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. 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.
Prescription Drug Cost Transparency.
In 2019 legislation was enacted to require the reporting of certain information to the HCA about the cost of prescription drugs. The legislation requires health carriers, pharmacy benefit managers, manufacturers, and pharmacy services administrative organizations to annually submit utilization, pricing, rebate, and discount data to the HCA. Drug manufacturers must provide the HCA with 60 days advance notice of price increases above a certain threshold. The HCA must compile and analyze the data into an annual report demonstrating the impact of drug costs on health care premiums. The data in the report must be aggregated, not reveal information to specific entities, and other than the report and the provision of information to legislators upon request, the HCA must keep all data confidential.
Health Care Cost Transparency Board.
The Health Care Cost Transparency Board (Transparency Board) was established in 2020 to calculate and analyze information and trends related to health care costs in Washington. The Transparency Board's activities relate to annually calculating total health care expenditures. The Transparency Board must also annually calculate health care cost growth and establish the health care cost growth benchmark for increases in total health expenditures.
U.S. Food and Drug Administration Designations.
The U.S. Food and Drug Administration (FDA) may designate drugs or biological products that prevent, diagnose, or treat a rare disease or condition as orphan-drugs. This designation qualifies drug sponsors for a number of incentives including tax credits for qualified clinical trials, exemptions for user fees, and a potential seven years of market exclusivity after approval. In addition to the Orphan Drug Designation Program, the FDA Office of Orphan Products Development includes a number of other programs intended to enable the development of drugs and biologic products for rare diseases including the Rare Pediatric Disease Priority Review Voucher Program and the Orphan Products Grant Program.
Prescription Drug Affordability Board.
The Prescription Drug Affordability Board (Board) is established with five members appointed by the Governor who have expertise in health care economics or clinical medicine. The Board members must serve five-year terms. The Health Care Authority (HCA) must provide administrative support to the Board and any advisory groups and must adopt rules governing their operation, including how and when the Board will use and discuss confidential information. The Board may not hold its first meeting until at least one year after the HCA publishes its first prescription drug price transparency report.
By June 30, 2023, and yearly thereafter, the Board must identify prescription drugs that have been on the market for at least four years, are dispensed at a retail, specialty, or mail-order pharmacy, are not designated by the U.S. Food and Drug Administration (FDA) as a drug soley for the treatment of a rare disease or condition, and meet the following benchmarks:
The Board may choose to conduct up to 24 affordability reviews each year of prescription drugs it identifies as meeting the above thresholds. When deciding whether to conduct a review, the Board must consider:
For any prescription drug chosen for a review, the Board must establish an advisory group consisting of relevant stakeholders, including patients and patient advocates for the condition treated by the drug and a representative from the prescription drug industry.
Affordability reviews must determine if the drug has led or will lead to excess costs, defined as costs exceeding the therapeutic benefit relative to other treatments or that are not sustainable to the health care system over a 10-year period. The Board must publicize the drugs that are subject to an affordability review before it begins. When conducting a review, the Board must consider:
The Board may request confidential and proprietary information about the drug from the manufacturer to complete its review, and the manufacturer must submit all requested information within 30 days. The HCA may assess a fine up to $100,000 against a manufacturer for each failure to comply with an information request. All information collected by the Board during the review is confidential and not subject to public disclosure.
Upper Payment Limit.
The HCA must adopt rules setting forth a methodology established by the Board for setting an upper payment limit for drugs the Board determines have led or will lead to excess costs and the methodology must consider:
The Board may not establish an upper payment limit before January 1, 2027. Before setting an upper payment limit for a drug, the Board must post notice of the proposed upper payment limit including an explanation of the factors considered when setting the limit on the HCA's website and provide 30 days for public comment. The Board must notify the manufacturer of the drug subject to an upper payment limit and the manufacturer must inform the Board if it is able to make the drug available for sale in the state and include a rationale for its decision. The Board must establish an effective date for each upper payment limit which must be at least six months after the adoption of the limit and the limit only applies to purchases, contracts, and plans that are issued on or renewed after the effective date.
