HF 3228

1st Engrossment - 91st Legislature (2019 - 2020) Posted on 03/12/2020 04:02pm

A bill for an act
relating to health care; establishing the Prescription Drug Affordability Act; creating
a prescription drug affordability commission and prescription drug affordability
requirements; requiring a report; proposing coding for new law in Minnesota
Statutes, chapter 62J.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1.

new text begin [62J.85] CITATION.
new text end

new text begin Sections 62J.85 to 62J.95 may be cited as the "Prescription Drug Affordability Act."
new text end

Sec. 2.

new text begin [62J.86] DEFINITIONS.
new text end

new text begin Subdivision 1. new text end

new text begin Definitions. new text end

new text begin For the purposes of sections 62J.85 to 62J.95, the following
terms have the meanings given them.
new text end

new text begin Subd. 2. new text end

new text begin Advisory council. new text end

new text begin "Advisory council" means the Prescription Drug Affordability
Advisory Council established under section 62J.88.
new text end

new text begin Subd. 3. new text end

new text begin Biologic. new text end

new text begin "Biologic" means a drug that is produced or distributed in accordance
with a biologics license application approved under Code of Federal Regulations, title 42,
section 447.502.
new text end

new text begin Subd. 4. new text end

new text begin Biosimilar. new text end

new text begin "Biosimilar" means a drug that is produced or distributed in
accordance with a biologics license application approved under Code of Federal Regulations,
title 42, section 262(k)(3).
new text end

new text begin Subd. 5. new text end

new text begin Brand name drug. new text end

new text begin "Brand name drug" means a drug that is produced or
distributed in accordance with an original new drug application approved under United
States Code, title 21, section 355(c). This definition does not include an authorized generic
as defined by Code of Federal Regulations, title 42, section 447.502.
new text end

new text begin Subd. 6. new text end

new text begin Commission. new text end

new text begin "Commission" means the Prescription Drug Affordability
Commission established under section 62J.87.
new text end

new text begin Subd. 7. new text end

new text begin Generic drug. new text end

new text begin "Generic drug" means:
new text end

new text begin (1) a retail drug that is marketed or distributed in accordance with an abbreviated new
drug application approved under United States Code, title 21, section 355(j);
new text end

new text begin (2) an authorized generic as defined by Code of Federal Regulations, title 42, section
447.502; or
new text end

new text begin (3) a drug that entered the market before 1962 that was not originally marketed under a
new drug application.
new text end

new text begin Subd. 8. new text end

new text begin Group purchaser. new text end

new text begin "Group purchaser" has the meaning given in section 62J.03,
subdivision 6, and includes pharmacy benefit managers as defined in section 62W.02,
subdivision 15.
new text end

new text begin Subd. 9. new text end

new text begin Manufacturer. new text end

new text begin "Manufacturer" means an entity that:
new text end

new text begin (1) engages in the manufacture of a prescription drug product or enters into a lease with
another manufacturer to market and distribute a prescription drug product under the entity's
own name; and
new text end

new text begin (2) sets or changes the wholesale acquisition cost of the prescription drug product it
manufacturers or markets.
new text end

new text begin Subd. 10. new text end

new text begin Prescription drug product. new text end

new text begin "Prescription drug product" means a brand name
drug, a generic drug, a biologic, or a biosimilar.
new text end

new text begin Subd. 11. new text end

new text begin Wholesale acquisition cost or WAC. new text end

new text begin "Wholesale acquisition cost" or "WAC"
has the meaning given in United States Code, title 42, section 1395W-3a(c)(6)(B).
new text end

Sec. 3.

