Regular Session 2019-2020 House Bill 2212 P.N. 3183

PRINTER'S NO. 3183

THE GENERAL ASSEMBLY OF PENNSYLVANIA

HOUSE BILL

No.

2212

Session of

2020

INTRODUCED BY FRANKEL, RABB, HILL-EVANS, KINSEY, ZABEL, MADDEN,

SCHLOSSBERG, McNEILL, DeLUCA, WILLIAMS, HOWARD, JOHNSON-

HARRELL, A. DAVIS, READSHAW, DEASY, YOUNGBLOOD, FREEMAN,

CIRESI, HANBIDGE, GALLOWAY, ULLMAN, INNAMORATO, BURNS,

PASHINSKI, LEE, KULIK, MALAGARI, KORTZ, HARKINS, RAVENSTAHL,

BIZZARRO, MERSKI, DALEY AND WARREN, JANUARY 21, 2020

REFERRED TO COMMITTEE ON HEALTH, JANUARY 21, 2020

AN ACT

Providing for prescription drug affordability; establishing the

Prescription Drug Affordability Board, the Prescription Drug

Affordability Stakeholder Council and the Prescription Drug

Affordability Fund.

The General Assembly of the Commonwealth of Pennsylvania

hereby enacts as follows:

Section 1. Short title.

This act shall be known and may be cited as the Prescription

Drug Affordability Act.

Section 2. Definitions.

The following words and phrases when used in this act shall

have the meanings given to them in this section unless the

context clearly indicates otherwise:

"Biologic." A drug that is produced or distributed in

accordance with a biologics license issued under 21 C.F.R.

601.4 (relating to issuance and denial of license).

"Biosimilar." A drug that is produced or distributed in

accordance with a biologics license application approved under

42 U.S.C. § 262(k)(3) (relating to regulation of biological

products).

"Board." The Prescription Drug Affordability Board

established under section 3.

"Brand name drug." A drug that is produced or distributed in

accordance with an original new drug application approved under

21 U.S.C. § 355(c). The term does not include an authorized

generic drug as defined under 42 C.F.R. 447.502 (relating to

definitions).

"Fund." The Prescription Drug Affordability Fund established

under section 9.

"Generic drug." The term includes the following:

(1) a retail drug that is marketed or distributed in

accordance with an abbreviated new drug application, approved

under 21 U.S.C. § 355(j);

(2) an authorized generic drug as defined by 42 C.F.R.

447.502; or

(3) a drug that entered the market before 1962 that was

not originally marketed under a new drug application.

"Manufacturer." An entity that:

(1) Does the following:

(i) engages in the manufacture of a prescription

drug product; or

(ii) enters into a lease with another manufacturer

to market and distribute a prescription drug product

under the entity's own name.

(2) Sets or changes the wholesale acquisition cost of

the prescription drug product the entity manufactures or

markets.

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"Prescription drug product." A brand name drug, a generic

drug, a biologic or a biosimilar.

"Stakeholder council." The Prescription Drug Affordability

Stakeholder Council established under section 8.

Section 3. Prescription Drug Affordability Board.

(a) Establishment.--There is established a Prescription Drug

Affordability Board for the purposes under subsection (b).

(b) Purpose.--The purpose of the board is to protect

residents of this Commonwealth, local governments, commercial

health plans, health care providers, pharmacies licensed in this

Commonwealth and other stakeholders within the health care

system from the high costs of prescription drug products.

individuals, appointed by the Governor and confirmed by the

Senate, who shall have expertise in health care economics or

clinical medicine.

(d) Alternate members.--Three alternate members, who shall

have expertise in health care economics or clinical medicine,

shall be appointed by the Governor and confirmed by the Senate.

Each alternate member shall participate in deliberations of the

board when a member is recused.

(e) Prohibition.--A member or an alternate member may not be

an employee of, a board member of or a consultant to a

manufacturer or trade association for manufacturers.

(f) Conflict of interest.--Any conflict of interest,

including whether the individual has an association, including a

financial or personal association, that has the potential to

bias or has the appearance of biasing an individual's decision

in matters related to the board or the conduct of the board's

activities, shall be considered and disclosed when appointing

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members and alternate members to the board.

