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HF 801

2nd Engrossment - 92nd Legislature (2021 - 2022) Posted on 03/08/2021 04:08pm

KEY: stricken = removed, old language.
underscored = added, new language.
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A bill for an act
relating to health; establishing a prescription drug affordability board and
prescription drug affordability advisory council; providing for prescription drug
cost reviews and remedies; requiring a report; appropriating money; 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" has the meaning provided in section 62J.84, subdivision
2, paragraph (b).
new text end

new text begin Subd. 5. new text end

new text begin Board. new text end

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

new text begin Subd. 6. new text end

new text begin Brand name drug. new text end

new text begin "Brand name drug" has the meaning provided in section
62J.84, subdivision 2, paragraph (c).
new text end

new text begin Subd. 7. new text end

new text begin Generic drug. new text end

new text begin "Generic drug" has the meaning provided in section 62J.84,
subdivision 2, paragraph (e).
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 BOARD.
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 Board is created as
a board under section 15.012, paragraph (a), to protect consumers, state and local
governments, health plan companies, providers, pharmacies, and other health care system
stakeholders from unaffordable 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 Board 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
pharmaceutical economics and finance or 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 or a pharmacy benefit manager or trade association for
pharmacy benefit managers.
new text end

new text begin (c) Initial appointments shall be made by January 1, 2022.
new text end

new text begin Subd. 3. new text end

new text begin Terms. new text end

new text begin (a) Board appointees shall serve four-year terms, except that initial
appointees shall serve staggered terms of two, three, or four years as determined by lot by
the secretary of state. A board member shall serve no more than two consecutive terms.
new text end

new text begin (b) A board member may resign at any time by giving written notice to the board.
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 board shall elect a chair to replace the acting chair at the first meeting of the
board by a majority of the members. The chair shall serve for one year.
new text end

new text begin (c) The board 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 board shall hire an executive director and
other staff, who shall serve in the unclassified service. The executive director must have
knowledge and demonstrated expertise in pharmacoeconomics, pharmacology, health policy,
health services research, medicine, or a related field or discipline. The board may employ
or contract for professional and technical assistance as the board deems necessary to perform
the board's duties.
new text end

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

new text begin Subd. 6. new text end

new text begin Compensation. new text end

new text begin The board 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 board are subject to chapter 13D. The board shall
meet publicly at least every three months to review prescription drug product information
submitted to the board under section 62J.90. If there are no pending submissions, the chair
of the board may cancel or postpone the required meeting. The board 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 board 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 board shall provide the opportunity for comments from
the public, including the opportunity for written comments to be submitted to the board
prior to a decision by the board.
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 a 12-member stakeholder
advisory council to provide advice to the board 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;
new text end

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

new text begin (9) one member representing the commissioner of health with expertise in health
economics.
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, 2022. 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 board, the advisory council, or in the
conduct of the board's or council's activities. A conflict of interest includes any instance in
which a person, a person's immediate family member, including a spouse, parent, child, or
other legal dependent, or an in-law of any of the preceding individuals, 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 board. For purposes of this section, a
financial benefit includes honoraria, fees, stock, the value of the member's, immediate family
member's, or in-law's stock holdings, and any direct financial benefit deriving from the
finding of a review conducted under sections 62J.85 to 62J.95. Ownership of securities is
not a conflict of interest if the securities are: (1) part of a diversified mutual or exchange
traded fund; or (2) in a tax-deferred or tax-exempt retirement account that is administered
by an independent trustee.
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 board or advisory council member, board staff
member, or third-party contractor must disclose to the appointing authority or the board
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 board member, board 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 board 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 Board members, board 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 board.
new text end

Sec. 6.

new text begin [62J.90] PRESCRIPTION DRUG PRICE INFORMATION; DECISION TO
CONDUCT COST REVIEW.
new text end

new text begin Subdivision 1. new text end

new text begin Drug price information from the commissioner of health and other
sources.
new text end

new text begin (a) The commissioner of health shall provide to the board the information reported
to the commissioner by drug manufacturers under section 62J.84, subdivisions 3, 4, and 5.
The commissioner shall provide this information to the board within 30 days of the date the
information is received from drug manufacturers.
new text end

new text begin (b) The board shall subscribe to one or more prescription drug pricing files, such as
Medispan or FirstDatabank, or as otherwise determined by the board.
new text end

new text begin Subd. 2. new text end

new text begin Identification of certain prescription drug products. new text end

new text begin (a) The board, in
consultation with the advisory council, shall identify the following prescription drug products:
new text end

