SENATE BILL NO. 3
January 08, 2025, Introduced by Senator CAMILLERI and referred to Committee on Finance,
Insurance, and Consumer Protection.
A bill to provide for a cost and affordability review of
certain prescription drug products; to create the prescription drug
pricing board and prescription drug affordability stakeholder
council and to prescribe their powers and duties; to provide for
the powers and duties of certain state governmental officers and
entities; to establish upper payment limits for certain
prescription drug products and provide remedies; and to provide for
the promulgation of rules.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
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1 Sec. 1. This act may be cited as the "prescription drug cost
2 and affordability review act".
3 Sec. 3. As used in this act:
4 (a) "Biologic" means a drug that is produced or distributed in
5 accordance with a biologics license application approved by the
6 United States Food and Drug Administration.
7 (b) "Biosimilar" means a drug that is produced or distributed
8 in accordance with a biologics license application approved under
9 42 USC 262(k).
10 (c) "Board" means the prescription drug affordability board
11 created in section 5.
12 (d) "Brand-name drug" means a drug other than an authorized
13 generic that is produced or distributed in accordance with an
14 original new drug application approved under 21 USC 355.
15 (e) "Consumer Price Index" means the United States Consumer
16 Price Index for all urban consumers as defined and reported by the
17 United States Department of Labor, Bureau of Labor Statistics.
18 (f) "Council" means the prescription drug affordability
19 stakeholder council created in section 9.
20 (g) "Department" means the department of insurance and
21 financial services.
22 (h) "Director" means the director of the department.
23 (i) "Fund" means the prescription drug affordability fund
24 created in section 17.
25 (j) "Generic drug" means any of the following:
26 (i) A retail drug that is marketed or distributed in accordance
27 with an abbreviated new drug application approved under 21 USC 355.
28 (ii) An authorized generic drug as that term is defined in 42
29 CFR 447.502.
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1 (iii) A drug that entered the market before 1962 that was not
2 originally marketed under a new drug application.
3 (k) "Health insurer" means any of the following:
4 (i) An insurer authorized under the insurance code of 1956,
5 1956 PA 218, MCL 500.100 to 500.8302, to deliver, issue for
6 delivery, or renew in this state a health insurance policy.
7 (ii) A health maintenance organization as that term is defined
8 in section 3501 of the insurance code of 1956, 1956 PA 218, MCL
9 500.3501.
10 (l) "Manufacturer" means an entity that meets any of the
11 following:
12 (i) Owns the patent to a prescription drug product or enters
13 into a lease with another manufacturer to market and distribute a
14 prescription drug product under the entity's own name.
15 (ii) Is the labeled entity of a generic drug at the point of
16 manufacture and the entity does 1 of the following:
17 (A) Sets or changes the wholesale acquisition cost of a brand-
18 name drug that it manufactures or has leased the right to market.
19 (B) Sets or changes the wholesale acquisition cost of a
20 generic drug that it manufactures.
21 (m) "Person" means an individual and includes a body politic
22 and corporate.
23 (n) "Prescription drug product" means a brand-name drug, a
24 generic drug, a biologic, or a biosimilar.
25 (o) "Prescription drug product purchaser" means an entity that
26 purchases and takes ownership of a prescription drug product for
27 resale or providing to patients.
28 (p) "Rule" means a rule promulgated pursuant to the
29 administrative procedures act of 1969, 1969 PA 306, MCL 24.201 to
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1 24.328.
2 (q) "Third-party payer" means a health insurer, a state
3 department or agency administering a plan of medical assistance
4 under the social welfare act, 1939 PA 280, MCL 400.1 to 400.119b, a
5 person administering a self-funded plan, or a pharmacy benefit
6 manager.
7 (r) "Wholesale acquisition cost" means that term as defined in
8 42 USC 1395w-3a(c)(6)(B).
9 (s) "340B Program entity" means an entity authorized to
10 participate in the federal 340B Program under section 340B of the
11 public health service act, 42 USC 256b.
12 Sec. 5. (1) The prescription drug affordability board is
13 created as an autonomous entity within the department.
14 (2) The board consists of 5 members, appointed by the governor
15 with the advice and consent of the senate. The members of the board
16 must include individuals who have expertise in health care
17 economics, health policy, health equity, and clinical medicine. The
18 governor shall not appoint an individual to the board if the
19 individual is employed by, a consultant to, or a board member of a
20 manufacturer or a trade association for a manufacturer or otherwise
21 has a personal or financial interest that has the potential to bias
22 or has the appearance of biasing the individual's decision in
23 matters related to the board or in conducting the board's
24 activities. The governor shall not appoint an individual to the
25 board if the individual is a lobbyist who is registered in this
26 state. An individual who is appointed to the board shall not
27 register as a lobbyist in this state for a period of 5 years after
28 the individual's term on the board expires.
