Rhode Island 2025 Regular Session

Rhode Island Senate Bill S0486 Compare Versions

Only one version of the bill is available at this time.

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5	5	2025 -- S 0486
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7	7	LC001879
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9	9	S T A T E O F R H O D E I S L A N D
10	10	IN GENERAL ASSEMBLY
11	11	JANUARY SESSION, A.D. 2025
12	12	____________
13	13
14	14	A N A C T
15	15	RELATING TO STATE AFFAIRS AND GOVERNMENT -- THE RHODE ISLAND HEALTH
16	16	CARE REFORM ACT OF 2004 -- HEALTH INSURANCE OVERSIGHT
17	17	Introduced By: Senators Lauria, DiPalma, Murray, Valverde, Sosnowski, Pearson, Gallo,
18	18	Ujifusa, Appollonio, and Urso
19	19	Date Introduced: February 26, 2025
20	20	Referred To: Senate Health & Human Services
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23	23	It is enacted by the General Assembly as follows:
24	24	SECTION 1. Chapter 42-14.5 of the General Laws entitled “The Rhode Island Health Care 1
25	25	Reform Act of 2004 — Health Insurance Oversight” is hereby amended by adding thereto the 2
26	26	following section: 3
27	27	42-14.5-6. Unsupported price increases on prescription drugs. 4
28	28	(a) Purpose. It is the purpose of this section to protect the safety, health and economic well-5
29	29	being of Rhode Island residents by guarding them against the negative and harmful impact of 6
30	30	unsupported price increases for prescription drugs. 7
31	31	(b) Definitions. As used in this chapter, the following words and terms shall have the 8
32	32	following meanings unless the context shall clearly indicate another or different meaning or intent: 9
33	33	(1) “Consumer price index” means the Consumer Price Index, Annual Average, for All 10
34	34	Urban Consumers, (CPI-U): US City Average, all items, as reported by the United States 11
35	35	Department of Labor, Bureau of Labor Statistics, or its successor or, if the index is discontinued, 12
36	36	an equivalent index reported by a federal authority or, if no such index is reported, "consumer price 13
37	37	index" means a comparable index chosen by the United States Bureau of Labor Statistics. 14
38	38	(2) “Identified drug” means any prescription drug that has at any time been identified as 15
39	39	having an unsupported price increase. 16
40	40	(3) “Prescription drug” has the same meaning as defined in § 5-19.1-2. 17
41	41	(4) “Unsupported price increase” means an increase in price for a prescription drug for 18
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45	45	which there was no, or inadequate, new clinical evidence to support the price increase. In order to 1
46	46	determine whether a price increase for a prescription drug is unsupported by new clinical evidence, 2
47	47	the state shall utilize and rely upon the analyses of prescription drugs prepared annually by the 3
48	48	Institute for Clinical and Economic Review (ICER) and published in its annual Unsupported Price 4
49	49	Increase Report. 5
50	50	(5) “Wholesale acquisition cost” means the manufacturer's list price for the drug or 6
51	51	biological to wholesalers or direct purchasers in the United States, not including prompt pay or 7
52	52	other discounts, rebates or reductions in price, for the most recent month for which the information 8
53	53	is available, as reported in wholesale price guides or other publications of drug or biological pricing 9
54	54	data as defined in 42 U.S.C. § 1395w-3(a)(c)(6). 10
55	55	(c) Penalty imposed and collection power. A penalty shall be assessed on the sales within 11
56	56	the state of identified drugs and payable by the manufacturers of the identified drugs. The penalty 12
57	57	shall be calculated as described in subsection (c)(1) of this section. 13
58	58	(1) The penalty in any calendar year shall equal eighty percent (80%) of the difference 14
59	59	between the revenue generated by sales within the state of the identified drugs and the revenue that 15
60	60	would have been generated if the manufacturer had maintained the wholesale acquisition cost from 16
61	61	the previous calendar year, adjusted for inflation utilizing the consumer price index. 17
62	62	(2) In order to be subject to the penalty, a manufacturer shall have at least two hundred 18
63	63	fifty thousand dollars ($250,000) in total annual sales within the state in the calendar year for which 19
64	64	the penalty is assessed. 20
65	65	(3) Within sixty (60) days of the annual publication by ICER of the Unsupported Price 21
66	66	Increase Report, the commissioner shall identify the manufacturers of identified drugs. The 22
67	67	commissioner shall notify each manufacturer that sales within the state of identified drugs shall be 23
68	68	subject to the penalty assessed in this section for a period of two (2) calendar years following the 24
69	69	identified drug’s appearance in the annual publication by ICER. 25
70	70	(4) Penalty shall be collected annually. Any manufacturer notified by the commissioner 26
71	71	pursuant to subsection (c)(3) of this section shall submit to the commissioner a return on a form 27
72	72	prescribed and furnished by the commissioner and pay the penalty by April 15 for the previous 28
73	73	calendar year. 29
74	74	(5) The form described in subsection (c)(4) of this section shall contain information 30
75	75	including, but not limited to: 31
76	76	(i) The total amount of sales of the identified drug within the state; 32
77	77	(ii) The total number of units sold of the identified drug within the state; 33
78	78	(iii) The wholesale acquisition cost of the identified drug during the tax period and any 34
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82	82	changes in the wholesale acquisition cost during the calendar year; 1
