(5) "Referenced drugs" means prescription drugs subjected to a referenced rate. 15
37+(6) "Referenced rate" means the maximum rate established by the health insurance 16
38+commissioner utilizing the wholesale acquisition cost and other pricing data pursuant to § 21-38-17
39+4. 18
40+(7) "State entity" means any agency of state government that purchases prescription drugs 19
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44-the ability of the state to fund those programs adequately and further threatening the ability of the 1
45-state to fund other programs necessary for the public good and safety, such as public education and 2
46-public safety; and 3
47-(v) Based on findings in subsections (i) through (iv) of this section, the legislature finds 4
48-that excessive prices for prescription drugs threaten the safety and well-being of Rhode Island 5
49-residents and find it is necessary to act in order to protect Rhode Island residents from the negative 6
50-impact of excessive costs. 7
51-SECTION 2. Title 21 of the General Laws entitled "FOOD AND DRUGS" is hereby 8
52-amended by adding thereto the following chapter: 9
53-CHAPTER 38 10
54-PRESCRIPTION DRUG COST PROTECTION 11
55-21-38-1. Definitions. 12
56-As used in this chapter: 13
57-(1) “ERISA Plan” means a plan qualified under the Employee Retirement Income Security 14
58-Act of 1974. 15
59-(2) “Health Plan” means any entity subject to the insurance laws and regulations of this 16
60-state, or subject to the jurisdiction of the commissioner, that contracts or offers to contract to 17
61-provide, deliver, arrange for, pay for, or reimburse any of the costs of healthcare services, including, 18
62-without limitation, an insurance company offering accident and sickness insurance, a health 19
63-maintenance organization licensed under chapter 41 of title 27, a nonprofit hospital service 20
64-corporation organized under chapter 19 of title 27, a nonprofit medical service corporation 21
65-organized under chapter 20 of title 27, a nonprofit dental service corporation organized under 22
66-chapter 41 of title 20.1, a nonprofit optometric service corporation organized under chapter 20.2 of 23
67-title 27, a domestic insurance company subject to chapter 1 of title 27 that offers or provides health 24
68-insurance coverage in the state, and a foreign insurance company subject to chapter 2 of title 27 25
69-that offers or providers health insurance coverage in the state. 26
70-(3) “Maximum fair price” means the maximum rate for a drug published by the Secretary 27
71-of the United States Department of Health and Human Services pursuant to Section 1195 of P.L. 28
72-117-169 (2022). 29
73-(4) “Participating ERISA plan” means an ERISA plan that has elected to participate in the 30
74-requirements and restrictions of this subchapter as described in § 21-38-4. 31
75-(5) “Price applicability period” means the period of time defined in Section 1191 of P.L. 32
76-117-169 (2022) 33
77-(6) “Referenced drug” means a drug subject to a maximum fair price. 34
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44+on behalf of the state for a person whose health care is paid for by the state, including any agent, 1
45+vendor, fiscal agent, contractor, or other party acting on behalf of the state. State entity does not 2
46+include the medical assistance program established under 42 U.S.C. § 1396 et seq. 3
47+(8) "Wholesale acquisition cost" means, with respect to a drug or biological, the 4
48+manufacturer's list price for the drug or biological to wholesalers or direct purchasers in the United 5
49+States, not including prompt pay or other discounts, rebates or reductions in price, for the most 6
50+recent month for which the information is available, as reported in wholesale price guides or other 7
51+publications of drug or biological pricing data. 8
52+21-38-2. Payment in excess of referenced rate -- prohibited. 9
53+(a) It is a violation of this chapter for a state entity or health plan or participating ERISA 10
54+plan to purchase referenced drugs to be dispensed or delivered to a consumer in the state, whether 11
55+directly or through a distributor, for a cost higher than the referenced rate as determined in § 21-12
56+38-4. 13
57+(b) It is a violation of this chapter for a retail pharmacy licensed in this state to purchase 14
58+for sale or distribution referenced drugs for a cost that exceeds the referenced rate to a person whose 15
59+health care is provided by a state entity or health plan or participating ERISA plan. 16
60+21-38-3. ERISA plan opt-in. 17
61+An ERISA plan may elect to participate in the provisions of this chapter. Any ERISA plan 18
62+that desires its purchase of prescription drugs to be subject to the prohibition described in § 21-38-19
63+2 shall notify the health insurance commissioner in writing by February 1 of each year. 20
64+ 21-38-4. Referenced drugs determined. 21
