The bill amends the Rhode Island General Laws, specifically within "The Rhode Island Health Care Reform Act of 2004 — Health Insurance Oversight," by introducing new definitions such as "Consumer Price Index," "Executive Office of Health and Human Services (EOHHS)," "Identified drug," "Prescription drug," "Unsupported price increase," and "Wholesale acquisition cost." An "Unsupported price increase" is defined as a price hike for a prescription drug that is not justified by new clinical evidence, with the state using analyses by the Institute for Clinical and Economic Review (ICER) to determine this. The bill also details the calculation of the Consumer Price Index and the actions to be taken if the index is discontinued or no longer reported.

Furthermore, the bill establishes penalties for manufacturers that implement unsupported price increases on prescription drugs, calculated as 80% of the difference between actual sales revenue and the hypothetical revenue if the wholesale acquisition cost had remained constant, adjusted for inflation. Manufacturers with annual sales over $250,000 in the state are subject to this penalty. The bill outlines the process for identifying these manufacturers, notifying them, and collecting the penalty. It also specifies the use of the collected revenue, which includes funding for the office of the health insurance commissioner, childhood and adult immunization accounts, and prohibits manufacturers from withdrawing drugs to avoid penalties, imposing a $500,000 fine for violations. The act takes effect upon passage.

Statutes affected:
7042: 42-14.5-2.1