83	83	(iv) The wholesale acquisition cost during the previous calendar year; 2
84	84	(v) A calculation of the penalty owed; and 3
85	85	(vi) Any other information that the commissioner determines is necessary to calculate the 4
86	86	correct amount of the penalty owed. 5
87	87	(6) The commissioner may request any department or agency to assist in calculation of the 6
88	88	penalty and collection, including the tax administrator, who may collect the penalty amount owed 7
89	89	with interest in the same manner and with the same powers as are prescribed for collection of taxes 8
90	90	in title 44. 9
91	91	(d) Use of revenue. 10
92	92	(1) The payments required by this section shall be made by electronic transfer of monies 11
93	93	to the general treasurer. 12
94	94	(2) The general treasurer shall take all steps necessary to facilitate the transfer of funds to 13
95	95	a restricted receipt account and made available to the office of the health insurance commissioner 14
96	96	to offset costs to assess and collect the penalty, audit manufacturers that are required to submit 15
97	97	returns pursuant to this section and defend appeals from manufacturers. The balance shall be 16
98	98	deposited equally to the "childhood immunization account" described in § 23-1-45(a) and the "adult 17
99	99	immunization account" described in § 23-1-45(c). 18
100	100	(3) The general treasurer shall provide the commissioner with a record of any funds 19
101	101	received and the director of the department of health with a record of any funds transferred and 20
102	102	deposited into the two (2) immunization accounts pursuant to subsection (d)(2) of this section. 21
103	103	(e) Prohibition on withdrawal of prescription drugs for sale. 22
104	104	(1) Any manufacturer or distributor of an identified drug shall be prohibited from 23
105	105	withdrawing that drug from sale or distribution within this state for the purpose of avoiding the 24
106	106	penalty set forth in this section. 25
107	107	(2) Any manufacturer who intends to withdraw an identified drug from sale or distribution 26
108	108	from within the state in order to avoid a penalty as described in this section shall provide a notice 27
109	109	of withdrawal in writing to the state pharmacy board and the attorney general one hundred eighty 28
110	110	days (180) days prior to such withdrawal. 29
111	111	(3) The commissioner shall assess a penalty of five hundred thousand dollars ($500,000) 30
112	112	on any entity, including any manufacturer or distributor of an identified drug, that they determine 31
113	113	has withdrawn an identified drug from distribution or sale in the state in violation of this section. 32
114	114	(f) Hearing by commissioner on application and appeals. 33
115	115	(1) Any manufacturer aggrieved by the action of the commissioner in determining the 34
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119	119	amount of any penalty imposed under this section may apply to the commissioner, within thirty 1
120	120	(30) days after the notice of the action is mailed, for a hearing. The commissioner shall fix a time 2
121	121	and place for the hearing and shall so notify the manufacturer. Upon hearing, the commissioner 3
122	122	shall correct manifest errors, if any, disclosed at the hearing and thereupon assess and collect the 4
123	123	amount lawfully due together with any penalty or interest. 5
124	124	(2) Appeals from administrative orders or decisions made pursuant to any provision of this 6
125	125	section shall be made pursuant to chapter 35 of title 42. The right to appeal under this section shall 7
126	126	be expressly made conditional upon prepayment of all interest and penalties unless the 8
127	127	manufacturer demonstrates, to the satisfaction of the court, that the manufacturer has a reasonable 9
128	128	probability of success on the merits and is unable to prepay all interest and penalties, considering 10
129	129	not only the manufacturer’s own financial resources but also the ability of the manufacturer to 11
130	130	borrow the required funds. If the court, after appeal, holds that the manufacturer is entitled to a 12
131	131	refund, the manufacturer shall also be paid interest on the amount at the rate provided in § 44-1-13
132	132	7.1. 14
133	133	SECTION 2. This act shall take effect upon passage. 15
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140	140	EXPLANATION
141	141	BY THE LEGISLATIVE COUNCIL
142	142	OF
143	143	A N A C T
144	144	RELATING TO STATE AFFAIRS AND GOVERNMENT -- THE RHODE ISLAND HEALTH
145	145	CARE REFORM ACT OF 2004 -- HEALTH INSURANCE OVERSIGHT
146	146	***
147	147	This act would establish a process whereby large drug manufacturers (those earning at least 1
148	148	two hundred fifty thousand dollars ($250,000) in total annual sales within the state) may be 2
149	149	penalized for increasing prices for an identified prescription drug where there is no, or inadequate, 3
150	150	evidence to support the price increase. The act would create a procedure where the commissioner 4
151	151	would notify the manufacturer by way of a form that would contain the total amount of sales of the 5
152	152	identified drug within the state, the total number of units sold of the identified drug within the state, 6
153	153	the wholesale acquisition cost of the identified drug and any changes to that cost during the year 7
154	154	and the previous year, a calculation of the penalty owed, and any other information that the 8
155	155	commissioner deems necessary. The act would also provide an opportunity for the manufacturer 9
156	156	to have a hearing and to appeal the decision rendered at that hearing. 10
157	157	This act would take effect upon passage. 11
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