65+(a) As of March 1 of each calendar year, the director of the state employee health insurance 22
66+plan shall transmit to the health insurance commissioner a list of the two hundred fifty (250) most 23
67+costly prescription drugs based upon net price multiplied utilization. For each of these prescription 24
68+drugs, the director of the state employee health insurance plan shall also provide the total net spent 25
69+on each of those prescription drugs for the previous calendar year. 26
70+(b) Utilizing this information provided in subsection (a) of this section, as of May 1 of each 27
71+calendar year the health insurance commissioner shall create and publish a list of two hundred fifty 28
72+(250) referenced drugs that shall be subject to the referenced rate. 29
73+(c) The health insurance commissioner shall determine the referenced rate by comparing 30
74+the wholesale acquisition cost to the cost from the: 31
75+(1) Ontario ministry of health and long-term care and most recently published on the 32
76+Ontario drug benefit formulary; 33
77+(2) Régie de L'Assurance Maladie du Québec and most recently published on the Québec 34
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81-(7) “State entity” means any agency of state government that purchases prescription drugs 1
82-on behalf of the state for a person whose health care is paid for by the state, including any agent, 2
83-vendor, fiscal agent, contractor, or other party acting on behalf of the state. State entity does not 3
84-include the medical assistance program established under 42 U.S.C. §1396 et seq. 4
85-21-38-2. Payment in excess of referenced rate prohibited. 5
86-(a) The maximum fair price is the maximum payment for a referenced drug and applies to 6
87-all purchases of a referenced drug and reimbursements for a claim for the referenced drug during 7
88-the price applicability period when the referenced drug is dispensed, delivered, or administered to 8
89-an individual in the state in person, by mail, or by other means 9
90-(b) It is a violation of this chapter for any purchaser to purchase a referenced drug or seek 10
91-reimbursement for a referenced drug to be dispensed, delivered, or administered to an individual in 11
92-the state in person, by mail, or by other means for a cost higher than the maximum fair price. The 12
93-maximum fair price does not include a dispensing fee paid to a pharmacy for dispensing a 13
94-referenced drug and nothing in this chapter shall be interpreted to prevent a retail pharmacy from 14
95-receiving a dispensing fee above the maximum fair price. 15
96-21-38-3. ERISA plan opt-in. 16
97-An ERISA plan may elect to participate in the provisions of this chapter. Any ERISA plan 17
98-that desires its purchase of prescription drugs to be subject to the prohibition described in § 21-38-18
99-3 shall notify the insurance commissioner in writing by February 1 of each year. 19
100-21-38-4. Rulemaking authority. 20
101-The insurance commissioner shall have the authority to implement regulations pursuant to 21
102-chapter 35 of title 42 ( "administrative procedures") to fully implement the requirements of this 22
103-chapter. 23
104-21-38-5. Registered agent and office within the state. 24
105-Any entity that sells, distributes, delivers, or offers for sale any drug in the state is required 25
106-to maintain a registered agent and office within the state. 26
107-21-38-6. Use of savings. 27
108-(a) Any savings generated as a result of the requirements in §21-38-3 during the referenced 28
109-rate applicability period above must be used to reduce costs to consumers. Any state entity, health 29
110-plan or participating ERISA plan must calculate such savings and utilize such savings directly to 30
111-reduce costs for its members. In determining how to utilize savings in order to comply with this 31
112-provision, purchasers are directed to consider strategies that promote greater health equity by 32
113-addressing disparities across communities. 33
114-(b) No later than April 1 of each calendar year, each state entity, health plan and 34
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81+public drug programs list of medications. 1
82+(3) British Columbia ministry of health and most recently published on the British 2
83+Columbia pharmacare formulary; and 3
84+(4) Alberta ministry of health and most recently published on the Alberta drug benefit list. 4
85+(d) The referenced rate for each prescription drug shall be calculated as the lowest cost 5
86+among those resources and the wholesale acquisition cost. If a specific referenced drug is not 6
87+included within resources described in subsection (c) of this section, the health insurance 7
88+commissioner shall utilize for the purpose of determining the referenced rate ceiling price for drugs 8
89+as reported by the government of Canada patented medicine prices review board. 9
90+(e) The health insurance commissioner shall calculate annually the savings that are 10