new text begin [62J.87] PRESCRIPTION DRUG AFFORDABILITY COMMISSION.
new text end

new text begin Subdivision 1. new text end

new text begin Establishment. new text end

new text begin The Prescription Drug Affordability Commission is
created to protect consumers, state and local governments, health plan companies, providers,
pharmacies, and other health care system stakeholders from excessive costs of certain
prescription drugs.
new text end

new text begin Subd. 2. new text end

new text begin Membership. new text end

new text begin (a) The Prescription Drug Affordability Commission consists
of seven members appointed as follows:
new text end

new text begin (1) three members appointed by the governor;
new text end

new text begin (2) one member appointed by the majority leader of the senate;
new text end

new text begin (3) one member appointed by the minority leader of the senate;
new text end

new text begin (4) one member appointed by the speaker of the house; and
new text end

new text begin (5) one member appointed by the minority leader of the house of representatives.
new text end

new text begin (b) All members appointed must have knowledge and demonstrated expertise in health
care economics and finance. A member must not be an employee of, a board member of,
or a consultant to a manufacturer or trade association for manufacturers.
new text end

new text begin (c) Initial appointments shall be made by January 1, 2021. Initial appointees shall serve
staggered terms of two, three, or four years as determined by lot by the secretary of state.
new text end

new text begin Subd. 3. new text end

new text begin Terms. new text end

new text begin (a) Following the initial appointments, commission appointees shall
serve four-year terms and shall serve no more than two consecutive terms.
new text end

new text begin (b) A commission member may resign at any time by giving written notice to the
commission.
new text end

new text begin Subd. 4. new text end

new text begin Chair; other officers. new text end

new text begin (a) The governor shall designate an acting chair from
the members appointed by the governor.
new text end

new text begin (b) The commission shall elect a chair to replace the acting chair at the first meeting of
the commission by a majority of the members. The chair shall serve for one year.
new text end

new text begin (c) The commission shall elect a vice-chair and other officers from its membership as
it deems necessary.
new text end

new text begin Subd. 5. new text end

new text begin Staff; technical assistance. new text end

new text begin (a) The commissioner of health must provide
meeting space and other administrative assistance as requested by the commission. The
commission may hire an executive director who serves in the unclassified service and may
employ or contract for professional and technical assistance as the commission deems
necessary to perform the commission's duties.
new text end

new text begin (b) The attorney general shall provide legal services to the commission.
new text end

new text begin Subd. 6. new text end

new text begin Compensation. new text end

new text begin The commission members shall not receive compensation but
may receive reimbursement for expenses as authorized under section 15.059, subdivision
3.
new text end

new text begin Subd. 7. new text end

new text begin Meetings. new text end

new text begin (a) Meetings of the commission are subject to chapter 13D. The
commission shall meet publicly at least every three months to review prescription drug
product information submitted to the commission under section 62J.90. If there are no
pending submissions, the chair of the commission may cancel or postpone the required
meeting. The commission may meet in closed session when reviewing proprietary information
as determined under the standards developed in accordance with section 62J.91, subdivision
4.
new text end

new text begin (b) The commission shall announce each public meeting at least two weeks prior to the
scheduled date of the meeting. Any materials for the meeting shall be made public at least
one week prior to the scheduled date of the meeting.
new text end

new text begin (c) At each public meeting, the commission shall provide the opportunity for comments
from the public, including the opportunity for written comments to be submitted to the
commission prior to a decision by the commission.
new text end

Sec. 4.

new text begin [62J.88] PRESCRIPTION DRUG AFFORDABILITY ADVISORY COUNCIL.
new text end

new text begin Subdivision 1. new text end

new text begin Establishment. new text end

new text begin The governor shall appoint an 11-member stakeholder
advisory council to provide advice to the commission on drug cost issues and to represent
stakeholders' views. The members of the advisory council shall be appointed based on their
knowledge and demonstrated expertise in one or more of the following areas: the
pharmaceutical business; practice of medicine; patient perspectives; health care cost trends
and drivers; clinical and health services research; and the health care marketplace.
new text end

new text begin Subd. 2. new text end

new text begin Membership. new text end

new text begin The council's membership shall consist of the following:
new text end

new text begin (1) two members representing patients and health care consumers;
new text end

new text begin (2) two members representing health care providers;
new text end

new text begin (3) one member representing health plan companies;
new text end

new text begin (4) two members representing employers, with one member representing large employers
and one member representing small employers;
new text end