Upper payment limits established by the Board apply to all purchases of the drug by any entity and reimbursements for a claim for the drug by a health carrier or health plan offered to public employees when the drug is dispensed or administered to an individual in the state in person, by mail, or other means. Employer-sponsored self-funded plans may elect to be subject to the upper payment limits. Any entity affected by a decision of the Board may request an appeal within 30 days of the Board's decision and the Board must rule on the appeal within 60 days. Board rulings are subject to judicial review.
The Board must monitor the supply of drugs subject to an upper payment limit and may suspend that limit if there is a shortage of a drug in the state. The Board may reassess the upper payment limit for any drug annually based on current economic factors.
Any individual denied coverage by a health carrier for a prescription drug because the drug was unavailable due to an upper payment limit established by the Board, may seek review of a denial through the carrier's grievance and appeal process or through an independent review organization following the grievance and appeal process. If it is determined that the prescription drug should be covered based on medical necessity, the carrier may disregard the upper payment limit and must provide coverage for the drug.
Any savings generated for a health plan offered by a carrier or a health plan offered to public employees that are attributable to an upper payment limit must be used to reduce costs to consumers, prioritizing the reduction of out-of-pocket costs for prescription drugs. By January 1, 2024, the Board must establish a formula for calculating the savings. By March 1 the year following the effective date of the first upper payment limit, and annually thereafter, each state agency and health carrier issuing a health plan in the state must submit a report to the Board describing the savings in the previous calendar year that were attributable to upper payment limits and how the savings were used to reduce costs to consumers.
Any manufacturer that intends to withdraw a prescription drug from sale or distribution within the state because the Board has established an upper payment limit for that drug, must provide notice of withdrawal indicating that the drug will be withdrawn because of the limit at least 180 days before the withdrawal to the Office of the Insurance Commissioner, the HCA, and any entity in the state with the manufacturer has a contract for the sale or distribution of the drug. If a manufacturer chooses to withdraw the prescription drug from the state, it is prohibited from selling that drug in Washington for three years. A manufacturer that has withdrawn from the market may petition the authority to reenter the market before the expiration of the three-year ban if it agrees to make the drug available for sale in compliance with the upper payment limit.
Board members and advisory group members may not be an employee, board member, or consultant of a prescription drug manufacturer, PBM, health carrier, prescription drug wholesale distributor, or related trade association, except for the representative on an advisory group from the prescription drug industry. Board members, advisory group members, staff members, and contractors of the Board must recuse themselves from a Board activity in which they have a conflict of interest. Board members must be compensated for the work of the Board in accordance with a personal services contract. The Board must coordinate and collaborate with the HCA, other boards, work groups, and commissions related to prescription drug costs and emerging therapies and may collaborate with prescription drug affordability boards established in other states.
All meetings of the Board must be open and public, except for executive sessions. All coordination and collaboration with the HCA, other work groups, boards, and other entities must comply with the Open Public Meetings Act. The HCA is authorized to adopt rules necessary to implement these requirements.
For health plans issued or renewed on or after January 1, 2024, if the Board has established an upper payment limit for a prescription drug, a carrier must provide sufficient information, as determined by the Insurance Commissioner, to indicate that reimbursement for a claim that a prescription drug will not exceed the upper payment limit.
Prescription Drug Price Transparency.
The Board and the Health Care Cost Transparency Board (Transparency Board) are authorized to access all data collected under the prescription drug price transparency statutes and any analysis prepared by the HCA. Any information provided by the HCA to legislators, the Board, or Transparency Board must be kept confidential and may not be publicly released. Recipients of data within the Board and Transparency Board must follow all rules adopted by the HCA regarding appropriate data use and protection and acknowledge that the recipient is responsible for any liability arising from misuse of the data and that the recipient does not have any conflicts under the Ethics in Public Service Act that would prevent the recipient from accessing or using the data.
The striking amendment:
(In support) Two years ago, the Legislature passed a bill establishing a Prescription Drug Affordability Board (Board), but it was vetoed by the Governor during the beginning of the pandemic. This bill comes back to the Legislature with the new leverage of an upper payment limit, which is included in the Colorado legislation. The Health Care Authority's Prescription Drug Price Transparency Report just came out last week and found that 73 of 290 drugs covered were due to prices exceeding $10,000 a month at the time of entry to the market. Additionally, 34 drugs had a 50 percent wholesale acquisition cost increase in the three-year period. This bill will give the state the necessary tools to have leverage to push back on the increasing drug prices.