91+expected to be achieved by subjecting prescription drugs to the referenced rate. In making this 11
92+determination the health insurance commissioner shall consult with the director of the state 12
93+employee health insurance plan and the chair of the state board of pharmacy. 13
94+(f) The health insurance commissioner shall have the authority to promulgate regulations 14
95+under § 42-14-5 to fully implement the requirements of this chapter. 15
96+21-38-5. Registered agent and office within the state. 16
97+Any entity that sells, distributes, delivers or offers for sale any prescription drug in the state 17
98+shall be required to maintain a registered agent and office within the state. 18
99+ 21-38-6. Use of savings. 19
100+(a) Any savings generated as a result of implementation and compliance with the provisions 20
101+of this chapter shall be used to reduce costs to consumers. Any state entity, health plan or 21
102+participating ERISA plan shall calculate such savings and utilize such savings directly to reduce 22
103+costs for its members. 23
104+(b) No later than April 1 of each calendar year, each state entity, health plan and 24
105+participating ERISA plan subject to this chapter shall submit to the health insurance commissioner 25
106+a report describing the savings achieved for each referenced drug for the previous calendar year 26
107+and how those savings were used to achieve the requirements of lower cost prescription prices. 27
108+21-38-7. Prohibition on withdrawal of referenced drugs for sale. 28
109+(a) It shall be a violation of this chapter for any manufacturer or distributor of a referenced 29
110+drug to withdraw that drug from sale or distribution within this state for the purpose of avoiding 30
111+the impact of the rate limitations set forth in § 21-38-2. 31
112+(b) Any manufacturer that intends to withdraw a referenced drug from sale or distribution 32
113+from within the state shall provide a notice of withdrawal in writing to the health insurance 33
114+commissioner and to the attorney general one hundred eighty (180) days prior to withdrawal. 34
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118-participating ERISA plan subject to this chapter shall submit to the insurance commissioner a report 1
119-describing the savings achieved for each referenced drug for the previous calendar year and how 2
120-those savings were used to achieve the requirements of subsection (a) of this section, including how 3
121-the savings were used to promote greater health equity by addressing disparities across 4
122-communities. 5
123-(c) The insurance commissioner shall implement rules setting forth the method for 6
124-calculating savings and the format and submission requirements for the report described in 7
125-subsection (b) of this section. 8
126-21-38-7. Enforcement. 9
127-Each violation of this chapter shall be subject to a fine of one thousand dollars ($1,000). 10
128-Every individual transaction in violation of § 21-38-3 is determined to be a separate violation. The 11
129-attorney general is authorized to enforce the provisions of this statute. The refusal of a manufacturer 12
130-or distributor to negotiate in good faith as described in § 21-38-8(d) shall be a valid affirmative 13
131-defense in any enforcement action brought under this chapter. 14
132-21-38-8. Prohibition on withdrawal of referenced drugs for sale. 15
133-(a) It shall be a violation of this chapter for any manufacturer or distributor of a referenced 16
134-drug to withdraw that drug from sale or distribution within this state for the purpose of avoiding 17
135-the impact of the rate limitations set forth in § 21-38-3. 18
136-(b) Any manufacturer that intends to withdraw a referenced drug from sale or distribution 19
137-from within the state shall provide a notice of withdrawal in writing to the insurance commissioner 20
138-and to the attorney general one hundred eight (180) days prior to such withdrawal. 21
139-(c) The insurance commissioner shall assess a penalty on any manufacturer or distributor 22
140-that it determines has withdrawn a referenced drug from distribution or sale in the state in violation 23
141-of subsection (a) or (b) of this section. With respect to each referenced drug for which the insurance 24
142-commissioner has determined the manufacturer or distributor has withdrawn from the market, the 25
143-penalty shall be equal to: 26
144-(1) Five hundred thousand dollars ($500,000); or 27
145-(2) The amount of annual savings determined by the insurance commissioner as described 28
146-in § 21-38-6, whichever is greater. 29
147-(d) It shall be a violation of this chapter for any manufacturer or distributor of a referenced 30
148-drug to refuse to negotiate in good faith with any payor or seller of prescription drugs a price that 31
149-is within the referenced rate as determined in § 21-38-2. 32
150-(e) The insurance commissioner shall assess a penalty on any manufacturer or distributor 33