new text begin (5) one member representing government employee benefit plans;
new text end

new text begin (6) one member representing pharmaceutical manufacturers;
new text end

new text begin (7) one member who is a health services clinical researcher; and
new text end

new text begin (8) one member who is a pharmacologist.
new text end

new text begin Subd. 3. new text end

new text begin Terms. new text end

new text begin (a) The initial appointments to the advisory council shall be made by
January 1, 2021. The initial appointed advisory council members shall serve staggered terms
of two, three, or four years determined by lot by the secretary of state. Following the initial
appointments, the advisory council members shall serve four-year terms.
new text end

new text begin (b) Removal and vacancies of advisory council members shall be governed by section
15.059.
new text end

new text begin Subd. 4. new text end

new text begin Compensation. new text end

new text begin Advisory council members may be compensated according to
section 15.059.
new text end

new text begin Subd. 5. new text end

new text begin Exemption. new text end

new text begin Notwithstanding section 15.059, the advisory council shall not
expire.
new text end

Sec. 5.

new text begin [62J.89] CONFLICTS OF INTEREST.
new text end

new text begin Subdivision 1. new text end

new text begin Definition. new text end

new text begin For purposes of this section, "conflict of interest" means a
financial or personal association that has the potential to bias or have the appearance of
biasing a person's decisions in matters related to the commission, the advisory council, or
in the conduct of the commission's or council's activities. A conflict of interest includes any
instance in which a person or a person's immediate family member, including a spouse,
parent, child, or other legal dependent, has received or could receive a direct or indirect
financial benefit of any amount deriving from the result or findings of a decision or
determination of the commission. For purposes of this section, a financial benefit includes
honoraria, fees, stock, the value of the member's or the immediate family member's stock
holdings, and any direct financial benefit deriving from the finding of a review conducted
under sections 62J.85 to 62J.95.
new text end

new text begin Subd. 2. new text end

new text begin General. new text end

new text begin (a) Prior to the acceptance of an appointment or employment, or prior
to entering into a contractual agreement, a commission or advisory council member,
commission staff member, or third-party contractor must disclose to the appointing authority
or the commission any conflicts of interest. The information disclosed shall include the
type, nature, and magnitude of the interests involved.
new text end

new text begin (b) A commission member, advisory council member, commission staff member, or
third-party contractor with a conflict of interest with regard to any prescription drug product
under review must recuse themselves from any discussion, review, decision, or determination
made by the commission relating to the prescription drug product.
new text end

new text begin (c) Any conflict of interest must be disclosed in advance of the first meeting after the
conflict is identified or within five days after the conflict is identified, whichever is earlier.
new text end

new text begin Subd. 3. new text end

new text begin Prohibitions. new text end

new text begin Commission members, advisory council members, commission
staff, or third-party contractors are prohibited from accepting gifts, bequeaths, or donations
of services or property that raise the specter of a conflict of interest or have the appearance
of injecting bias into the activities of the commission.
new text end

Sec. 6.

new text begin [62J.90] REQUIRED MANUFACTURER REPORTING REQUIREMENT.
new text end

new text begin Subdivision 1. new text end

new text begin Brand name drugs or biologics. new text end

new text begin A drug manufacturer shall notify the
commission if the manufacturer:
new text end

new text begin (1) increases the WAC of a brand name drug or biologic by more than ten percent or by
more than $10,000 during any 12-month period or course of treatment if less than 12 months;
or
new text end

new text begin (2) intends to introduce to market a brand name drug or biologic at a WAC of $30,000
per calendar year or per course of treatment.
new text end

new text begin Subd. 2. new text end

new text begin Biosimilar drugs. new text end

new text begin A drug manufacturer shall notify the commission if the
manufacturer intends to introduce to market a biosimilar at a WAC that is not at least 15
percent lower than the referenced brand biologic at the time the biosimilar is introduced.
new text end

