SB540: Bill Text

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2021 - 2022 LEGISLATURE

2021 Senate BILL 540

September 2, 2021 - Introduced by Senators Smith, Erpenbach, Agard, Bewley, Carpenter, Johnson, Larson, Pfaff and Ringhand, cosponsored by Representatives Subeck, Hesselbein, Anderson, Cabral-Guevara, Conley, Considine, Doyle, Emerson, Hebl, Hong, Milroy, L. Myers, Neubauer, S. Rodriguez, Shankland, Shelton, Sinicki, Snodgrass, Spreitzer, Stubbs, Vining and Vruwink. Referred to Committee on Government Operations, Legal Review and Consumer Protection.

SB540,1,3 An Act to create 15.07 (3) (bm) 7., 15.735 and subchapter VI (title) of chapter 601 [precedes 601.78] of the statutes; relating to: creating a prescription drug affordability review board and granting rule-making authority.

Analysis by the Legislative Reference Bureau

This bill creates a prescription drug affordability review board, whose purpose is to protect Wisconsin residents and other stakeholders from the high costs of prescription drugs. The board consists of the commissioner of insurance and the following members, all of whom are appointed by the governor for four-year terms:

1. Two members who represent the pharmaceutical drug industry, at least one of whom is a licensed pharmacist.

2. Two members who represent the health insurance industry.

3. Two members who represent the health care industry, at least one of whom is a licensed practitioner.

4. Two members who represent the interests of the public.

The bill requires the board to meet in open session at least four times per year to review prescription drug pricing information. The board must provide at least two weeks' public notice of its meetings, make the meeting's materials publicly available at least one week prior to meeting, and provide the opportunity for public comment. The bill imposes conflict of interest requirements for the board relating to recusal and public disclosure of certain conflicts. The bill directs the board to access and assess drug pricing information, to the extent practicable, by accessing and assessing information from other states, by assessing spending for the drug in Wisconsin, and by accessing other available pricing information.

Under the bill, the board must conduct drug cost affordability reviews. The first step in the reviews is for the board to identify prescription drugs whose increase in wholesale acquisition cost exceeds specified thresholds and other prescription drugs that may create affordability challenges for the health care system in Wisconsin. For each identified prescription drug, the board must determine whether to conduct an affordability review by seeking stakeholder input and considering the average patient cost share for the drug. During an affordability review, the board must determine whether use of the prescription drug that is fully consistent with the labeling approved by the federal Food and Drug Administration or standard medical practice has led or will lead to an affordability challenge for the health care system in Wisconsin. In making this determination, the bill requires the board to consider a variety of factors, which include the following:

1. The drug's wholesale acquisition cost.

2. The average monetary price concession, discount, or rebate the manufacturer provides, or is expected to provide, for the drug to health plans.

3. The total amount of price concessions, discounts, and rebates the manufacturer provides to each pharmacy benefit manager for the drug.

4. The price at which therapeutic alternatives have been sold and the average monetary concession, discount, or rebate the manufacturer provides, or is expected to provide, to health plan payors and pharmacy benefit managers for therapeutic alternatives.

5. The costs to health plans based on patient access consistent with federal labeled indications and recognized standard medical practice.

6. The impact on patient access resulting from the drug's cost relative to insurance benefit design.

7. The current or expected dollar value of drug–specific patient access programs that are supported by the manufacturer.

8. The relative financial impacts to health, medical, or social services costs that can be quantified and compared to baseline effects of existing therapeutic alternatives.

9. The average patient copay or other cost sharing for the drug.

If the board determines that a prescription drug will lead to an affordability challenge, the bill directs the board to establish an upper payment limit for that drug that applies to all purchases and payor reimbursements of the drug dispensed or administered to individuals in Wisconsin. In establishing the upper payment limit, the board must consider the cost of administering the drug, the cost of delivering it to consumers, and other relevant administrative costs. For certain drugs, the board must solicit information from the manufacturer regarding the price increase and, if the board determines that the price increase is not a result of the need for increased manufacturing capacity or other effort to improve patient access during a public health emergency, the board must establish an upper payment limit equal to the drug's cost prior to the price increase.

For further information see the state fiscal estimate, which will be printed as an appendix to this bill.

The people of the state of Wisconsin, represented in senate and assembly, do enact as follows:

SB540,1 Section 1 . 15.07 (3) (bm) 7. of the statutes is created to read:

SB540,3,3 15.07 (3) (bm) 7. The prescription drug affordability review board shall meet at least 4 times each year.