29 (3) The governor shall appoint 2 of the first members to 1-
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1 year terms and 3 of the first members to 2-year terms. After the
2 first appointments, the term of a member of the board is 4 years or
3 until a successor is appointed, whichever is later.
4 (4) If a vacancy occurs on the board, the governor shall
5 appoint an individual to fill the vacancy for the balance of the
6 term in the same manner as the original appointment.
7 (5) The governor may remove a member of the board for
8 incompetence, dereliction of duty, malfeasance, misfeasance, or
9 nonfeasance in office, or any other good cause.
10 (6) The governor shall call the first meeting of the board. At
11 the first meeting, the board shall elect from among its members a
12 chairperson and other officers as it considers necessary or
13 appropriate. After the first meeting, the board shall meet at least
14 quarterly, or more frequently at the call of the chairperson or if
15 requested by 3 or more members.
16 (7) A majority of the members of the board constitute a quorum
17 for transacting business. Except as otherwise provided in this
18 subsection, a majority of the members present and serving are
19 required for official action of the board. If 1 or more members of
20 the board recuse themselves, 2/3 of the members present and serving
21 are required for official action of the board.
22 (8) The board shall conduct its business in compliance with
23 the open meetings act, 1976 PA 267, MCL 15.261 to 15.275.
24 (9) Except as otherwise provided in this subsection, a writing
25 that is prepared, owned, used, in the possession of, or retained by
26 the board in performing an official function is subject to the
27 freedom of information act, 1976 PA 442, MCL 15.231 to 15.246. A
28 writing containing a trade secret or proprietary information is
29 confidential and is not subject to disclosure under the freedom of
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1 information act, 1976 PA 442, MCL 15.231 to 15.246.
2 (10) The salaries and other expenses incurred by members of
3 the board are subject to an annual appropriation as provided by
4 law.
5 (11) As used in this section, "health equity" means attaining
6 the highest level of health for all individuals, in which an
7 individual has a fair and just opportunity to attain the
8 individual's optimal health regardless of race, ethnicity,
9 disability, sexual orientation, gender identity, socioeconomic
10 status, geography, preferred language, or other factor that affects
11 access to health care and health outcomes.
12 Sec. 7. A member of the board is subject to 1968 PA 317, MCL
13 15.321 to 15.330, and 1973 PA 196, MCL 15.341 to 15.348.
14 Sec. 9. (1) The prescription drug affordability stakeholder
15 council is created within the department.
16 (2) Subject to subsection (3), the council consists of the
17 following 21 members:
18 (a) Seven members appointed by the governor as follows:
19 (i) One individual representing manufacturers of brand-name
20 drugs.
21 (ii) One individual representing manufacturers of generic
22 drugs.
23 (iii) One individual representing employers.
24 (iv) One individual representing pharmacy benefit managers.
25 (v) One individual representing pharmacists.
26 (vi) One individual representing a mutual insurance company.
27 The mutual insurance company under this subparagraph must not be an
28 entity that, directly or indirectly, through 1 or more
29 intermediaries, controls, is controlled by, or is under common
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1 control with the managed care organization under subdivision
2 (c)(iv).
3 (vii) One member of the public.
4 (b) Seven members appointed by the governor from a list of
5 nominees submitted by the speaker of the house of representatives.
6 The list of nominees must include individuals who represent the
7 following:
8 (i) A statewide organization that advocates for senior
9 citizens.
10 (ii) A statewide organization that advocates for health care.
11 (iii) A statewide organization that advocates for diversity
12 within communities.
13 (iv) A labor union.
14 (v) Researchers who specialize in prescription drug products.
15 (vi) The public.
16 (c) Seven members appointed by the governor from a list of
17 nominees submitted by the senate majority leader. The list of
18 nominees must include individuals who represent each of the
19 following:
20 (i) Physicians.
21 (ii) Nurses.
22 (iii) Hospitals.
23 (iv) Managed care organizations. The managed care organization
24 under this subparagraph must not be an entity that, directly or
25 indirectly, through 1 or more intermediaries, controls, is
26 controlled by, or is under common control with the mutual insurance
27 company under subdivision (a)(vi).
28 (v) The department of technology, management, and budget.
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1 (vi) Clinical researchers.
2 (vii) The public.
3 (3) The governor shall ensure that the members appointed to
4 the council have knowledge in 1 or more of the following areas:
5 (a) The pharmaceutical business model.
