Prescription Drug Purchasing Consortium.  In 2005, the Legislature directed 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.

Prescription Drug Price Transparency Legislation.  In 2019, the Legislature enacted legislation requiring health carriers, prescription drug manufacturers, pharmacy benefit managers (PBMs), and pharmacy service administration organizations (PSAOs) to report certain drug pricing information to HCA, which HCA would then use to publish an annual report. 

HCA must compile the information collected from health carriers, PBMs, drug manufacturers, and PSAOs and prepare an annual report for the Legislature demonstrating the overall impact of drug costs on health care premiums.  The data in the report must be aggregated and not reveal information specific to individual health carriers, PBMs, PSAOs, prescription drugs, classes of prescription drugs, or manufacturers.  The data collected 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.

Identified drugs are drugs identified by the Institute for Clinical and Economic Review as having a price increase for which there is no, or inadequate, new clinical evidence to support the price increase.  Within 60 days of publication of the institute's annual unsupported price increase report, HCA must notify the manufacturers of each identified drug and the Department of Revenue (DOR).

DOR may assess a penalty against a manufacturer of an identified drug of 80 percent of the difference between the revenue generated by sales of the drug within the state and the revenue that would have been generated if the manufacturer had maintained the wholesale acquisition cost from the previous calendar year, if the manufacturer has at least $250,000 in total annual sales within the state in the calendar year for which the tax is assessed.

Any manufacturer notified by HCA, must submit to DOR the following information:

• the total amount of sales of the drug with the state;
• the total amount of units sold of the drug within the state;
• the current wholesale acquisition cost of the drug;
• the wholesale acquisition cost of the drug during the previous calendar year; and
• any other information DOR deems necessary.

All revenue collected pursuant to the penalty must be deposited into the foundational public services account. 

A manufacturer may not withdraw an identified drug from the market for the purpose of avoiding the penalty.  DOR must assess a penalty of $500,000 per identified drug on any entity that it determines has withdrawn an identified drug from the state in violation of this act. 

HCA and DOR may adopt rules necessary to implement the act.

If the reliance on an unsupported price increase report to identify drugs subject to the penalties prescribed in this act is found to be invalid, the remainder of the act or the application of the provision to other persons or circumstances is terminated.

• Places the program in the drug price transparency chapter.
• Limits the definition of the unsupported price increase report to reports that do not rely on quality adjusted life year analysis.
• Removes requirement that identified drugs also be reported as covered drugs to the drug price transparency program.
• Requires HCA to notify Department of Revenue and the manufacturers of identified drugs that the drugs are subject to the penalty.
• Requires DOR to collect the penalty.
• Removes distributors from the entities that may be penalized for removing an identified drug from the market.
• Provides rulemaking authority for HCA and DOR.
• Moves the effective date to January 1, 2023.
• Provides that the act is inoperable if the use of an unsupported price increase report is found to be invalid.

The committee recommended a different version of the bill than what was heard.  PRO:  Manufacturers often raise drug prices when that increase is not supported by new evidence.  These unsupported price increases drive health care costs.  There is a need to act now on increasing drug prices.

CON:  A Quality Adjusted Life Years (QALY) standard used to judge efficacy of a drug is inappropriate because it does not accurately evaluate to benefit of the drug.  The Institute for Clinical and Economic Review does not consider non-clinical factors for prices and does not conduct a full economic review when evaluating drug prices.  Their evaluations should not be used to determine if drug prices are justified.  This bill is a price control bill and relies on information from an unregulated group.  Price controls have been found to be unconstitutional and reduce access to life saving drugs. The bill does not provide due process rights for manufacturers.  The Institute for Clinical and Economic Review does not incorporate patient voices and patient groups do not support the bill.  Price controls affect building trades associated with pharmaceutical industry and threaten jobs.

OTHER:  The Institute for Clinical and Economic Review is an independent nonpartisan organization and QALY is not used to evaluate the price increase of a drug.