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Minnesota Legislature

Office of the Revisor of Statutes

SF 364

as introduced - 91st Legislature (2019 - 2020) Posted on 01/22/2019 03:53pm

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; authorizing the commissioner of health to review costs for
insulin products sold in Minnesota; determining if the cost is excessive; establishing
a maximum level of reimbursement for insulin products if necessary; 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.871] DEFINITIONS.
new text end

new text begin Subdivision 1. new text end

new text begin Definitions. new text end

new text begin (a) For the purposes of this section, the following terms have
the meanings given them.
new text end

new text begin (b) "Commissioner" means the commissioner of health.
new text end

new text begin (c) "Excess cost" means the cost of appropriate utilization of an insulin product that is
not sustainable to public and private health care systems in this state over a ten-year time
period.
new text end

new text begin (d) "Group purchaser" has the meaning given in section 62J.03, subdivision 6, and
includes pharmacy benefit managers, but does not include state and federal public health
care programs.
new text end

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

new text begin Subd. 2. new text end

new text begin Manufacturer reporting requirement; excess costs review. new text end

new text begin (a) Each
manufacturer of an insulin product made available in Minnesota must report to the
commissioner of health by September 1, 2019, the wholesale acquisition cost for each insulin
product offered for sale in Minnesota. A manufacturer may submit with this report any
documents or research related to the price, 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 insulin product.
new text end

new text begin (b) The commissioner shall review the cost of an insulin product reported to the
commissioner under this subdivision and make a determination as to whether appropriate
utilization of the insulin product, based on utilization that is consistent with the United
States Food and Drug Administration (FDA) label, has led or will lead to excess costs for
the health care systems in this state.
new text end

new text begin (c) The commissioner may consider the following factors in determining excess costs:
new text end

new text begin (1) the price at which the insulin product has been and will be sold in this 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 the insulin product;
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 this state for the insulin product, 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 this 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 federal 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 insulin product relative to
insurance benefit design;
new text end

new text begin (8) the current or expected dollar value of insulin-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; and
new text end

new text begin (10) any other factors as determined by the commissioner.
new text end

new text begin (d) If, after considering the factors described in this subdivision, the commissioner is
unable to determine whether an insulin product will produce or has produced excess costs
using the factors described, the commissioner 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
this state;
new text end

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

new text begin (e) Notwithstanding section 62U.04, subdivision 11, the commissioner may use the
Minnesota all-payer claims database (APCD) to conduct the analysis required under this
section.
new text end

new text begin Subd. 3. new text end

new text begin Advisory work group. new text end

new text begin (a) The commissioner may convene a work group to
provide advice to the commissioner on insulin cost issues and to represent stakeholders'
views. If convened, the members of the work group must have demonstrated knowledge
and expertise in one or more of the following areas: health care cost trends and drivers;
practice of medicine; pharmaceutical business; patient perspectives; clinical and health care
research; and the health care marketplace.
new text end

new text begin (b) A work group member must disclose to the commissioner any conflicts of interest,
including the type, nature, and magnitude of the interests involved. For purposes of this
subdivision, a 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 relating
to the commissioner's duties under this section or before the work group.
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
commissioner related to a insulin cost review shall be made available to the public with the
exception of information determined by the commissioner to be proprietary or information
that could qualify as a trade secret.
new text end

new text begin (b) The commissioner 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 federal Food and Drug Administration.
new text end

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

new text begin (d) Prior to the commissioner making a determination on the costs of an insulin product,
the commissioner shall provide the opportunity for comments from the public, including
an opportunity to submit written comments to the commissioner.
new text end

new text begin Subd. 5. new text end

new text begin Determinations; compliance; remedies. new text end

new text begin (a) In the event the commissioner
finds that the spending on an insulin product reviewed under this section creates excess
costs for group purchasers and consumers, the commissioner shall establish a maximum
level of reimbursement to be billed and paid among:
new text end

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

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

new text begin (3) pharmacies or administering entities 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 (b) The maximum level of reimbursement set by the commissioner under paragraph (a)
must not create more than a 50 percent net profit margin for the manufacturer. For purposes
of this subdivision, "net profit margin" means a financial ratio used to calculate the percentage
of profit a manufacturer produces from its total revenue. The net profit margin is equal to
net profit divided by total revenue.
new text end

new text begin (c) The commissioner shall determine how each participant in the supply chain of the
insulin product shall be remunerated.
new text end

new text begin (d) An entity who obtains price concessions from a drug manufacturer that results in a
lower net cost to the stakeholder than the maximum rate established by the commissioner
shall not be considered to be out of compliance.
new text end

new text begin (e) 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 rates established by the commissioner.
new text end

new text begin (f) The noncompliance of an entity to bill or pay a reimbursement rate in accordance
with the rate established by the commissioner under this subdivision shall be referred to the
Office of the Attorney General. If the Office of the Attorney General finds that an entity
was noncompliant with the commissioner 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 Subd. 6. new text end

new text begin Compliance with reporting. new text end

new text begin If a drug manufacturer fails to report to the
commissioner as required by this section, or submit any information requested by the
commissioner under this section, the commissioner may refer the matter to the attorney
general for review and possible action as permitted under chapter 8; or may establish a
maximum level of reimbursement as authorized under subdivision 5 without the reported
information from the manufacturer. If the commissioner establishes a maximum level of
reimbursement due to noncompliance of the reporting requirements, the manufacturer does
not have the right to appeal the commissioner's decision as permitted under subdivision 7.
new text end

new text begin Subd. 7. new text end

new text begin Appeals. new text end

new text begin (a) Persons affected by a decision of the commissioner may request
an appeal of the commissioner's decision within 30 days of the date of the decision. The
commissioner 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. 2. new text beginAPPROPRIATION.
new text end

new text begin $....... in fiscal year 2020 is appropriated from the general fund to the commissioner of
health for the implementation of section 1.
new text end