new text begin (1) brand name drugs or biologics for which the WAC increases 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, after adjusting for changes in the consumer price index (CPI);
new text end

new text begin (2) brand name drugs or biologics that have been introduced at a WAC of $30,000 or
more per calendar year or per course of treatment;
new text end

new text begin (3) biosimilar drugs that have been introduced at a WAC that is not at least 15 percent
lower than the referenced brand name biologic at the time the biosimilar is introduced; and
new text end

new text begin (4) generic drugs for which the WAC:
new text end

new text begin (i) is $100 or more, after adjusting for changes in the consumer price index (CPI), for:
new text end

new text begin (A) 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 (B) 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 (C) 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 (ii) 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, after adjusting for changes in the consumer price
index (CPI).
new text end

new text begin (b) The board, in consultation with the advisory council, shall identify prescription drug
products not described in paragraph (a) that may impose costs that create significant
affordability challenges for the state health care system or for patients, including but not
limited to drugs to address public health emergencies.
new text end

new text begin (c) The board shall make available to the public the names and related price information
of the prescription drug products identified under this subdivision, with the exception of
information determined by the board to be proprietary under the standards developed by
the board under section 62J.91, subdivision 4.
new text end

new text begin Subd. 3. new text end

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

new text begin (a) The board may initiate a cost
review of a prescription drug product identified by the board under this section.
new text end

new text begin (b) The board shall consider requests by the public for the board to proceed with a cost
review of any prescription drug product identified under this section.
new text end

new text begin (c) If there is no consensus among the members of the board on whether or not to initiate
a cost review of a prescription drug product, any member of the board may request a vote
to determine whether or not to review the cost of the prescription drug product.
new text end

Sec. 7.

new text begin [62J.91] PRESCRIPTION DRUG PRODUCT REVIEWS.
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 board has been made to proceed with
a cost review of a prescription drug product, the board 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 or 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 board 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 price at which therapeutic alternatives have been or will be sold in the state;
new text end

new text begin (4) 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 (5) 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 (6) 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 (7) the current or expected dollar value of drug-specific patient access programs that are
supported by manufacturers;
new text end

new text begin (8) 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 (9) the average patient co-pay or other cost-sharing for the prescription drug product in
the state;
new text end

new text begin (10) any information a manufacturer chooses to provide; and
new text end

new text begin (11) any other factors as determined by the board.
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 board is unable to determine whether a prescription drug product will produce or has
produced an affordability challenge, the board may consider:
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;
new text end

new text begin (4) any information 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 (i) life cycle management;
new text end

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

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

new text begin (5) any additional factors determined by the board to be relevant.
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 board
related to a drug cost review shall be made available to the public with the exception of
information determined by the board to be proprietary.
new text end

new text begin (b) The board shall establish the standards for the information to be considered proprietary
under paragraph (a) and section 62J.90, subdivision 2, 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 board 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 Upper payment limit. new text end

new text begin (a) In the event the board finds that the spending
on a prescription drug product reviewed under section 62J.91 creates an affordability
challenge for the state health care system or for patients, the board shall establish an upper
payment limit 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;
new text end

new text begin (3) the range of prices at which the drug is sold in the United States according to one or
more pricing files accessed under section 62J.90, subdivision 1, and the range at which
pharmacies are reimbursed in Canada; and
new text end

new text begin (4) any other relevant pricing and administrative cost information for the drug.
new text end

new text begin (b) The upper payment limit 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 Subd. 2. new text end

new text begin Noncompliance. new text end

new text begin (a) The failure of an entity to comply with an upper payment
limit established by the board 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
upper payment limit 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 upper payment limit established by the board shall
not be considered to be in noncompliance.
new text end

new text begin (d) The Office of the Attorney General may provide guidance to stakeholders concerning
activities that could be considered noncompliant.
new text end

new text begin Subd. 3. new text end

new text begin Appeals. new text end

new text begin (a) Persons affected by a decision of the board may request an appeal
of the board's decision within 30 days of the date of the decision. The board 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, 2022, and each March 1 thereafter, the board shall submit a report
to the governor and legislature on general price trends for prescription drug products and
the number of prescription drug products that were subject to the board'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 board, but are free to choose to
exceed the upper payment limit established by the board 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 upper payment limit 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 upper payment
limit established by the board.
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 beginAPPROPRIATION.
new text end

new text begin $....... for the biennium beginning July 1, 2021, is appropriated from the general fund to
the Prescription Drug Affordability Board established under Minnesota Statutes, section
62J.87, for implementation of the Prescription Drug Affordability Act.
new text end