FINAL BILL REPORT

E2SHB 1224

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.

C 334 L 19

Synopsis as Enacted

Brief Description: Concerning prescription drug cost transparency.

Sponsors: House Committee on Appropriations (originally sponsored by Representatives Robinson, Macri, Ryu, Peterson, Frame, Tharinger, Bergquist, Gregerson, Jinkins, Ortiz-Self, Lovick, Doglio, Stanford, Appleton, Slatter and Wylie).

House Committee on Health Care & Wellness

House Committee on Appropriations

Senate Committee on Health & Long Term Care

Senate Committee on Ways & Means

Background:

Prescription Drug Purchasing Consortium.

The Health Care Authority (HCA) established a prescription drug purchasing consortium. State purchased health care programs must purchase prescription drugs through the consortium, and local governments, private entities, labor organizations, uninsured, and underinsured residents may voluntarily participate 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.

State Agency Work on Prescription Drug Costs.

In 2016 the Department of Health convened a task force to evaluate factors contributing to out-of-pocket costs for patients, including prescription drug cost trends. The same year, the HCA and the OFM prepared a report on prescription drug costs and potential purchasing strategies. The report describes increases in state agency spending on prescription drugs in recent years, current cost drivers, strategies to slow the rate of prescription drug spending, and policy options.

Pharmacy Benefit Manager.

A pharmacy benefit manager (PBM) acts as an intermediary between the entities with which it contracts and pharmaceutical manufacturers to administer the drug benefit portion of a health plan. A PBM is defined as a person that contracts with pharmacies on behalf of an insurer, a third-party payor, or the prescription drug purchasing consortium to: process claims for prescription drugs or medical supplies or provide retail network management for pharmacies or pharmacists; pay pharmacies or pharmacists for prescription drugs or medical supplies; or negotiate rebates with manufacturers for drugs paid for or procured as described in this subsection. A PBM does not include a health care service contractor. A PBM must register with the Office of the Insurance Commissioner and renew the registration annually.

Summary:

Health Carrier Reporting.

Beginning October 1, 2019, and yearly thereafter, carriers must provide the Health Care Authority (HCA) the following information from the previous calendar year for each health plan it offers in Washington:

Pharmacy Benefit Manager Reporting.

By March 1 of each year, a pharmacy benefit manager (PBM) must provide the HCA the following information from the previous calendar year:

A PBM may not cause or knowingly permit the use of any advertisement, promotion, solicitation, representation, proposal, or offer that is untrue, deceptive, or misleading. The HCA may examine or audit the financial records of a PBM for purposes of ensuring the information submitted is accurate.

Manufacturer Reporting.

Beginning October 1, 2019, manufacturers must provide the data organization with the following data for covered drugs:

A manufacturer must submit this information at least 60 days in advance of a qualifying price increase for a covered drug and within 30 days of release a new covered drug to market. If 60 days' notice is not possible for a price increase of a generic drug, the notice should be made as soon as the increase is known and not later than the date of the price increase.

A "covered drug" is defined as a prescription drug that: (1) a covered manufacturer intends to introduce at a wholesale acquisition cost of $10,000 or more for a course of treatment lasting less than one month or 30-day supply, whichever is longer; or (2) is currently on the market and has a wholesale acquisition cost of at least $100 for a course of treatment lasting less than one month or 30-day supply that has a price increase of 20 percent or more including the proposed increase over one year, or 50 percent or more including the proposed increase over three years. A "prescription drug" is defined as a legend drug or controlled substance that is prescribed for outpatient use and distributed in a retail setting. A "qualifying price increase" is an increase in the wholesale acquisition cost of a drug that costs at least $100 for a course of treatment or 30-day supply that is at least 20 percent or more including the proposed increase over one year, or 50 percent or more including the proposed increase over three years.

Manufacturer Notice of New Drug Applications.

Beginning October 1, 2019, manufacturers must report the following Food and Drug Administration (FDA) filing information to the HCA:

The manufacturer has 60 days to file a notice of FDA approval with the HCA.

Health Care Authority Requests to Manufacturers.

Upon receipt of FDA approval notice from the manufacturer, the HCA may request the following information from the manufacturer if it believes the drug will have significant impact on state expenditures:

Manufacturer Notice to Health Care Authority.

Beginning October 1, 2019, a manufacturer must notify the HCA, in writing, of a qualifying price increase of a covered drug at least 60 days prior to the planned effective date of the increase for drugs. If 60 days' notice is not possible for a price increase of a generic drug, the notice should be made as soon as the increase is known and not later than the date of the price increase. The notification must include:

By December 1, 2020, the HCA must provide recommendations on how to provide advance notice of price increases to purchasers consistent with state and federal law.

Pharmacy Services Administrative Organization Reporting.

Beginning October 1, 2019, and yearly thereafter, pharmacy services administrative organizations (PSAOs) must provide the HCA:

Pharmacy services administrative organizations whose revenue is generated from flat service fees, not connected to drug prices or volume, are exempt from reporting.

Health Care Authority Report.

The HCA must compile the information collected from issuers, PBMs, manufacturers, and PSAOs and prepare an annual report for the Legislature demonstrating the overall impact of drug costs on health care premiums. Beginning January 1, 2021, the HCA must publish the report annually on its website. The data in the report must be aggregated and not reveal information specific to individual health carriers, PBMs, PSOAs, prescription drugs, classes of prescription drugs, or manufacturers. The data collected under the act is not subject to public disclosure.

Upon the request of a legislator, the HCA must provide all data submitted under the act and any analysis prepared by the HCA. Any information provided must be kept confidential within the Legislature and may not be publicly released.

The HCA may assess fines of up to $1,000 per day for failure to comply with reporting requirements.

The HCA must work with Oregon and California to develop strategies to reduce prescription drug costs and increase price transparency.

Votes on Final Passage:

House

80

18

Senate

48

0

(Senate amended)

House

(House refused to concur)

Conference Committee

Senate

48

0

House

92

5

Effective:

July 28, 2019