Prescription drug prices are impacted by a complex network and there is no true drug price. The amendments incorporated in the Senate broaden the authority of the Board and provide multiple options to control prices. A statement of intent should also be included and one of the state's Pharmacoeconomists should be added to the Board.
Rising drugs costs are a challenge for affordable care and patients should not have to choose between prescription drugs, food, and other bills. Affordable access to medications is a vital element of a well-functioning health care system and society. There is no sign that prescription drugs will become any more affordable in the future. This bill gets at the heart of the problem—the price set by manufacturers. This bill will help ensure that more patients will have access to affordable prescription drugs.
The original bill was a much stronger bill than this version and the one that passed two years ago. This bill needs to be strengthened for it to achieve its purpose. A number of changes must be made to make meaningful change, including that drugs should be reviewed after three to five years, rather than 10, the price threshold to be lowered back to $25,0000, drugs dispensed by specialty pharmacies should be included, and there should be penalties for excess price increases. If the language is left as-is in this current version, many people will not be able to benefit from this bill.
Overpriced drugs appear at all levels and the review should not be limited to drugs sold at retail pharmacies. A 2019 survey from Multiple Sclerosis (MS) Society showed that 40 percent of patients with MS had altered their use of medications due to cost. Treatments for MS have risen drastically in the last few years and faster than other drug prices.
(Opposed) Affordability and access to prescription drugs is incredibly important. However, this bills still contains an upper payment limit and so it is opposed. Net prices for prescription drugs fell in 2020 and the prices and spending on prescription drugs are in line with other areas of healthcare.
(Other) Drug costs are the largest and fastest growing portion of the health plan premium. While there is support for the intent, the bill has been changed in ways that will make it less effective in lowering costs. There are administrative costs for health plans associated with this bill, which the plans are willing to assume, but if the bill is not modified to become more effective the changes in the current bill might eliminate most, if not all, of the savings.
In 2017 the National Academy of State Health Policy created the first model law establishing a Prescription Drug Affordability Board and Maryland passed the first law in 2019. In 2021 Colorado passed a similar law, which includes the authority to set upper payment limits. This bill includes a number of provisions that other states have found to be successful.
The Prescription Drug Affordability Board (Board) must identify drugs that have been on the market for at least seven years rather than four years. The Board must submit a comprehensive report to the Legislature by December 15, 2022, and annually thereafter, detailing all actions the Board has taken in the past year. The rules adopted by the Health Care Authority and the upper payment limits adopted by the Board may not go into effect until at least 90 days after the next regular legislative session.
The bill is null and void unless funded in the budget.
(In support) Addressing the cost of prescription drugs is the one of the biggest issues facing patients today. Ensuring patients can afford their medicine will save lives and ease the financial burden of chronic conditions. This bill would be stronger and more beneficial to patients by lowering the thresholds and increasing the number of drugs reviewed. The $60,000 price threshold is higher than the average income in Washington and should be adjusted back to the original bill's threshold of $25,000. Drug prices have not gone down and the amount of money the state has paid for public employees through the Public Employees Benefit Board and for Medicaid continues to increase. This bill will save the state millions of dollars.
(Opposed) In 2020 net drug prices fell by over 2 percent and the increases in spending on prescription drugs are in line with other areas of health care spending.
Affordability and access to medications are very important issues. There are many things in this bill the drug industry does not like, but the primary concern is about the change to include drugs that have only been on the market for four years. This bill is fundamentally different than the one that left the Senate, which focused on older drugs that have been on the market for at least 10 years and do not have a lot of competition. This striking amendment targets newer, innovative drugs that are complicated and expensive to develop and manufacture which fundamentally conflicts with the drug development process. Most medicines only have eight to 12 years of patent protection once they are on the market, which is roughly consistent with the 10-year provision in the Senate bill version. The four-year timeline places innovated medicines under the threat of price controls when they are brand new to the market and have not yet recouped their costs. This threshold should be returned to 10 years. The amendments in the Senate were also heavily negotiated and were a fair compromise that left no one completely satisfied.