PRINTER'S NO. 1605
THE GENERAL ASSEMBLY OF PENNSYLVANIA
SENATE BILL
No.
1091
Session of
2020
INTRODUCED BY LAUGHLIN, STREET, TARTAGLIONE, LEACH, STEFANO,
BOSCOLA, COLLETT, SABATINA, FARNESE, COSTA, BREWSTER,
HAYWOOD, YUDICHAK, BLAKE, PITTMAN AND BARTOLOTTA,
MARCH 25, 2020
REFERRED TO BANKING AND INSURANCE, MARCH 25, 2020
AN ACT
Providing for pharmaceutical transparency; establishing the
Pharmaceutical Transparency Review Board and providing for
its powers and duties; and establishing the Pharmaceutical
Transparency Review 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
Pharmaceutical Transparency 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:
"Board." The Pharmaceutical Transparency Review Board
established in section 3.
"Fund." The Pharmaceutical Transparency Review Fund
established in section 8.
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"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; and
(2) sets or changes the wholesale acquisition cost of
the prescription drug product that the entity manufactures or
markets.
"Prescription drug product." Any of the following:
(1) A brand name drug licensed under a new drug
application.
(2) A generic drug licensed under an abbreviated new
drug application.
(3) A biologic licensed under a biologic license
application.
Section 3. Pharmaceutical Transparency Review Board.
(a) Establishment.--The Pharmaceutical Transparency Review
Board is established as an independent board. The board shall be
an instrumentality of the Commonwealth and a body corporate and
politic.
(b) Purpose.--The purpose of the board is to review high-
cost prescription drug products and develop recommendations for
addressing affordability burdens faced by residents, State and
local government agencies, commercial health plans, health care
providers, employers, pharmacies licensed in this Commonwealth
and other stakeholders.
(c) Composition.--The following shall apply:
(1) The board shall be composed of the following
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individuals, who shall have expertise in health care
economics or clinical medicine:
(i) One member appointed by the Governor who shall
act as chair.
(ii) One member appointed by the President pro
tempore of the Senate.
(iii) One member appointed by the Majority Leader of
the Senate.
(iv) One member appointed by the Minority Leader of
the Senate.
(v) One member appointed by the Speaker of the House
of Representatives.
(vi) One member appointed by the Majority Leader of
the House of Representatives.
(vii) One member appointed by the Minority Leader of
the House of Representatives.
(2) A member may not be an employee of, a board member
of or a consultant to a manufacturer or trade association for
manufacturers.
(3) In appointing members to the board, an appointing
authority shall consider and disclose a 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.
(d) Term of office.--The following shall apply:
(1) Except as set forth in paragraph (2), the term of a
member of the board is five years.
(2) The terms of the initial members of the board are as
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follows:
(i) Members appointed under subsection (c)(1)(iii)
and (iv) shall serve initial terms of three years.
(ii) Members appointed under subsection (c)(1)(vi)
and (vii) shall serve initial terms of four years.
(iii) Members appointed under subsection (c)(1)(i),
(ii) and (v) shall serve initial terms of five years.
(e) Board staff.--The chair shall appoint an executive
director, general counsel and other staff for the board to the
extent funds are available to the board for this purpose.
(f) Compensation.--A member of the board:
(1) May receive compensation as a member of the board in
conformity with the rules of the Executive Board.
(2) Is entitled to reimbursement for expenses in
accordance with Commonwealth regulations.
(g) Quorum.--A majority of the members of the board shall
constitute a quorum for the purposes of conducting the business
of the board.
(h) Meetings.--The following shall apply:
(1) The board shall meet for the following purposes:
(i) Subject to subparagraphs (ii) and (iv), the
board shall meet in open session at least once each
quarter to review prescription drug product information.
(ii) The following actions of the board shall be
made in open session:
(A) Deliberations on whether to subject a
prescription drug product to a review under
subsection (b).
(B) Decisions by the board, including agreeing
to reports created by the board under section 9.
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(iii) The chair may cancel or postpone a meeting if
the board has no prescription drug products before it to
review.
(iv) 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 prior to the meeting.
(3) Materials for each board meeting shall be made
available to the public at least one week prior to the
meeting.
(4) The board shall provide an opportunity for public
comment at each open meeting of the board and shall provide
the public with the opportunity to provide written comments
to the board.
(5) The board may allow expert testimony at board
meetings, including when the board meets in closed session.
Section 4. Conflict of interest.
(a) Recusal.--Board members shall recuse themselves from
decisions related to a prescription drug product where a
conflict of interest exists. A conflict of interest exists if
the member, or an immediate family member of the member, has
received or could receive any of the following:
(1) A direct financial benefit of any amount deriving
from the result or finding of a study or determination by or
for the board.
(2) A financial benefit from a person that 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.
