The proposed bill, SB 486, amends the Rhode Island Health Care Reform Act of 2004 by introducing a new section, 42-14.5-6, focused on regulating unsupported price increases for prescription drugs. The purpose of this section is to protect the safety, health, and economic well-being of Rhode Island residents by guarding against the negative impacts of unsupported price increases for prescription drugs.

The bill defines key terms, including "unsupported price increase," which refers to an increase in price for a prescription drug that lacks adequate new clinical evidence to justify the increase. The state will rely on analyses prepared annually by the Institute for Clinical and Economic Review (ICER) to determine unsupported price increases.

A penalty structure is established for drug manufacturers with annual sales of at least $250,000 in the state. The penalty will be calculated as 80% of the difference between the revenue generated from sales of identified drugs and the revenue that would have been generated if the previous year's wholesale acquisition cost had been maintained, adjusted for inflation.

The bill outlines the process for notifying manufacturers of identified drugs, requiring the commissioner to notify them within 60 days of ICER's annual publication of the Unsupported Price Increase Report. Manufacturers will be required to submit a return detailing sales and pricing information and pay the assessed penalty by April 15 for the previous calendar year.

Additionally, the bill prohibits manufacturers from withdrawing identified drugs from sale or distribution in the state to avoid penalties, with a significant penalty of $500,000 for non-compliance. A hearing process is provided for manufacturers to contest penalties, and appeals must be made in accordance with chapter 35 of title 42, with specific conditions regarding prepayment of penalties.

The revenue generated from these penalties will be directed to a restricted receipt account to offset costs associated with assessing and collecting penalties, auditing manufacturers, and defending appeals. The balance will be deposited into the "childhood immunization account" and the "adult immunization account."

This act will take effect upon passage.