151-that it determines has failed to negotiate in good faith in violation of § 21-38-7. With respect to 34
152-
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155-each referenced drug for which the insurance commissioner has determined the manufacturer or 1
156-distributor has failed to negotiate in good faith, the penalty shall be equal to: 2
157-(1) Five hundred thousand dollars ($500,000); or 3
158-(2) The amount of annual savings determined by the insurance commissioner as described 4
159-in § 21-38-6, whichever is greater. 5
160-21-38-9. Severability clause. 6
161-If any provision of this chapter or the application thereof is determined to be invalid, the 7
162-invalidity does not affect other provisions or applications of this chapter which can be given effect 8
163-without the invalid provision or application, and to this end the provisions of this chapter are 9
164-severable. 10
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118+(c) The health insurance commissioner shall assess a penalty on any manufacturer or 1
119+distributor that it determines has withdrawn a referenced drug from distribution or sale in the state 2
120+in violation of § 21-38-7(a). With respect to each referenced drug for which the health insurance 3
121+commissioner has determined the manufacturer or distributor has withdrawn from the market, the 4
122+penalty shall be equal to five hundred thousand dollars ($500,000) or the amount of annual savings 5
123+determined by the health insurance commissioner as described in § 21-38-4(e), whichever is 6
124+greater. 7
125+(d) It shall be a violation of this chapter for any manufacturer or distributor of a referenced 8
126+drug to refuse to negotiate in good faith with any payer or seller of prescription drugs a price that 9
127+is within the referenced rate as determined in §21-38-4. 10
128+(e) The health insurance commissioner shall assess a penalty on any manufacturer or 11
129+distributor that it determines has failed to negotiate in good faith in violation of subsection (d) of 12
130+this section. With respect to each referenced drug for which the health insurance commissioner has 13
131+determined the manufacturer or distributor has failed to negotiate in good faith, the penalty shall 14
132+be equal to five hundred thousand dollars ($500,000) or the amount of annual savings determined 15
133+by the health insurance commissioner as described in § 21-38-4(e), whichever is greater. 16
134+21-38-8. Enforcement. 17
135+(a) Each violation of § 21-38-2 shall be subject to a fine of one thousand dollars ($1,000). 18
136+Every individual transaction in violation of § 21-38-2 is determined to be a separate violation. 19
137+(b) The attorney general is authorized to enforce the provisions of this statute on behalf of 20
138+any state entity or consumers of prescription drugs. The refusal of a manufacturer or distributor to 21
139+negotiate in good faith as described in § 21-38-7(d) shall be a valid affirmative defense in any 22
140+enforcement action for a violation of § 21-38-2. 23
141+21-38-9. Severability. 24
142+If any provision of this chapter or its application to any person or circumstances is held 25
143+invalid, the invalidity shall not affect other provisions or applications of the chapter which can be 26
144+given effect without the invalid provision or application, and to this end the provisions of this 27
145+chapter are declared to be severable. 28
146+SECTION 2. This act shall take effect upon passage. 29
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171153 EXPLANATION
172154 BY THE LEGISLATIVE COUNCIL
173155 OF
174156 A N A C T
175157 RELATING TO FOOD AND DRUGS -- PRESCRIPTION DRUG COST PROTECTION
176158 ***
177159 This act would prohibit the state, participating ERISA or any health plan from purchasing 1
178-referenced drugs for a cost higher than the referenced rate. 2
179-This act would take effect upon passage. 3
160+referenced drugs for a cost higher than the referenced rate. The referenced rate will have two 2
161+hundred fifty (250) of the most costly prescription drugs based upon the net price multiplied by 3
162+utilization and the referenced rate shall be determined by comparing wholesale acquisition cost to 4
163+the cost from various Canadian drug lists. Any manufacturer or distributor who fails to comply 5
164+with the purchase standards shall be subject to a penalty equal to five hundred thousand dollars 6
165+($500,000) or the amount of annual savings determined by the superintendent, whichever if greater. 7
166+Additionally, any manufacturer or distributor who fails to negotiate in good faith shall be subject 8
167+to a penalty of five hundred thousand dollars ($500,000) or the amount of annual savings 9
168+determined by the health insurance commissioner, whichever is greater. 10
169+This act would take effect upon passage. 11
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