SB540,2 Section 2 . 15.735 of the statutes is created to read:

SB540,3,7 15.735 Same; attached board. (1) There is created a prescription drug affordability review board attached to the office of the commissioner of insurance under s. 15.03. The board shall consist of the following members:

SB540,3,8 (a) The commissioner of insurance or his or her designee.

SB540,3,12 (b) Two members appointed for 4-year terms who represent the pharmaceutical drug industry, including pharmaceutical drug manufacturers and wholesalers. At least one of the members appointed under this paragraph shall be a licensed pharmacist.

SB540,3,14 (c) Two members appointed for 4-year terms who represent the health insurance industry, including insurers and pharmacy benefit managers.

SB540,3,17 (d) Two members appointed for 4-year terms who represent the health care industry, including hospitals, physicians, pharmacies, and pharmacists. At least one of the members appointed under this paragraph shall be a licensed practitioner.

SB540,3,19 (e) Two members appointed for 4-year terms who represent the interests of the public.

SB540,4,3 (2) A member appointed under sub. (1) may not be an employee of, a board member of, or a consultant to a drug manufacturer or trade association for drug manufacturers.

SB540,4,8 (3) Any conflict of interest, including any financial or personal association, that has the potential to bias or has the appearance of biasing an individual's decision in matters related to the board or the conduct of the board's activities shall be considered and disclosed when appointing that individual to the board under sub. (1).

SB540,3 Section 3 . Subchapter VI (title) of chapter 601 [precedes 601.78] of the statutes is created to read:

SB540,4,11 CHAPTER 601

SB540,4,13 SUBCHAPTER VI Prescription drug

SB540,4,14 affordability review board

SB540,4,15 601.78 Definitions. In this subchapter:

SB540,4,17 (1) “Biologic” means a drug that is produced or distributed in accordance with a biologics license application approved under 21 CFR 601.20.

SB540,4,19 (2) “Biosimilar” means a drug that is produced or distributed in accordance with a biologics license application approved under 42 USC 262 (k) (3).

SB540,4,21 (3) “Board” means the prescription drug affordability review board established under s. 15.735 (1).

SB540,4,24 (4) “Brand name drug” means a drug that is produced or distributed in accordance with an original new drug application approved under 21 USC 355 (c), other than an authorized generic drug, as defined in 42 CFR 447.502.

SB540,5,2 (5) “Drug product” means a brand name drug, a generic drug, a biologic, a biosimilar, or an over-the-counter drug.

SB540,5,6 (6) “Financial benefit” includes an honoraria, fee, stock, the value of the stock holdings of a member of the board or any immediate family member, as defined in s. 97.605 (4) (a) 2., and any direct financial benefit deriving from the finding of a review conducted under s. 601.79.

SB540,5,7 (7) “Generic drug” means any of the following:

SB540,5,9 (a) A retail drug that is marketed or distributed in accordance with an abbreviated new drug application approved under 21 USC 355 (j).

SB540,5,10 (b) An authorized generic drug, as defined in 42 CFR 447.502.

SB540,5,12 (c) A drug that entered the market prior to 1962 and was not originally marketed under a new drug application.

SB540,5,13 (8) “Manufacturer” means an entity that does all of the following:

SB540,5,16 (a) Engages in the manufacture of a drug product or enters into a lease with another manufacturer to market and distribute a prescription drug product under the entity's own name.

SB540,5,18 (b) Sets or changes the wholesale acquisition cost of the drug product or prescription drug product described in par. (a).

SB540,5,20 (9) “Over-the-counter drug” means a drug intended for human use that does not require a prescription and meets the requirements of 21CFR parts 328 to 364.

SB540,5,21 (10) “Pharmacy benefit manager” has the meaning given in s. 632.865 (1) (c).

SB540,5,23 (11) “Prescription drug product” means a brand name drug, a generic drug, a biologic, or a biosimilar.

SB540,6,3 601.785 Prescription drug affordability review board. (1) Mission. The purpose of the board is to protect state residents, the state, local governments, health plans, health care providers, pharmacies licensed in this state, and other stakeholders of the health care system in this state from the high costs of prescription drug products.

SB540,6,4 (2) Powers and duties. (a) The board shall do all of the following:

SB540,6,7 1. Meet in open session at least 4 times per year to review prescription drug product pricing information, except that the chair may cancel or postpone a meeting if there is no business to transact.