BILL NUMBER: S1351A
SPONSOR: CLEARE
 
TITLE OF BILL:
An act to amend the insurance law, in relation to requiring a referenced
rate for prescription drugs
 
PURPOSE OR GENERAL IDEA OF BILL:
To create a three-year state pilot program that caps the price of the
ten most expensive prescription drugs by referencing Canadian prices.
This would allow the state to assess the utility of international refer-
ence pricing as a tool to cap prescription drug prices.
 
SUMMARY OF SPECIFIC PROVISIONS:
The legislature finds and declares that access to prescription drugs is
necessary for the public health, general welfare, and economy of the
state.
To address this issue, the Director of the Employee Benefits Division
within the Department of Civil Service, which currently manages employee
health plan costs, will identify the ten most costly prescription drugs
to reference based on the formula of net price multiplied by utiliza-
tion.
Beginning no later than one year after being signed into law, the Direc-
tor will send the Department of Financial Services (DFS) Superintendent
the list of the ten drugs to reference and the prior year's total net
spend on each of them.
No later than one year and five months after the bill is signed into
law, the Superintendent will publish the list of the ten referenced
drugs on the DFS's website. The reference rates go into effect six
months from the published date and annually thereafter during the three-
year pilot program.
The Superintendent will determine the referenced rate by comparing the
drug's list price set by the manufacturer-known as the wholesale acqui-
sition cost (WAC)-to the following sources, which list the prices in the
largest Canadian provinces; all of listed provinces utilize transparent
price setting processes:
*Ontario Ministry of Health and Long Term Care and most recently
published on the Ontario Drug Benefit Formulary;
*Regie de ('Assurance Maladie du Quebec and most recently published on
the Quebec Public Drug Programs List of Medications;
*British Columbia Ministry of Health and most recently published on the
BC Pharmacare Formulary; and
*Alberta Ministry of Health and most recently published on the Alberta
Drug Benefit List.
The referenced rate, at which a state entity or health plan will
purchase the referenced drugs, will be calculated as the lowest among
the WAC and the prices listed in the referenced resources. In the case a
specific drug is not included in those resources, the Superintendent
will use the ceiling price reported by the Government of Canada Patented
Medicine Prices Review Board.
The Superintendent will calculate the expected savings, and generally
consult with the Director of the State Employee Health Insurance Plan
and the Chair of the State Board of Pharmacy.
During this pilot study, it will be a violation for a state entity or
health plan to purchase, or for a pharmacy to purchase or distribute,
the referenced drugs subject to this pilot program at a cost higher than
the referenced rate.
Any savings generated must be used to reduce costs to consumers and
purchasers.
No later than sixty days after the conclusion of each year of the pilot
program, the state entity and/or health plans subject to this pilot
program will submit to the DES Superintendent a report describing the
savings and how those savings were used to benefit consumers.
No later than one hundred eighty days following the conclusion of the
plan year, the DFS Superintendent in coordination with the Drug Account-
ability Board will issue a report on the savings, if any, of the
program, along with recommendations on the feasibility of expanding this
program to other prescription drugs, improvements to the program, and
anything else the Superintendent deems necessary to understand its
broader effects.
Manufacturers will not be able to withdraw a referenced drug from sale
or distribution to avoid the program. If they wish to withdraw a refer-
enced drug, they will need to provide notice to DFS and the AG 180 days
prior to the withdrawal. The DFS Superintendent will assess a penalty on
an entity that it determines has withdrawn a referenced drug in
violation of the program. It will also be a violation for a manufacturer
to refuse to negotiate in good faith with any payor or seller of the
referenced drugs at a price that is within the referenced rate. The
penalty for both will be $500,000 or the amount of annual savings deter-
mined by the DFS Superintendent, whichever is greater.
 
JUSTIFICATION:
New Yorkers pay 3 times more for brand drugs than people in similar
countries do. For example, the price of Xeljanz, a drug for rheumatoid
arthritis, is 450% higher in the United States than in Canada. An effec-
tive tool to address the cost of living crisis, especially for seniors,
is to utilize international reference pricing in capping the price of a
medication by comparing it to the price in a group of other reference
countries. This bill creates a pilot program to cap prescription drug
prices based on the prices that Canadians pay, so that we can assess the
utility of international reference pricing as a tool to cap prescription
drug prices.
 
PRIOR LEGISLATIVE HISTORY:
A9086 of 2024: Referred to Insurance
 
FISCAL IMPLICATIONS FOR STATE AND LOCAL GOVERNMENTS:
To be determined.
 
EFFECTIVE DATE:
This act shall take effect on the thirtieth day after it shall have
become a law.