new text begin Subd. 3. new text end

new text begin Generic drugs. new text end

new text begin A drug manufacturer shall notify the commission if the
manufacturer:
new text end

new text begin (1) increases the WAC of a generic drug by $100 or more for:
new text end

new text begin (i) a 30-day supply lasting a patient for a period of 30 consecutive days based on the
recommended dosage approved for labeling by the United States Food and Drug
Administration (FDA);
new text end

new text begin (ii) a supply lasting a patient for fewer than 30 days based on recommended dosage
approved for labeling by the FDA; or
new text end

new text begin (iii) one unit of the drug if the labeling approved by the FDA does not recommend a
finite dosage; and
new text end

new text begin (2) the WAC is increased by 200 percent or more during the immediate preceding
12-month period, as determined by the difference between the resulting WAC and the
average of the WAC reported over the preceding 12 months.
new text end

new text begin Subd. 4. new text end

new text begin Other reporting requirements. new text end

new text begin The commission, in consultation with the
advisory council, may establish a reporting threshold for manufacturers for other prescription
drug products that may impose costs that create significant affordability challenges for the
state health care system or for patients.
new text end

new text begin Subd. 5. new text end

new text begin Notification; justification. new text end

new text begin (a) The notice provided by the manufacturer under
subdivisions 1 to 4 must be provided to the commission in writing at least 30 days before
the planned effective date of the increase or the introduction of the drug to market. Upon
the receipt of the notification, the commission shall review the justification for the
introductory price or price increase of the prescription drug product reported.
new text end

new text begin (b) To the extent practicable, the commission shall access manufacturer justification
information made public by other states.
new text end

new text begin (c) If manufacturer justification information is not available from other state sources,
the commission may require a manufacturer to submit to the commission any documents
and research related to the manufacturer's selection of the introductory price or price increase,
including but not limited to:
new text end

new text begin (1) life cycle management;
new text end

new text begin (2) net average price in Minnesota that includes the net of all price concessions, such as
discounts and rebates, but excludes in-kind concessions;
new text end

new text begin (3) market competition and context;
new text end

new text begin (4) projected revenue; and
new text end

new text begin (5) if available, estimated value or cost-effectiveness of the prescription drug product.
new text end

new text begin Subd. 6. new text end

new text begin Public input. new text end

new text begin (a) The commission shall make available to the public all
notifications and justifications received by the commission under this section, unless the
information is likely to compromise the financial or competitive position of the manufacturer
or could qualify as a trade secret.
new text end

new text begin (b) The commission shall allow the public to request the commission to proceed to a
cost review of any prescription drug product reported under this section.
new text end

new text begin Subd. 7. new text end

new text begin Determination to proceed with review. new text end

new text begin (a) The commission may initiate a
review of the cost of a prescription drug product reported to the commission under this
section.
new text end

new text begin (b) The commission shall also review any public request made under subdivision 6,
paragraph (b), and shall determine whether to initiate a review of the cost of the prescription
drug product identified in the request.
new text end

new text begin (c) If there is not consensus among the members of the commission on whether or not
to review a prescription drug product, any member of the commission may request a vote
to determine whether or not to review the prescription drug product.
new text end

Sec. 7.

new text begin [62J.91] AFFORDABILITY OF A PRESCRIPTION DRUG PRODUCT.
new text end

new text begin Subdivision 1. new text end

new text begin General. new text end

new text begin Once a decision by the commission has been made to proceed
with a cost review of a prescription drug product, the commission shall conduct the review
and make a determination as to whether appropriate utilization of the prescription drug
under review, based on utilization that is consistent with the United States Food and Drug
Administration (FDA) label and standard medical practice, has led or will lead to affordability
challenges for the state health care system or for patients.
new text end

new text begin Subd. 2. new text end

new text begin Review considerations. new text end

new text begin In reviewing the cost of a prescription drug product,
the commission may consider the following factors:
new text end

new text begin (1) the price at which the prescription drug product has been and will be sold in the state;
new text end