6 (b) Supply chain business models.
7 (c) The practice of medicine or clinical training.
8 (d) Consumer or patient perspectives.
9 (e) Health care costs trends.
10 (f) Clinical and health services research.
11 (4) The governor shall appoint 7 of the first members to 1-
12 year terms, 7 of the first members to 2-year terms, and 7 of the
13 first members to 3-year terms. After the first appointments, the
14 term of a member of the council is 3 years or until a successor is
15 appointed, whichever is later.
16 (5) If a vacancy occurs on the council, the governor shall
17 appoint an individual to fill the vacancy for the balance of the
18 term in the same manner as the original appointment.
19 (6) The governor may remove a member of the council for
20 incompetence, dereliction of duty, malfeasance, misfeasance, or
21 nonfeasance in office, or any other good cause.
22 (7) At the first meeting of the council, the council shall
23 elect from among its members a chairperson and other officers as it
24 considers necessary or appropriate. After the first meeting, the
25 council shall meet at least quarterly, or more frequently at the
26 call of the chairperson or if requested by 7 or more members.
27 (8) A majority of the members of the council constitute a
28 quorum for transacting business. A majority of the members present
29 and serving are required for official action of the council.
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1 (9) The council shall conduct its business in compliance with
2 the open meetings act, 1976 PA 267, MCL 15.261 to 15.275.
3 (10) Except as otherwise provided in this subsection, a
4 writing that is prepared, owned, used, in the possession of, or
5 retained by the council in performing an official function is
6 subject to the freedom of information act, 1976 PA 442, MCL 15.231
7 to 15.246. A writing containing a trade secret or proprietary
8 information is confidential and is not subject to disclosure under
9 the freedom of information act, 1976 PA 442, MCL 15.231 to 15.246.
10 (11) A member of the council is not entitled to compensation
11 for service on the council, but may be reimbursed for actual and
12 necessary expenses incurred in serving.
13 (12) The council shall assist the board in making decisions
14 required under this act.
15 Sec. 11. (1) Beginning 18 months after the effective date of
16 this act, subject to subsection (2), the board, in consultation
17 with the council, shall select 1 or more prescription drug products
18 based on any of the following criteria:
19 (a) The prescription drug product is a brand-name drug or a
20 biologic that, as adjusted annually for inflation in accordance
21 with the Consumer Price Index, has a wholesale acquisition cost of
22 $60,000.00 or more per year or course of treatment or has a
23 wholesale acquisition cost increase of $3,000.00 or more in any 12-
24 month period.
25 (b) The prescription drug product is a biosimilar that has a
26 wholesale acquisition cost that is not at least 15% lower than the
27 referenced brand biologic.
28 (c) The prescription drug product is a generic drug that, as
29 adjusted annually for inflation in accordance with the Consumer
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1 Price Index, has a wholesale acquisition cost that meets both of
2 the following requirements:
3 (i) Is $100.00 or more for any of the following:
4 (A) A 30-day supply that lasts a patient for a period of 30
5 consecutive days based on the recommended dosage approved for
6 labeling by the United States Food and Drug Administration.
7 (B) A supply that lasts a patient for fewer than 30 days based
8 on the recommended dosage approved for labeling by the United
9 States Food and Drug Administration.
10 (C) One unit of the drug if the labeling approved by the
11 United States Food and Drug Administration does not recommend a
12 finite dosage.
13 (ii) Increased by 200% or more during the immediately preceding
14 12-month period, as determined by the difference between the
15 resulting wholesale acquisition cost and the average wholesale
16 acquisition cost reported over the immediately preceding 12 months.
17 (d) The prescription drug product is a prescription drug
18 product that may create affordability challenges for health care
19 systems in this state and patients, including, but not limited to,
20 a prescription drug product needed to address a public health
21 emergency.
22 (2) In selecting 1 or more prescription drug products under
23 subsection (1), the board is not required to identify each
24 prescription drug product that meets the criteria described in
25 subsection (1).
26 (3) The board shall determine whether to conduct a cost and
27 affordability review for each prescription drug product that is
28 selected under subsection (1). In making a determination under this
29 subsection, the board shall consider input from the council and the
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1 average patient cost share for each prescription drug product.
2 (4) If the board conducts a cost and affordability review of a
3 prescription drug product, the board may consider when conducting
4 the review any document or research related to the manufacturer's
5 selection of the introductory price or price increase of the
6 prescription drug product, including life cycle management, net
7 average price in this state, market competition, projected revenue,
8 and, subject to subsection (7), the estimated cost effectiveness of
9 the pr