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Minnesota Legislature

Office of the Revisor of Statutes

SF 2801

as introduced - 90th Legislature (2017 - 2018) Posted on 03/02/2018 09:06am

KEY: stricken = removed, old language.
underscored = added, new language.

Current Version - as introduced

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A bill for an act
relating to health care; establishing the Prescription Drug Cost Review and Rate
Setting Act; creating a prescription drug cost review commission and rate-setting
requirements; 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.94 may be cited as the "Prescription Drug Cost Review and Rate
Setting 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.94, 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 Cost Review
Advisory Council established under section 62J.88.
new text end

new text begin Subd. 3. new text end

new text begin Commission. new text end

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

new text begin Subd. 4. new text end

new text begin Excess costs. new text end

new text begin "Excess costs" means the cost of a prescription drug product that
either:
new text end

new text begin (1) exceeds the therapeutic benefit relative to other therapeutic options or alternative
treatments; or
new text end

new text begin (2) is not sustainable to public and private health care systems over a ten-year time
period.
new text end

new text begin Subd. 5. 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.
new text end

new text begin Subd. 6. 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 COST REVIEW 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 Cost Review 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 Cost Review 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 of representatives; 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.
new text end

new text begin (c) Initial appointments shall be made by January 1, 2019. 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 commission may hire an executive director
who serves in the unclassified service and may employ or contract with 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 Meetings. new text end

new text begin (a) 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.
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 COST REVIEW 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, 2019. 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 or in the conduct of the
commission'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.
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 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 NOTICE.
new text end

new text begin Subdivision 1. new text end

new text begin Patented products. new text end

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

new text begin (1) plans to increase the WAC of a patent-protected brand name drug by more than
$10,000 during any 12-month period; or
new text end

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

new text begin (b) The notice must be provided in writing to the commission at least 30 days prior to
the planned effective date of the increase or introduction and must include a justification
as described under subdivision 4.
new text end

new text begin Subd. 2. new text end

new text begin Generic products and off-patent sole-source brand products. new text end

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

new text begin (1) plans to increase the WAC of a generic or off-patent sole-source brand product drug
by more than 25 percent or by more than $300 during any 12-month period; or
new text end

new text begin (2) intends to introduce to market a generic drug that has a WAC of $3,000 or more
annually.
new text end

new text begin (b) The notice must be provided in writing to the commission at least 30 days prior to
the planned effective date of the increase or introduction and must include a justification
as described under subdivision 4.
new text end

new text begin Subd. 3. new text end

new text begin Other price increase notifications. new text end

new text begin (a) After consultation with the advisory
council, the commission may establish a third threshold for brand name prescription drugs
and generic and off-patent, sole-source brand prescription drugs that when breached shall
require the drug manufacturer of the drug product to notify the commission according to
this section. This third threshold may require reporting of price increases that are below the
thresholds specified under subdivisions 1 and 2, but impose costs on the state's public and
private health care systems that create significant challenges to affordability.
new text end

new text begin (b) If the commission establishes a third threshold, the commission shall notify the
legislature of the threshold and the specific triggers of the threshold.
new text end

new text begin Subd. 4. new text end

new text begin Justification. new text end

new text begin A drug manufacturer shall include in the notice required to be
submitted to the commission under subdivision 1, 2, or 3 a justification for the proposed
introduction price or price increase. The justification must include all documents and research
related to the manufacturer's selection of the introduction 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. 5. new text end

new text begin Additional information. new text end

new text begin Upon receiving the justification response required
under this subdivision, the commission may make a written request to the manufacturer for
additional information. The commission shall require the manufacturer to submit any
additional information by a specific date, taking into consideration the request and its
complexity for the manufacturer to fulfill.
new text end

new text begin Subd. 6. new text end

new text begin Public data. new text end

new text begin 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

Sec. 7.

new text begin [62J.91] DETERMINATION TO PROCEED WITH A FULL COST REVIEW.
new text end

new text begin (a) The commission shall make a determination as to whether to undertake a full cost
review of a prescription drug that triggered the notification requirements under section
62J.90. The commission shall publicly meet and deliberate on whether to subject a
prescription drug product to a full cost review and shall consider any public comments
received prior to making its decision.
new text end

new text begin (b) Any member of the commission may request a vote on whether or not to undertake
a full cost review under section 62J.92 if there is not a consensus of the commission with
the decision.
new text end

new text begin (c) The commission shall provide the public with the opportunity to request that the
commission conduct a full cost review of any of the prescription drug products that triggered
the notification requirements under section 62J.90.
new text end

Sec. 8.