(g) Board diversity.--To the extent practicable and

consistent with Federal and State law, the membership of the

board shall reflect the racial, ethnic and gender diversity of

this Commonwealth.

(h) Term of office.--Members of the board shall serve as

follows:

(1) The term of a member or an alternate member shall be

five years.

(2) The terms of the members and alternate members shall

be staggered as provided under subsection (i).

(i) Expiration of terms.--The terms of the initial members

and alternate members of board shall expire as follows:

(1) One member and one alternate member three years

after appointment.

(2) Two members and one alternate member four years

after appointment.

(3) Two members, including the chair of the board, and

one alternate member five years after appointment.

(j) Board staff.--The board shall be staffed as follows:

(1) The chair shall hire an executive director.

(2) The executive director shall hire a general counsel

and staff for the board.

(3) Staff of the board shall receive a salary as

determined by the board.

(k) Compensation.--A member of the board:

(1) May receive compensation as a member of the board.

(2) Shall be entitled to reimbursement for actual and

necessary expenses incurred in the performance of their

duties.

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(l) Quorum.--A majority of the members of the board shall

constitute a quorum for the purposes of conducting the business

of the board.

(m) Meetings.--The board shall meet as follows:

(1) (i) Subject to subparagraphs (ii) and (iv), the

board shall meet in open session at least once every six

weeks to review prescription drug product information.

(ii) The chair may cancel or postpone a meeting if

there are no prescription drug products to review.

(iii) The following actions by the board shall be

made in open session:

(A) Deliberations on whether to subject a

prescription drug product to a cost review under

section 5(f).

(B) A vote on whether to impose an upper payment

limit on purchases and payor reimbursements of

prescription drug products in this Commonwealth.

(iv) Notwithstanding 65 Pa.C.S. Ch.7 (relating to

open meetings), the board may meet in closed session to

discuss proprietary data and information.

(2) The board shall provide public notice of each board

meeting at least two weeks in advance of the meeting.

(3) Materials for each board meeting shall be made

available to the public at least one week in advance of the

meeting.

(4) The board shall provide an opportunity for public

comment at each open meeting of the board.

(5) The board shall provide the public with the

opportunity to provide written comments on pending decisions

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of the board.

(6) The board may allow expert testimony at board

meetings, including when the board meets in closed session.

(7) To the extent practicable, the board shall access

pricing information for prescription drug products by:

(i) Entering into a memorandum of understanding with

another state to which manufacturers already report

pricing information.

(ii) Accessing other available pricing information.

Section 4. Conflict of interest.

(a) General rule.--The following shall apply to conflicts of

interest:

(1) A member of the board shall recuse themselves from

decisions related to a prescription drug product if the

member, or an immediate family member of the member, has

received or could receive any of the following:

(i) a direct financial benefit of any amount

deriving from the result or finding of a study or

determination by or for the board; or

(ii) a financial benefit from a person who owns,

manufactures or provides prescription drug products,

services or items to be studied by the board that in the

aggregate exceeds $5,000 per year.

(2) For the purposes of paragraph (1), a financial

benefit includes honoraria, fees, stock, the value of the

member's or immediate family member's stock holdings and any

direct financial benefit deriving from the finding of a

review conducted under this act.

(b) Disclosure requirements.--A conflict of interest shall

be disclosed:

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(1) By the board when hiring board staff.

(2) By the appointing authority when appointing members

and alternate members to the board and members to the

stakeholder council.

(3) By the board, when a member of the board is recused

in any final decision resulting from a review of a

prescription drug product.

(4) In advance of the first open meeting after the

conflict is identified or within five days after the conflict

is identified.

under subsection (b) shall be posted on the publicly accessible

Internet website of the board unless the chair of the board

recuses the member who has the conflict of interest from any

final decision resulting from a review of a prescription drug

product. A posting under this subsection shall include the type,

nature and magnitude of the interests of the member involved.

(d) Gifts and donations.--Members and alternate members of

the board, board staff and third-party contractors may not

accept any gift or donation of services or property that

indicates a potential conflict of interest or has the appearance

of biasing the work of the board.

Section 5. Powers and duties of the board.

(a) General rule.--The board may:

(1) Promulgate regulations for the implementation of

this act.

