PRINTER'S NO. 1948
THE GENERAL ASSEMBLY OF PENNSYLVANIA
SENATE BILL
No.
1315
Session of
2020
INTRODUCED BY KILLION, KEARNEY, MASTRIANO, MENSCH, PITTMAN AND
STEFANO, SEPTEMBER 11, 2020
REFERRED TO BANKING AND INSURANCE, SEPTEMBER 11, 2020
AN ACT
Providing for reduction in prescription drug costs; and imposing
powers and duties on the Insurance Commissioner.
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 Cost Reduction Act.
Section 2. Purpose and findings.
(a) Purpose.--The purpose of this act is to protect the
safety, health and economic well-being of the residents of this
Commonwealth by safeguarding them from the negative and harmful
impact of excessive and unconscionable prices for prescription
drugs.
(b) Findings.--The General Assembly finds that:
(1) Access to prescription drugs is necessary for the
residents of this Commonwealth to maintain or acquire good
health.
(2) Excessive prices for prescription drugs threaten the
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safety and well-being of the residents of this Commonwealth,
and it is necessary to protect our residents from the
negative impact of excessive costs.
Section 3. 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 board of trustees of the Pennsylvania Employee
Benefit Trust Fund.
"Commissioner." The Insurance Commissioner of the
Commonwealth.
"Commonwealth entity." An agency of State government that
purchases prescription drugs on behalf of the Commonwealth for a
person whose health care is paid for by the Commonwealth,
including an agent, vendor, fiscal agent, contractor or other
party acting on behalf of the Commonwealth. The term does not
include the medical assistance program established under Title
XVIII of the Social Security Act (Public Law 74-271, 42 U.S.C. §
1395 et seq.).
"ERISA plan." A plan qualified under the Employee Retirement
Income Security Act of 1974 (Public Law 93-406, 88 Stat. 829).
"Health plan." A plan, contract or certificate subject to
section 602-A of the act of May 17, 1921 (P.L.682, No.284),
known as The Insurance Company Law of 1921.
"Participating ERISA plan." An ERISA plan that has elected
to participate in the requirements and restrictions of this act
as described in section 5.
"Prescription drug." A drug for which a prescription is
required for dispensing the drug in this Commonwealth, as those
terms are defined in or within the meaning of the act of
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September 27, 1961 (P.L.1700, No.699), known as the Pharmacy
Act.
"Referenced drug." A prescription drug subject to a
referenced rate.
"Referenced rate." The maximum rate established by the
commissioner utilizing the wholesale acquisition cost and other
pricing data described in section 5.
"Wholesale acquisition cost." This term shall have the same
meaning as in 42 U.S.C. § 1395w-3a.
Section 4. Payment in excess of referenced rate prohibited.
(a) General rule.--It is unlawful for a Commonwealth entity,
health plan or participating ERISA plan to purchase referenced
drugs to be dispensed or delivered to a consumer in this
Commonwealth, whether directly or through a distributor, for a
cost higher than the referenced rate as determined in section 5.
(b) Contract provision required.--A contract entered into by
a Commonwealth entity, health plan or participating ERISA plan
and a third party for the purchase of prescription drugs shall
expressly provide that rates paid for referenced drugs shall not
exceed the referenced rate.
(c) Retail pharmacy conduct.--It is unlawful for a retail
pharmacy licensed in this Commonwealth to purchase for sale or
distribution to a person whose health care is provided by a
Commonwealth entity or health plan referenced drugs for a cost
that exceeds the referenced rate.
Section 5. ERISA plan opt-in.
An ERISA plan may elect to participate in this act. An ERISA
plan that desires its purchase of prescription drugs to be
subject to the prohibition in section 4 shall notify the
commissioner in writing by January 1 of each year.
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Section 6. Referenced drugs determined.
(a) Duty of board.--As of March 1 of each calendar year, the
board shall transmit to the commissioner a list of the 250 most
costly prescription drugs based upon net price times
utilization. For each of the prescription drugs on the list, the
board shall also provide the total amount expended by the
Commonwealth on each of the prescription drugs on the list for
the previous calendar year.
(b) Duty of commissioner.--Utilizing the information
described in subsection (a), as of April 1 of each year, the
commissioner shall produce and publish a list of 250 referenced
drugs that shall be subject to the referenced rate as determined
under subsection (c).
(c) Determination of referenced rate.--
(1) The commissioner shall determine the referenced rate
for each prescription drug by comparing the wholesale
acquisition cost to the cost from the:
(i) Ontario Ministry of Health and Long-Term Care
and most recently published on the Ontario Drug Benefit
Formulary.
(ii) Régie de l'Assurance Maladie du Québec and most
recently published on the Quebec Public Drug Programs
List of Medications.
(iii) British Columbia Ministry of Health and most
recently published on the BC Pharmacare Formulary.
(iv) Alberta Ministry of Health and most recently
published on the Alberta Drug Benefit List.
(2) After the comparison under paragraph (1) is
conducted, the referenced rate for each prescription drug
shall be calculated as the lowest cost among those resources
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and the wholesale acquisition cost. If a specific referenced
drug is not included within resources described in paragraph
(1), the commissioner shall utilize for the purpose of
determining the referenced rate the ceiling price for drugs
as reported by the Government of Canada Patented Medicine
Prices Review Board.
(d) Analysis of cost.--The determination by the commissioner
of which prescription drugs to include on the list of referenced
drugs shall be based on an analysis of the savings that could be
achieved by subjecting those prescription drugs to the
referenced rate. In making this determination, the commissioner
shall consult with the board or its designee and the State Board
of Pharmacy.
(e) Regulations.--The commissioner may promulgate
regulations to implement the requirements of this act.
Section 7. Registered agent and office required.
An entity that sells, distributes, delivers or offers for
sale a prescription drug in this Commonwealth shall maintain a
registered agent and office in this Commonwealth.
Section 8. Use of savings.
(a) General rule.--Any savings generated as a result of the
requirements in section 4(a) must be used to reduce costs to
consumers. A Commonwealth entity, health plan or participating
ERISA plan must calculate and utilize the savings directly to
reduce costs for its members.
(b) Savings report to be filed with commissioner.--No later
than April 1 of each calendar year, a Commonwealth entity,
health plan and participating ERISA plan subject to this act
shall submit to the commissioner a report describing the savings
achieved for each referenced drug for the previous calendar year
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and how the savings were used to achieve the requirements of
subsection (a).
Section 9. Enforcement.
Each violation of this act shall be subject to a fine of
$1,000. Every individual transaction in violation of section 4
shall be deemed be a separate violation. The Attorney General is
authorized to enforce the provisions of this act on behalf of a
Commonwealth entity or consumer of prescription drugs.
Section 10. Prohibition on withdrawal of referenced drugs for
sale.
(a) General rule.--No manufacturer or distributor of a
referenced drug may withdraw the referenced drug from sale or
distribution within this Commonwealth for the purpose of
avoiding the impact of the rate limitations provided in section
3.
(b) Notice of withdrawal.--A manufacturer that intends to
withdraw a referenced drug from sale or distribution within this
Commonwealth shall provide a notice of withdrawal in writing to
the commissioner and Attorney General not less than 180 days
prior to the withdrawal.
(c) Penalty.--The commissioner shall assess a penalty of
$500,000 on an entity, including a manufacturer or distributor
of a referenced drug, that the commissioner determines has
withdrawn a referenced drug from distribution or sale in the
State in violation of subsection (a) or (b).
Section 11. Effective date.
This act shall take effect in 60 days.
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