new text begin (2) the average monetary price concession, discount, or rebate the manufacturer provides
to a group purchaser in this state as reported by the manufacturer and the group purchaser
expressed as a percent of the WAC for prescription drug product under review;
new text end

new text begin (3) the total amount of the concession, discount, or rebate the manufacturer provides to
each pharmacy benefit manager operating in the state for the prescription drug product
under review, expressed as a percent of the wholesale acquisition cost;
new text end

new text begin (4) the price at which therapeutic alternatives have been or will be sold in the state;
new text end

new text begin (5) the average monetary price concession, discount, or rebate the manufacturer provides
or is expected to provide to a group purchaser in the state or is expected to provide to group
purchasers in the state for therapeutic alternatives;
new text end

new text begin (6) the cost to group purchasers based on patient access consistent with the United States
Food and Drug Administration (FDA) labeled indications;
new text end

new text begin (7) the impact on patient access resulting from the cost of the prescription drug product
relative to insurance benefit design;
new text end

new text begin (8) the current or expected dollar value of drug-specific patient access programs that are
supported by manufacturers;
new text end

new text begin (9) the relative financial impacts to health, medical, or other social services costs that
can be quantified and compared to baseline effects of existing therapeutic alternatives;
new text end

new text begin (10) the average patient co-pay or other cost-sharing for the prescription drug product
in the state;
new text end

new text begin (11) any information a manufacturer chooses to provide; and
new text end

new text begin (12) any other factors as determined by the commission.
new text end

new text begin Subd. 3. new text end

new text begin Further review factors. new text end

new text begin If, after considering the factors described in subdivision
2, the commission is unable to determine whether a prescription drug product will produce
or has produced an affordability challenge using the factors described in subdivision 2, the
commission may consider the following factors:
new text end

new text begin (1) manufacturer research and development costs, as indicated on the manufacturer's
federal tax filing for the most recent tax year in proportion to the manufacturer's sales in
the state;
new text end

new text begin (2) that portion of direct-to-consumer marketing costs eligible for favorable federal tax
treatment in the most recent tax year that are specific to the prescription drug product under
review and that are multiplied by the ratio of total manufacturer in-state sales to total
manufacturer sales in the United States for the product under review;
new text end

new text begin (3) gross and net manufacturer revenues for the most recent tax year; and
new text end

new text begin (4) any additional factors as determined by the commission to be relevant to the
circumstance.
new text end

new text begin Subd. 4. new text end

new text begin Public data; proprietary information. new text end

new text begin (a) Any submission made to the
commission related to a drug cost review shall be made available to the public with the
exception of information determined by the commission to be proprietary.
new text end

new text begin (b) The commission shall establish the standards for the information to be considered
proprietary under paragraph (a), including standards for heightened consideration of
proprietary information for submissions for a cost review of a drug that is not yet approved
by the FDA.
new text end

new text begin (c) Prior to the commission establishing the standards under paragraph (b), the public
shall be provided notice and the opportunity to submit comments.
new text end

Sec. 8.

new text begin [62J.92] DETERMINATIONS; COMPLIANCE; REMEDIES.
new text end

new text begin Subdivision 1. new text end

new text begin Maximum reimbursement level. new text end

new text begin (a) In the event the commission finds
that the spending on a prescription drug product reviewed under section 62J.91 creates an
affordability challenge for the health care system or for patients, the commission shall
establish a maximum reimbursement level after considering:
new text end

new text begin (1) the cost of administering the drug;
new text end

new text begin (2) the cost of delivering the drug to consumers; and
new text end

new text begin (3) any other relevant administrative costs related to the drug.
new text end

new text begin (b) The maximum reimbursement level shall apply to all public and private purchases,
payments, and payer reimbursements for the prescription drug product that is intended for
individuals in the state in person, by mail, or by other means.
new text end

new text begin (c) The commission shall determine how each participant in the supply chain of the
prescription drug shall be remunerated.
new text end