(2) Enter into a contract with a qualified, independent

third party for any service necessary to carry out the powers

and duties of the board.

(b) Third party contracts.--Unless permission is granted by

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the board, a third party hired by the board under subsection (a)

(2) may not release, publish or otherwise use any information to

which the third party has access under its contract.

shall identify prescription drug products that are:

(1) Brand name drugs or biologics that, as adjusted

annually for inflation in accordance with the Consumer Price

Index, have:

(i) a launch wholesale acquisition cost of $30,000

or more per year or course of treatment; or

(ii) a wholesale acquisition cost increase of $3,000

or more in any 12-month period or course of treatment if

less than 12 months.

(2) Biosimilar drugs that have a launch wholesale

acquisition cost that is not at least 15% lower than the

referenced brand biologic at the time the biosimilars are

launched.

(3) Generic drugs that, as adjusted annually for

inflation in accordance with the consumer price index, have a

wholesale acquisition cost:

(i) Of $100 or more for:

(A) a 30-day supply lasting a patient for a

period of 30 consecutive days based on the

recommended dosage approved for labeling by the

United States Food and Drug Administration;

(B) a supply lasting a patient for fewer than 30

days based on the recommended dosage approved for

labeling by the United States Food and Drug

Administration; or

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approved by the United States Food and Drug

Administration does not recommend a finite dosage.

(ii) That increased by 200% or more during the

immediately preceding 12-month period, as determined by

the difference between the resulting wholesale

acquisition cost and the average of the wholesale

acquisition cost reported over the immediately preceding

12 months.

(4) Other prescription drug products that may create

affordability burdens for the health care system and patients

in this Commonwealth, in consultation with the stakeholder

council.

(d) Cost review.--After identifying prescription drug

products as provided under subsection (c), the board shall

determine whether to conduct a cost review as described under

subsection (f) for each identified prescription drug product by:

(1) Seeking stakeholder council input about the

prescription drug product.

(2) Considering the average patient cost share of the

prescription drug product.

(e) Request of information.--Information for a cost review

may be obtained and utilized as follows:

(1) To the extent there is no publicly available

information to conduct a cost review as described under

subsection (f), the board shall request the information from

the manufacturer of the prescription drug product.

(2) The information to conduct a cost review may include

any document and research related to the manufacturer's

selection of the introductory price or price increase of the

prescription drug product, including life cycle management,

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net average price in this Commonwealth, market competition

and context, projected revenue and the estimated value or

cost-effectiveness of the prescription drug product.

(3) Failure of a manufacturer to provide the board with

the information requested under this subsection shall not

affect the authority of the board to conduct a review as

described under subsection (f) or establish an upper payment

limit as authorized under subsection (g).

(f) Conduct of cost review.--A cost review under this

section shall be conducted as follows:

(1) If the board conducts a review of the cost of a

prescription drug product, the review shall determine whether

use of the prescription drug product that is fully consistent

with the labeling approved by the United States Food and Drug

Administration or standard medical practice has led or will

lead to affordability burdens for the state health care

system or high out-of-pocket costs for patients.

(2) To the extent practicable, in determining whether a

prescription drug product identified under subsection (c) has

led or will lead to an affordability burden, the board shall

consider the following factors:

(i) The wholesale acquisition cost for the

prescription drug product sold in this Commonwealth.

(ii) The average monetary price concession, discount

or rebate the manufacturer provides to health plans in

this Commonwealth or is expected to provide to health

plans in this Commonwealth as reported by manufacturers

and health plans, expressed as a percent of the wholesale

acquisition cost for the prescription drug product under

review.

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(iii) The total amount of the price concession,

discount or rebate the manufacturer provides to each

pharmacy benefits manager operating in this Commonwealth

for the prescription drug product under review, as

reported by manufacturers and pharmacy benefits managers,

expressed as a percent of the wholesale acquisition costs

for the prescription drug product under review.

(iv) The price at which therapeutic alternatives

have been sold in this Commonwealth.

(v) The average monetary concession, discount or

rebate the manufacturer provides or is expected to

provide to health plan payors and pharmacy benefits

managers in this Commonwealth for therapeutic

alternatives.

(vi) The costs to health plans based on patient

access consistent with United States Food and Drug

Administration labeled indications or accepted medical

practice.

