OHIO LEGISLATIVE SERVICE COMMISSION
Office of Research Legislative Budget
www.lsc.ohio.gov and Drafting Office
H.B. 509 Bill Analysis
135th General Assembly
Version: As Introduced
Primary Sponsors: Reps. Barhorst and Baker
Effective date:
Logan Briggs, Attorney
SUMMARY
 Requires health plan issuers to calculate cost-sharing amounts for prescription drugs
based on the price of the drug after all rebates have been applied to the original cost of
that drug.
 Prohibits health plan issuers from publishing or disclosing information regarding the
actual amount of rebates the health plan issuer receives with respect to a drug or class
of drugs, manufacturer, or pharmacy.
DETAILED ANALYSIS
Cost-sharing and rebates
The bill requires health plan issuers to calculate cost-sharing amounts for prescription
drugs at the point of sale based on the price of the drug after all rebates have been applied to
the original cost.1
For example, consider a situation where a drug costs $100 at the point of sale, a health
plan issuer implements a 20% cost-sharing requirement on the covered person, and the health
plan issuer also receives a $50 rebate for the sale of that drug. Under the bill, the health plan
issuer would not be permitted to charge the covered person a $20 for cost-sharing, and then
claim the $50 rebate. Instead, the health plan issuer must calculate the drug’s price after the
rebate, which would be $50 instead of $100. Based on that new reduced price, the cost-sharing
amount would also be reduced from $20 to $10.
The bill permits health plan issuers to reduce cost-sharing amounts even further if they
wish. So health plan issuers may provide additional reductions to cost-sharing amounts, but
1 R.C. 3902.63(B).
June 17, 2024
Office of Research and Drafting LSC Legislative Budget Office
they cannot impose cost-sharing calculated on a drug’s price prior to the application of any
rebates.2
Rebates
The bill defines “rebate” to include both of the following:
 Negotiated price concessions, which include base price concessions and reasonable
estimates of any price protection rebates and performance-based price concessions that
may accrue directly or indirectly to the health plan issuer during the coverage year from
a manufacturer, dispensing pharmacy, or other party in connection with the dispensing
or administration of a prescription drug. This means that if a health plan issuer expects
certain rebates or concessions to accrue throughout a year, a reasonable estimate of
that amount is considered a rebate. Additionally, base price concessions are considered
rebates for the purposes of the bill regardless of whether they are described as
“rebates” by the parties involved.
 Reasonable estimates of any negotiated price concessions, fees, and other
administrative costs that are passed through, or are reasonably anticipated to be passed
through, to the health plan issuer, and which serve to reduce a health plan issuer’s
expenses for a prescription drug.3
Under the bill a “price protection rebate” is a negotiated price concession that accrues
directly or indirectly to a health plan issuer, or other party on behalf of the health plan issuer, in
the event of an increase in the wholesale acquisition cost of a drug above a specified threshold.
In other words, if the wholesale price of a drug increases beyond an agreed upon point, then
the health plan issuer (or a third party) is entitled to a rebate which protects them from paying
more for the drug than what was negotiated.4
Confidentiality
The bill prohibits health plan issuers or their agents from publishing or disclosing
information regarding the actual amount of rebates the health plan issuer receives with respect
to a product or drug, therapeutic class of products or drugs, manufacturer, or pharmacy.
Furthermore, any documents or evidence containing information related to the amount of
rebates received are confidential. They are not public records under Ohio’s public records law,
and may not be released directly, indirectly, or in any manner which could lead to the
identification of any product or drug, therapeutic class of products or drugs, manufacturer, or
pharmacy. The bill broadly prohibits the release of these documents in any way which could
compromise the financial, competitive, or propriety nature of the rebate information.
2 R.C. 3902.63(C).
3 R.C. 3902.63(A)(3).
4 R.C. 3902.63(A)(2).
P a g e |2 H.B. 509
As Introduced
Office of Research and Drafting LSC Legislative Budget Office
The bill requires health plan issuers to impose these confidentiality requirements on any
agent or third party performing health care or administrative services on behalf of the health
plan issuer if that agent or third-party might receive or have access to this information.5
Enforcement
The bill’s provisions are enforced by the Superintendent of Insurance. A violation of this
bill is an unfair and deceptive insurance act or practice. If the Superintendent determines that a
violation has occurred, the person or health plan issuer may be subject to orders or other
administrative remedies imposed by the Superintendent.6
However, the bill clarifies that, in implementing these provisions, the Superintendent of
Insurance may only regulate health plan issuers to the extent permitted by applicable law. In
other words, contrary state or federal law which limits or preempts the Superintendent’s
regulation may limit or supersede the provisions of the bill.7
Applicability
The bill applies to health plan issuers. Under the bill, “health plan issuer” means an
entity subject to the insurance laws and rules of this state, or subject to the jurisdiction of the
Superintendent of Insurance, that contracts, or offers to contract to provide, deliver, arrange
for, pay for, or reimburse any of the costs of health care services under a health benefit plan,
including a sickness and accident insurance company, a health insuring corporation, a fraternal
benefit society, a self-funded multiple employer welfare arrangement, or a nonfederal,
government health plan. This includes third-party administrators, to the extent that the services
they provide are subject to the insurance laws and rules of this state.
However, for the purposes of this bill, “health plan issuer” does not include the public
employee benefit plan covering state employees paid directly by warrant of the Director of
Budget and Management. This includes elected officials.8
HISTORY
Action Date
Introduced 04-30-24
ANHB0509IN-135/ts
5 R.C. 3902.63(E).
6 R.C. 3902.63(D) and (F); R.C. 3901.22, not in the bill.
7 R.C. 3902.63(D).
8 R.C. 3902.63(A)(1).
P a g e |3 H.B. 509
As Introduced