(b) Duty to disclose.--A conflict of interest shall be
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disclosed:
(1) by the board when hiring board staff;
(2) by the appointing authority when appointing members
to the board; and
(3) by the board when a member of the board is recused
from a final decision resulting from a review of a
prescription drug product.
(c) Time for disclosure.--A conflict of interest shall be
disclosed:
(1) in advance of the first open meeting after the
conflict is identified; or
(2) within five days after the conflict is identified.
(d) Public disclosure.--The following shall apply:
(1) A conflict of interest disclosed under subsection
(a) shall be posted on the publicly accessible Internet
website of the board unless the chair recuses the member from
a final decision resulting from a review of a prescription
drug product.
(2) A posting under paragraph (1) shall include the
type, nature and magnitude of the interests of the member
involved.
(e) Prohibition.--Members of the board, board staff and
third-party contractors of the board may not accept a 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.
(f) Definition.--As used in this section, the term
"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 findings of a
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review conducted under this act.
Section 5. Powers and duties of board.
(a) General.--The board shall assess and issue a report as
provided under section 9(a) on how to make prescription drugs
affordable for residents of this Commonwealth.
(b) Pricing information.--To the extent practicable, the
board may access pricing information for prescription drug
products by:
(1) Entering into a memorandum of understanding with
another state to which manufacturers already report pricing
information.
(2) Accessing other available pricing information.
(c) Independent contractors.--The following shall apply:
(1) The board may enter into a contract with a
qualified, independent third party for any service necessary
to carry out the powers and duties of the board.
(2) Unless permission is granted by the board, a third
party hired by the board may not release, publish or
otherwise use any information to which the third party has
access under the third party's contract.
(d) Penalty.--The board may assess a fee of $20,000 per day
per drug on a manufacturer that fails to comply with the
provisions of this act.
Section 6. Board assessment of prescription drug affordability.
(a) General rule.--After receiving information about
prescription drug products reported under section 7, the board
shall analyze the reported data and any other relevant data in
order to publish reports on the prescription drug products
subject to reporting.
(b) Posting.--The board shall post information about
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prescription drug products on its publicly accessible Internet
website in a manner that does not reveal specific trade secrets
about a particular drug product.
(c) Regulations.--The board may promulgate regulations on
what can be considered a trade secret for purposes of
publication of reported data.
Section 7. Pharmaceutical transparency.
(a) Application.--This section shall only apply to a
prescription drug product that meets one of the following
criteria:
(1) The drug has an average wholesale acquisition cost
of at least $5,000 annually or per course of treatment if
less than a year, adjusted annually to the Consumer Price
Index for All Urban Consumers, and which:
(i) the average wholesale acquisition cost has
increased by 50% or more over the past five years; or
(ii) the average wholesale acquisition cost has
increased by 15% or more over the past 12 months.
(2) The board has determined that the drug has created
an affordability burden in this Commonwealth.
(b) Information from manufacturer.--A manufacturer of a
prescription drug product shall file with the board the
following information on a form prescribed by the board:
(1) The costs for the development and manufacturing of
the drug, including the following:
(i) The total research and development costs accrued
in the United States and paid by the manufacturer in the
development of the drug.
(ii) The total costs of clinical trials and other
regulatory costs accrued in the United States and paid by
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the manufacturer.
(iii) The total costs of materials, manufacturing
and distribution attributable to the drug for each of the
previous three years.
(iv) The costs accrued in the United States and paid
by an entity other than the manufacturer for research and
development, including, but not limited to, any amount
from Federal, State or other governmental programs or any
form of subsidies, grants or other support.
(v) Other costs to acquire the drug, including costs
for the purchase of or leasing the rights to patents,
licensing or acquisition of a corporate entity owning
rights to the drug while in development.
(vi) The marketing and advertising costs accrued in
the United States for the promotion of the drug directly
to consumers for each of the previous three years,
including, but not limited to:
(A) Costs associated with coupons or discounts
that are directed to consumers and the amount
redeemed in the United States.
(B) Marketing and advertising costs accrued in
the United States for promotion of the drug directly
or indirectly to prescribers.
(C) All other advertising costs accrued in the
United States for the drug.
(2) A five-year history of average wholesale acquisition
cost increases for the drug expressed as percentages,
including the months each average wholesale acquisition cost
increase took effect.
(3) The total profit attributable to the drug and
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realized in the United States as represented:
(i) in dollars; and
(ii) as a percentage of the total company profits
realized in the United States that were derived from the
sale of the drug for each of the previous three years.
(4) The aggregate amount of all rebates that the
manufacturer provided to all payers, including, but not
limited to, insurers and pharmacy benefit managers, for the
sale of the drug within this Commonwealth for each of the
previous three years.
