PRINTER'S NO. 716
THE GENERAL ASSEMBLY OF PENNSYLVANIA
SENATE BILL
No.
637
Session of
2017
INTRODUCED BY WHITE, STREET, YAW, BARTOLOTTA, COSTA, FONTANA AND
BREWSTER, APRIL 18, 2017
REFERRED TO BANKING AND INSURANCE, APRIL 18, 2017
AN ACT
Amending the act of May 17, 1921 (P.L.682, No.284), entitled "An
act relating to insurance; amending, revising, and
consolidating the law providing for the incorporation of
insurance companies, and the regulation, supervision, and
protection of home and foreign insurance companies, Lloyds
associations, reciprocal and inter-insurance exchanges, and
fire insurance rating bureaus, and the regulation and
supervision of insurance carried by such companies,
associations, and exchanges, including insurance carried by
the State Workmen's Insurance Fund; providing penalties; and
repealing existing laws," in health and accident insurance,
establishing the Pharmaceutical Transparency Commission and
providing for its powers and duties.
The General Assembly of the Commonwealth of Pennsylvania
hereby enacts as follows:
Section 1. The act of May 17, 1921 (P.L.682, No.284), known
as The Insurance Company Law of 1921, is amended by adding a
section to read:
Section 635.8. Pharmaceutical Transparency Commission.--(a)
The Insurance Department shall oversee the Pharmaceutical
Transparency Commission, which commission is hereby established.
The commission shall consist of:
(1) The Insurance Commissioner.
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(2) The Secretary of Health.
(3) The Secretary of Human Services.
(4) A pharmacist designated by the Pennsylvania Pharmacists
Association.
(5) A consumer advocate designated by the Leukemia and
Lymphoma Society.
(6) A physician designated by the Pennsylvania Medical
Society.
(7) An insurance industry representative designated by the
Pennsylvania Association of Health Underwriters.
(b) The commission shall have the following powers and
duties:
(1) Hold quarterly meetings.
(2) Review pharmaceutical retail pricing and determine
whether those prices are reasonably related to the costs set
forth in subsection (c)(1)(i)(A), (B), (C), (D) and (E). Prices
in excess of twenty per centum (20%) of those costs shall be
presumed to not be in reasonable relation to those costs. Absent
a finding by the commission that such prices are nonetheless
reasonable, an insurer or pharmacy benefit manager shall not be
required to pay the price of any prescription medication
exceeding twenty per centum (20%) of those costs.
(3) Assess an annual fee on pharmaceutical manufacturers to
provide for the commission's activities.
(4) Determine reasonable reimbursement to hospitals, health
care providers and physicians for costs associated with the
dispensing of medication.
(c) (1) Each manufacturer of prescription medication shall
report annually to the commission by March 31 the following for
each prescription medication that is delivered for treatment in
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this Commonwealth:
(i) Total costs derived in the production of the
prescription medication, including the following:
(A) The total research and development costs paid by the
manufacturer and, separately, the total research and development
costs paid by any predecessor in the development of the drug.
(B) The total costs of clinical trials and other regulatory
costs paid by the manufacturer and, separately, the total costs
of clinical trials and other regulatory costs paid by any
predecessor in the development of the drug.
(C) The total costs for materials, manufacturing and
administration attributable to the drug.
(D) The total costs paid by any entity other than the
manufacturer or predecessor for research and development,
including any amount from Federal, State or other governmental
programs or any form of subsidies, grants or other support.
(E) Any other costs to acquire the drug, including costs for
the purchase of patents, licensing or acquisition of any
corporate entity owning any rights to the drug while in
development or all of such costs.
(F) The total marketing and advertising costs for the
promotion of the drug directly to consumers, including, but not
limited to, costs associated with direct-to-consumer coupons and
amount redeemed, total marketing and advertising costs for
promotion of the drug directly or indirectly to prescribers and
any other advertising for the drug.
(ii) A cumulative annual history of average wholesale price
and weighted average cost increases for the drug, expressed as
percentages, including the months each increase in the
categories of average wholesale price and weighted average cost
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took effect.
(iii) The total profit attributable to the drug as
represented in total dollars and represented as a percentage of
the total company profits that were derived from the sale of the
drug.
(iv) A description of the manufacturer's patient
prescription assistance program, including, but not limited to,
the total amount of financial assistance provided, the total
amount of financial assistance provided to Pennsylvania
residents, the average amount of assistance per Pennsylvania
resident and for each drug and the parameters and qualifications
for any patient prescription assistance program.
(v) Total profit as represented in total dollars and a
percentage of total company profit derived from the sale of each
prescription medication.
(2) In the event a company fails to report information for a
drug required by this section, an insurer or pharmacy benefit
manager shall not be required to reimburse the pharmaceutical
manufacturer for that drug.
(d) All of the information in subsection (c) shall be
itemized and documented by the manufacturer and audited by a
fully independent third-party auditor prior to filing.
(e) (1) The commission shall submit recommendations to the
Insurance Department for regulations deemed necessary by the
commission to administer this section.
(2) The Insurance Department may promulgate regulations
based on the recommendations submitted by the commission under
paragraph (1).
(3) The regulations promulgated under paragraph (2) shall be
binding on the commission.
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(f) The commission, in conjunction with the Insurance
Department, shall report annually to the General Assembly and
post on the department's publicly accessible Internet website
the information reported under this section.
Section 2. This act shall take effect in 60 days.
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