new text begin [62J.92] COST REVIEW; DETERMINING EXCESS COSTS.
new text end

new text begin Subdivision 1. new text end

new text begin General. new text end

new text begin (a) Once a decision by the commission has been made to proceed
with a full cost review, 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, has led or will lead to excess costs.
new text end

new text begin (b) The commission shall accept analysis and data from manufacturers, group purchasers,
consumers, and experts, staff, or third-party contractors to determine if the cost to the health
care system of appropriate utilization is commensurate with a benefit to the system, and
whether the drug under review is affordable for state residents.
new text end

new text begin (c) If the commission finds that the cost is excessive and not affordable, the commission
shall establish a cost or payment rate for the drug by which all group purchasers, pharmacies,
and wholesale drug distributors must abide. No group purchaser, pharmacy, or wholesale
distributor shall pay more for any prescription drug product for which the commission
established a rate according to section 62J.93.
new text end

new text begin Subd. 2. new text end

new text begin Phase-one determination. new text end

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

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

new text begin (2) the average monetary price concession, including any discounts or rebates, the
manufacturer provides to a group purchaser or is expected to provide to a group purchaser
as reported by the manufacturer and the group purchaser;
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 for therapeutic alternatives;
new text end

new text begin (5) the relative clinical merits of the prescription drug product under review compared
to therapeutic alternatives;
new text end

new text begin (6) the cost to group purchasers based on patient access consistent with FDA labeled
indications;
new text end

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

new text begin (8) the current or expected value of manufacturer-supported, drug-specific, patient access
programs;
new text end

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

new text begin (10) other factors that may be specified by the commission.
new text end

new text begin Subd. 3. new text end

new text begin Phase-two determination. new text end

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

new text begin (1) manufacturer research and development costs, as shown on the manufacturer's federal
tax filing for the most recent tax year multiplied by the proportion of manufacturer in-state
sales to United States sales;
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 United States sales for the product under review;
new text end

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

new text begin (4) any additional factors that can be specified in regulations or that the commission
considers relevant to the circumstances, as may be proposed by the drug manufacturer.
new text end

new text begin Subd. 4. new text end

new text begin Public deliberation. new text end

new text begin (a) The commission shall publicly review a prescription
drug product cost analysis and take a public vote on whether to impose a cost or payment
limit on the prescription drug product according to section 62J.93.
new text end

new text begin (b) All submissions to the commission pertaining to a cost review shall be public with
the exception of information determined to be proprietary to the persons submitting the
information. The commission shall establish parameters for what is considered proprietary
and shall give attention to any premarket submissions.
new text end

Sec. 9.

new text begin [62J.93] DETERMINATIONS; COMPLIANCE; REMEDIES.
new text end

new text begin Subdivision 1. new text end

new text begin Rate setting. new text end

new text begin In the event the commission finds that the spending on a
prescription drug product under review creates excess costs, the commission shall establish
the level of reimbursement that must be billed and paid among:
new text end

new text begin (1) group purchasers and pharmacies;
new text end

new text begin (2) wholesale distributors and pharmacies; and
new text end

new text begin (3) pharmacies and uninsured consumers or consumers who are enrolled in a health plan
but who have not yet met the health plan's deductible.
new text end

new text begin Subd. 2. new text end

new text begin Compliance with rate setting. new text end

new text begin (a) Instances of failure to bill and pay at the
rate established by the commission under this section shall be referred to the attorney general
for possible action.
new text end

new text begin (b) Upon a finding of noncompliance with the commission's requirements, the attorney
general may pursue remedies consistent with chapter 8, or in the case of intentional
profiteering, appropriate criminal charges.
new text end

new text begin (c) A health care stakeholder who obtains price concessions from a drug manufacturer
that result in a lower net cost to the stakeholder than the rate established by the commission
is not considered noncompliant.
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.94, 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 decision. The commission shall
hear the appeal and render a decision within 60 days of the appeal request.
new text end

new text begin (b) All appeal decisions are subject to judicial review.
new text end

Sec. 10.

new text begin [62J.94] REPORTS.
new text end

new text begin Beginning March 1, 2020, the commission shall annually report to the governor and
legislature on general prescription drug price trends, 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. 11. new text beginFINANCING RECOMMENDATIONS.
new text end

new text begin By March 1, 2019, the Prescription Drug Cost Review Commission shall submit
recommendations to the legislature on possible financing options for the commission
beginning fiscal year 2020, to ensure ongoing financing for the commission and the
implementation of the Prescription Drug Cost Review and Rate Setting Act.
new text end

Sec. 12. new text beginAPPROPRIATION.
new text end

new text begin $....... in fiscal year 2019 is appropriated from the general fund to the commissioner of
health for the Prescription Drug Cost Review Commission established under Minnesota
Statutes, section 62J.88, and the implementation of the Prescription Drug Cost Review and
Rate Setting Act.
new text end