new text begin Subd. 2. new text end

new text begin Noncompliance. new text end

new text begin (a) The noncompliance of an entity to bill or pay a
reimbursement rate in accordance with the level established by the commission under this
section shall be referred to the Office of the Attorney General.
new text end

new text begin (b) If the Office of the Attorney General finds that an entity was noncompliant with the
commission reimbursement requirements, the attorney general may pursue remedies
consistent with chapter 8 or appropriate criminal charges if there is evidence of intentional
profiteering.
new text end

new text begin (c) An entity who obtains price concessions from a drug manufacturer that result in a
lower net cost to the stakeholder than the maximum level established by the commission
shall not be considered to be in noncompliance.
new text end

new text begin (d) The Office of the Attorney General shall provide guidance to stakeholders concerning
activities that could be considered noncompliant that are in addition to billing and payment
where drug costs exceed the level established by the commission.
new text end

new text begin Subd. 3. new text end

new text begin Compliance with reporting. new text end

new text begin Failure of a drug manufacturer to report to the
commission as required by section 62J.90, or submit any information requested by the
commission under sections 62J.86 to 62J.95, shall be referred to the attorney general for
review and possible action as permitted under chapter 8.
new text end

new text begin Subd. 4. new text end

new text begin Appeals. new text end

new text begin (a) Persons affected by a decision of the commission may request an
appeal of the commission's decision within 30 days of the date of the decision. The
commission shall hear the appeal and render a decision within 60 days of the hearing.
new text end

new text begin (b) All appeal decisions are subject to judicial review in accordance with chapter 14.
new text end

Sec. 9.

new text begin [62J.93] REPORTS.
new text end

new text begin Beginning March 1, 2021, and each March 1 thereafter, the commission shall submit a
report to the governor and legislature on general price trends for prescription drug products,
the number of manufacturers required to report during the prior calendar year under section
62J.90, and the number of prescription drug products that were subject to the commission's
cost review and analysis, including the result of any analysis as well as the number and
disposition of appeals and judicial reviews.
new text end

Sec. 10.

new text begin [62J.94] ERISA PLANS AND MEDICARE DRUG PLANS.
new text end

new text begin (a) Nothing in sections 62J.85 to 62J.95 shall be construed to require ERISA plans or
Medicare Part D plans to comply with decisions of the commission, but are free to choose
to reimburse more than the maximum reimbursement level established by the commission
under section 62J.92.
new text end

new text begin (b) Providers who dispense and administer drugs in the state must bill all payers no more
than the maximum reimbursement level without regard to whether or not an ERISA plan
or Medicare Part D plan chooses to reimburse the provider in an amount greater than the
maximum reimbursement level limit established by the commission.
new text end

new text begin (c) For purposes of this section, an ERISA plan or group health plan is an employee
welfare benefit plan established by or maintained by an employer or an employee
organization, or both, that provides employer sponsored health coverage to employees and
the employee's dependents and is subject to the Employee Retirement Income Security Act
of 1974 (ERISA).
new text end

Sec. 11.

new text begin [62J.95] SEVERABILITY.
new text end

new text begin If any provision of sections 62J.85 to 62J.94 or the application thereof to any person or
circumstance is held invalid for any reason in a court of competent jurisdiction, the invalidity
does not affect other provisions or any other application of sections 62J.85 to 62J.94 that
can be given effect without the invalid provision or application.
new text end

Sec. 12. new text begin FINANCING RECOMMENDATIONS.
new text end

new text begin By March 1, 2021, the Prescription Drug Affordability Commission established under
Minnesota Statutes, section 62J.87, shall submit recommendations to the legislature on
possible financing options for the commission beginning fiscal year 2022, to ensure ongoing
financing for the commission and the implementation of the Prescription Drug Affordability
Act.
new text end

Sec. 13. new text begin APPROPRIATION.
new text end

new text begin $....... in fiscal year 2021 is appropriated from the general fund to the commissioner of
health for the Prescription Drug Affordability Commission established under Minnesota
Statutes, section 62J.87, and the implementation of the Prescription Drug Affordability Act.
new text end