(5) A description of the manufacturer's patient
prescription assistance programs available in the United
States that include a drug under subsection (a), including,
but not limited to:
(i) The amount of financial assistance provided for
each of the previous three years.
(ii) The amount of financial assistance provided to
residents of this Commonwealth for each of the previous
three years.
(iii) The average per capita amount of assistance to
residents of this Commonwealth and the drugs for which
assistance was provided for each of the previous three
years.
(iv) The eligibility and benefit structure of the
patient prescription assistance programs, including
coupons.
(6) Payments or financial incentives, direct or
indirect, to hospitals, health care providers or physicians
located in this Commonwealth attributable to a drug under
subsection (a), including, but not limited to, speaking fees,
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dinners, research, consulting, charitable donations, grants
or other incentives, discounts or rebates for each of the
previous three years.
(c) Filing deadlines.--The following shall apply:
(1) For a drug described under subsection (a)(1),
filings must be submitted to the board by March 31.
(2) For a drug described under subsection (a)(2),
filings must be submitted to the board within 90 days of the
board making a formal determination to review.
(d) Audit and certification.--A filing under this section
shall be audited and certified by an independent third-party
auditor prior to filing.
(e) Regulations.--The board may promulgate regulations as
may be necessary and appropriate to carry out the provisions of
this section.
Section 8. Pharmaceutical Transparency Review Fund.
(a) Establishment.--The Pharmaceutical Transparency Review
Fund is established as a special fund in the State Treasury. The
fund shall be used only to provide funding for the board and for
the purposes authorized under this act, including any costs
expended by any State agency to implement this act. The fund
shall be invested and reinvested in the same manner as other
State funds. Any investment earnings shall be retained to the
credit of the fund. The fund shall be subject to an audit by the
Auditor General. This subsection may not be construed to
prohibit the fund from receiving money from any other source.
(b) Assessment.--The following shall apply:
(1) The board shall be funded by an assessment on
manufacturers. A manufacturer shall pay the assessment within
the time prescribed by the board.
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(2) Annually, the board shall assess and collect fees
from manufacturers as provided for in this subsection.
(3) The board shall assess each manufacturer based on
the manufacturer's relative share of gross revenue from
prescription drug sales in this Commonwealth.
(4) The board shall pay all money collected from the
assessment into the fund.
(c) Repayment.--Any appropriation to the board from the
General Fund shall be repaid to the General Fund from the
assessments collected under this section.
Section 9. Reports by board.
(a) Submission.--A report created by the board shall be
submitted to the following:
(1) The Governor.
(2) The President pro tempore of the Senate.
(3) The Majority Leader of the Senate.
(4) The Minority Leader of the Senate.
(5) The Speaker of the House of Representatives.
(6) The Majority Leader of the House of Representatives.
(7) The Minority Leader of the House of Representatives.
(8) The chairperson and minority chairperson of the
Appropriations Committee of the Senate.
(9) The chairperson and minority chairperson of the
Banking and Insurance Committee of the Senate.
(10) The chairperson and minority chairperson of the
Health and Human Services Committee of the Senate.
(11) The chairperson and minority chairperson of the
Appropriations Committee of the House of Representatives.
(12) The chairperson and minority chairperson of the
Health Committee of the House of Representatives.
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(13) The chairperson and minority chairperson of the
Insurance Committee of the House of Representatives.
(b) Report.--The following shall apply:
(1) By January 2023, the board shall submit a report on
recommendations as to how to make prescription drugs more
affordable for all individuals, providers and health plans in
this Commonwealth.
(2) The report shall include:
(i) An analysis of the role of the supply chain in
prescription drug costs.
(ii) The role of price transparency in lowering
costs.
(iii) How high patient out-of-pocket costs relate to
prescription drug costs and affordability.
(3) The report shall review pricing from the
manufacturer through the supply chain to the point of service
and the patient.
(4) The report shall examine the role of health plans
and pharmacy benefit management contractors in prescription
drug costs.
(5) The report shall examine actions undertaken by other
states to make prescription drugs more affordable and the
impact of those actions.
(c) Further reporting.--On or before December 31 of each
year, the board shall submit a report that includes:
(1) Price trends for prescription drug products.
(2) Specific information about prescription drug
products and price increases that were reported to the board.
(d) Study.--By June 2021, the board shall submit a study of
the operation of the generic drug market that includes a review
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of physician-administered drugs. The study shall include:
(1) The prices of generic drugs on a year-over-year
basis.
(2) The degree to which generic drug prices affect
yearly insurance premium changes.
(3) Annual changes in insurance cost-sharing for generic
drugs.
(4) The potential for and history of drug shortages.
(5) The degree to which generic drug prices affect
yearly State Medicaid spending.
(6) Any other information relevant to the study.
Section 10. Effective date.
This act shall take effect in 60 days.
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