House of Representatives
Office of Program Research
Health Care & Wellness Committee
This analysis was prepared by non-partisan legislative staff for the use of legislative members in their deliberations. This analysis is not a part of the legislation nor does it constitute a statement of legislative intent.
Brief Description: Establishing a prescription drug affordability board.
Sponsors: Senate Committee on Ways & Means (originally sponsored by Senators Keiser, Conway, Das, Frockt, Hasegawa, Hunt, Kuderer, Pedersen, Randall, Rolfes, Stanford and Wilson, C.).
Hearing Date: 2/26/20
Staff: Kim Weidenaar (786-7120).
State Purchased Prescription Drugs.
In 2003 the Legislature created an evidence-based prescription drug program for state agencies purchasing prescription drugs directly or through reimbursement to pharmacies. The program is part of the Washington Prescription Drug Program (WPDP) and uses a preferred drug list (PDL), which is a list of prescription drug classes having gone through an evidence-based review process to determine their safety, efficacy, and effectiveness.
Washington contracts with the Oregon Health and Science University Center for Evidence-Based Policy to independently review drug classes. Their recommendations are reviewed by the Pharmacy and Therapeutics Committee, an independent group of pharmacists and physicians, which then makes recommendations regarding the drugs on the PDL.
Prescription Drug Purchasing Consortium.
In 2005 the Legislature directed the Health Care Authority (HCA) to establish a prescription drug purchasing consortium. In addition to state agencies, the consortium may include, on a voluntary basis, local government, private entities, labor organizations, and individuals without insurance, or who are underinsured for prescription drug coverage. State purchased health care services purchased through health carriers and health maintenance organizations are exempted from participating in the consortium. In 2006 Washington and Oregon formed the Northwest Prescription Drug Consortium (Northwest Consortium) to expand their purchasing power. The Northwest Consortium offers access to retail pharmacy discounts, pharmacy benefit management services, rebate management services, and a prescription discount card for uninsured residents.
Summary of Bill:
Prescription Drug Affordability Board.
Subject to the availability of amounts appropriated, the Prescription Drug Affordability Board (Board) is established. The Board consists of five members appointed by the Governor who have expertise in health care economics or clinical medicine. Board members may not be an employee, board member, or consultant to a prescription drug manufacturer, pharmacy benefit manager, health carrier, prescription drug wholesale distributor, or related trade association.
The Board may establish advisory groups of relevant stakeholders. The advisory group members are immune from civil liability for any official act performed in good faith as a member of the group. The Health Care Authority (HCA) must provide administrative support to the Board and any advisory groups. The HCA may adopt rules governing the operation of the Board and any advisory groups. Board members must be compensated in accordance with a personal services contract.
A simple majority of the Board constitutes a quorum for purposes of conducting business. All meetings must be open and public, except that the Board may hold executive sessions to the extent permitted by the Open Public Meetings Act.
By June 30, 2021, and yearly thereafter, the Board must identify:
brand name prescription drug and biologic products that:
are introduced to the market with a wholesale acquisition cost (WAC) of $30,000 or more per year or course of treatment lasting less than a year; or
have a price increase of $3,000 or more in any 12-month period or for a course of treatment lasting less than 12 months;
biosimilar products with a WAC less than 15 percent below the reference brand biologic product;
generic drugs with a WAC of $100 for a 30-day supply or less that has increased in price by 200 percent or more in the preceding 12 months; and
any other prescription drug product the Board determines may create excess cost for Washington and patients.
The Board may choose to conduct a cost review of any drug it identifies as meeting the above thresholds. The Board must determine whether the drug had led or will lead to excess costs to Washington or patients. The Board may examine publicly available information and collect information from the drug manufacturer and other relevant sources. During a review the Board should consider:
relevant factors contributing to the price paid by Washington for the drug, such as WAC, discounts, and rebates;
the average patient co-pay or cost sharing for the drug;
the dollar value of the drug manufacturer's patient assistance programs;
the price of therapeutic alternatives; and
any other factor the Board deems relevant.
If the Board is unable to determine based on the above factors if a drug will lead to excess costs, the Board may consider:
the manufacturer's research and development costs;
the portion of direct-to-consumer marketing costs eligible for favorable federal tax treatment;
the manufacturer's gross and net revenues; and
any additional factors identified by the Board.
"Excess cost" is defined as costs of the appropriate utilization of a prescription drug that:
exceed the therapeutic benefit relative to other alternative treatments; or
are not sustainable to public and private health care systems over a 10-year time frame.
Any information collected by the Board for review purposes is not subject to public disclosure.
The Board must establish a process for setting upper payment limits for prescription drugs the Board determined have led or will lead to excess costs. Any state agency administering a state purchased health care program may not pay more than the upper payment limit set by the Board. When setting payment limits, the Board must consider the cost of delivering and administering the drug to patients and any other relevant factors.
The process must allow for suspension of the payment limit if a drug is placed on the federal Food and Drug Administration's drug shortage list, and the Board may suspend the payment limit if there is a drug shortage within Washington. Any entity affected by a Board decision may request an appeal in accordance with the Administrative Procedure Act.
Fiscal Note: Available.
Effective Date: The bill takes effect 90 days after adjournment of the session in which the bill is passed.