(vii) The impact on patient access resulting from

the cost of the prescription drug product relative to

insurance benefit design.

(viii) The current or expected dollar value of drug-

specific patient access programs that are supported by

the manufacturer.

(ix) The relative financial impacts to health,

medical or social services costs as can be quantified and

compared to baseline effects of existing therapeutic

alternatives.

(x) The average patient copay or other cost-sharing

for the prescription drug product in this Commonwealth.

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(xi) Any other factors as determined by the board in

regulations adopted by the board.

(3) If the board is unable to determine whether a

prescription drug product will produce or has produced

challenges to the affordability of the drug for the health

care system in this Commonwealth, using the factors listed

under paragraph (2), the board may consider the following

factors:

(i) The manufacturer's research and development

costs, as indicated on the manufacturer's Federal tax

filing or information filed with the Federal Securities

and Exchange Commission for the most recent tax year in

proportion to the manufacturer's sales in this

Commonwealth.

(ii) The portion of direct-to-consumer marketing

costs eligible for favorable Federal tax treatment in the

most recent tax year that are specific to the

prescription drug product under review and that are

multiplied by the ratio of total manufacturer in-State

sales to total manufacturer sales in the United States

for the product under review.

(iii) Gross and net manufacturer revenues for the

most recent tax year.

(iv) Any additional factors proposed by the

manufacturer that the board considers relevant.

(v) Any additional factors as established by the

board in regulations.

(g) Upper payment limit.--The board may impose an upper

payment limit as follows:

(1) If the board finds that the spending on a

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prescription drug product reviewed under this section has led

or will lead to an affordability burden, the board shall

recommend or establish an upper payment limit of this

subsection after considering:

(i) The cost of administering the drug.

(ii) The cost of delivering the drug to consumers.

(iii) Other relevant administrative costs related to

the drug.

(2) The upper payment limit shall apply to all purchases

and payor reimbursements of the prescription drug product

dispensed or administered to individuals in this Commonwealth

in person, by mail or by other means.

(h) Refusal to sell.--If a manufacturer refuses to sell a

prescription drug product subject to a cost review under section

5(f) in this Commonwealth or an upper payment limit established

by the board, the board may work with the Federal Government to

import the prescription drug product that the manufacturer

refuses to sell in this Commonwealth.

(i) Public information.--Any information submitted to the

board under this section shall be subject to public inspection

as provided by law.

(j) Construction.--This section may not be construed to

prevent a manufacturer from marketing a prescription drug

product approved by the United States Food and Drug

Administration while the product is under review by the board.

(k) Report.--On or before December 31 of each year, the

board shall submit a report to the chair and minority chair of

the Health and Human Services Committee of the Senate and the

chair and minority chair of the Health Committee of the House of

Representatives that includes:

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(1) Price trends for prescription drug products.

(2) The number of prescription drug products that were

subject to board review, including the results of the review,

and the number and disposition of appeals and judicial

reviews of board decisions.

(3) Any recommendations the board may have on further

legislation needed to make prescription drug products more

affordable in this Commonwealth.

(l) Study.--On or before June 1, 2021, the board shall:

(1) Conduct a study of the operation of the generic drug

market in the United States that includes a review of

physician-administered prescription drug products and

considers:

(i) The prices of generic drugs on a year-over-year

basis.

(ii) The degree to which generic drug prices affect

yearly insurance premium changes.

(iii) Annual changes in insurance cost-sharing for

generic drugs.

(iv) The potential for and history of drug

shortages.

(v) The degree to which generic drug prices affect

yearly Medicaid spending in this Commonwealth.

(vi) Any other relevant study questions.

(2) Report its findings to the General Assembly.

Section 6. Appeals.

(a) General rule.--A person aggrieved by a decision of the

board may file an appeal of the decision within 30 days after

the board renders the decision.

(b) Final decision.--The board shall hear the appeal and

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make a final decision within 60 days after the appeal is filed.

decision of the board may petition for judicial review as

provided under 2 Pa.C.S. Ch. 7 Subch. A (relating to judicial

review of Commonwealth agency action).

Section 7. Employee Retirement Income Security Act of 1974

Plans and Medicare Drug Plans.

Employee Retirement Income Security Act of 1974 plans and

Medicare Part D plans are not bound by decisions of the board

and can choose to reimburse more than the upper payment

limit. Health care providers who dispense and administer drugs

in this Commonwealth to individuals in this Commonwealth shall

bill all payers no more than the upper payment limit to the

patient without regard to whether or not an Employee Retirement

Income Security Act plan or Medicare Part D plan chooses to

reimburse the health care provider above the upper payment

limit.

Section 8. Prescription Drug Affordability Stakeholder Council.

(a) Establishment.--The Prescription Drug Affordability

Stakeholder Council is established for the purpose under

subsection (b).

(b) Purpose.--The purpose of the stakeholder council is to

provide stakeholder input to assist the board in making

decisions as required under this act.

the following members appointed by the Governor from lists of

qualified individuals submitted by the President pro tempore of

the Senate, in consultation with the Majority Leader and

Minority Leader of the Senate, and the Speaker of the House of

Representatives, in consultation with the Majority Leader and

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Minority Leader of the House of Representatives:

(1) One representative from the Department of Human

Services.

(2) One representative from the Department of Health.

(3) One representative from the Insurance Department.

(4) One representative of brand name drug corporations.

(5) One representative of generic drug corporations.

(6) One representative of employers.

(7) One representative of pharmacy benefits managers.

(8) One representative of pharmacists.

(9) One pharmacologist.

(10) One representative of doctors.

(11) One representative of nurses.

(12) One representative of hospitals.

(13) One representative of health insurers.

(14) One representative of the Office of Budget.

(15) One clinical researcher.

(16) One representative of a Statewide consumer health

care advocacy coalition.

(17) One representative of a Statewide advocacy

organization for seniors.

(18) One representative of a Statewide organization for

diverse communities.

(19) One representative of a labor union.

(20) Two health services researchers specializing in

prescription drugs.

(21) Five consumer representatives.

(d) Expertise of members.--A member of the stakeholder

council shall have knowledge in one or more of the following:

(1) the pharmaceutical business model;

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(2) supply chain business models;

(3) the practice of medicine or clinical training;

(4) consumer or patient perspectives;

(5) health care cost trends and drivers;

(6) clinical and health services research; or

(7) the Commonwealth's health care marketplace.

(e) Diversity.--To the extent practicable and consistent

with Federal and State law, the membership of the stakeholder

council shall reflect the racial, ethnic, and gender diversity

of this Commonwealth.

(f) Co-chairs.--From among the membership of the stakeholder

council, the chair of the board shall appoint two members to be

co-chairs of the stakeholder council.

(g) Terms.--A member of the stakeholder council shall serve

a term of three years. The initial members of the stakeholder

council shall serve staggered terms as determined by the board.

(h) Compensation and reimbursement.--A member of the

stakeholder council:

(1) May not receive compensation as a member.

(2) Shall be entitled to reimbursement for actual and

necessary expenses incurred in the performance of their

duties.

Section 9. Prescription Drug Affordability Fund.

(a) Establishment.--The Prescription Drug Affordability Fund

is established as a special fund in the State Treasury. Money in

the fund shall be appropriated to the board on a continuing

basis to carry out the purposes of this act, including any costs

expended by any State agency to implement this act. To the

extent money is appropriated to the board from the General Fund,

that money shall be repaid to the General Fund with the fee

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imposed under subsection (c).

(b) Investment of fund.--Money in the fund shall be invested

and reinvested in the same manner as other funds in the custody

of the State Treasurer in the manner provided by law. Any

investment earnings shall be retained to the credit of the fund.

This subsection shall not be construed to prohibit the fund from

receiving additional money from any other source.

on the manufacturer's relative share of gross revenue from drug

sales in this Commonwealth which shall be deposited into the

fund. A manufacturer assessed under this section shall annually

pay the fee to the board.

Section 10. Enforcement.

The Office of Attorney General shall enforce the provisions

of this act.

Section 11. Severability.

The provisions of this act are severable. If a provision of

this act or the provision's application to a person or

circumstance is held invalid, the invalidity shall not affect

other provisions or applications of this act which can be given

effect without the invalid provision or application.

Section 12. Effective date.

This act shall take effect in 180 days.

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