CORRECTED     Feb 15 2021

REFERENCE TITLE: prescription drugs; upper payment limit..

State of Arizona House of Representatives Fifty-fifth Legislature First Regular Session 2021

HB 2890

Introduced by Representatives Fernandez: Bolding, Butler, Friese, Pawlik, Powers Hannley, Rodriguez, Salman, Stahl Hamilton, Ter  n (with permission of Committee on Rules)

 

AN ACT

 

Amending title 36, Arizona Revised Statutes, by adding chapter 40; appropriating monies; relating to prescription drugs.

 

 

(TEXT OF BILL BEGINS ON NEXT PAGE)

 

Be it enacted by the Legislature of the State of Arizona:

Section  1. Title 36, Arizona Revised Statutes, is amended by adding chapter 40, to read:

CHAPTER 40

PRESCRIPTION DRUG AFFORDABILITY BOARD

ARTICLE 1. GENERAL PROVISIONS

START_STATUTE36-4001. Definitions

In this article, unless the context otherwise requires:

1. "Biologic" means a drug that is produced or distributed in accordance with a biologics license application approved pursuant to 42 Code of Federal Regulations section 447.502.

2. "Biosimilar" means a drug that is produced or distributed in accordance with a biologics license application approved pursuant to 42 United States Code section 262(k)(3).

3. "Board" means the prescription drug affordability board.

4. "Brand-name drug":

(a) Means a drug that is produced or distributed in accordance with an original new drug application approved pursuant to 21 United States code section 355(c).

(b) Does not include an authorized generic drug as defined in 42 Code of Federal Regulations section 447.502.

5. "Generic drug" means any of the following:

(a) A retail drug that is marketed or distributed in accordance with an abbreviated new drug application approved pursuant to 21 United States Code section 355(j).

(b) An authorized generic drug as defined in 42 Code of Federal Regulations section 447.502.

(c) A drug that entered the market before 1962 and that was not originally marketed under a new drug application.

6. "Manufacturer" means an entity that does one of the following:

(a) Engages in the manufacture of a prescription drug product.

(b) Enters into a lease with another manufacturer to market and distribute a prescription drug product under the entity's own name.

(c) Sets or changes the wholesale acquisition cost of the prescription drug product the entity manufactures or markets.

7. "Prescription drug product" means a brand-name drug, a generic drug, a biologic or a biosimilar.

8. "Stakeholder council" means the prescription drug affordability stakeholder council.END_STATUTE

START_STATUTE36-4002. Prescription drug affordability board; membership; appointment; conflict of interest prohibited; definition

A. The prescription drug affordability board is established to protect state residents, state and local governments, commercial health plans, health care providers, pharmacies and other stakeholders within the health care system in this state from the high costs of prescription drug products.   The board is a body politic and an independent unit of state government.   The exercise by the board of its authority under this article is an essential state function.      

B. The board consists of five members and three alternates who are appointed by the governor pursuant to section 38-211.   Each member of the board or alternate member shall serve a term of five years.   Board members must have expertise in health care economics and clinical medicine and may not be an employee of, a board member of or a consultant to a manufacturer or trade association for manufacturers.

C. Any conflict of interest, including whether the individual has an association, including a financial or personal association, that has the potential to bias or has the appearance of biasing the individual's decision in matters related to the board or the conduct of the board's activities, shall be considered and disclosed when the governor appoints members and alternate members to the board.

D. The board shall hire an executive director, who shall hire staff for the board, and a general counsel.   Staff of the board shall receive a salary as provided in the budget of the board.

E. Board members may receive compensation as prescribed in section 38-611 and are entitled to reimbursement for expenses necessarily incurred in attending board meetings.

F. A majority of the members of the board constitutes a quorum for the purposes of conducting the business of the board.   The board shall meet in open session at least once every six weeks to review prescription drug product information.   The chairperson may cancel or postpone a meeting if there are no prescription drug products to review.   The board shall provide public notice of each board meeting at least two weeks before the meeting. Materials for each board meeting shall be made available to the public at least one week before the meeting.   The board shall provide an opportunity for public comment at each open meeting of the board and shall provide the public with the opportunity to provide written comments on pending decisions of the board.   The board may allow expert testimony at board meetings, including when the board meets in closed session. The board may meet in closed session to discuss proprietary data and information regarding a prescription drug product.   The following actions by the board shall be made in open session:

1. Deliberations on whether to subject a prescription drug product to a cost review pursuant to this article.

2. Any vote on whether to impose an upper-payment limit on purchases and payor reimbursements of prescription drug products in this state.

3. Any decision by the board.

G. Members of the board shall recuse themselves from decisions related to a prescription drug product if the member, or an immediate family member of the member, has received or could receive either of the following:

1. A direct financial benefit of any amount deriving from the result or finding of a study or determination by or for the board.

2. A financial benefit from any person that owns, manufactures or provides prescription drug products, services or items to be studied by the board that in the aggregate exceeds $5,000 per year.

H. A conflict of interest shall be disclosed:

1. By the following:

(a) The board when hiring board staff.

(b) The appointing authority when appointing members and alternate members to the board and members to the stakeholder council.

(c) The board, when a member of the board is recused in any final decision resulting from a review of a prescription drug product.

2. Either:

(a) Before the first open meeting after the conflict is identified.

(b) Within five days after the conflict is identified.

I. A conflict of interest disclosed under this section shall be posted on the website of the board unless the chairperson of the board recuses the member from any final decision resulting from a review of a prescription drug product.   If the conflict is related to a financial interest specified in subsection G of this section, the posting shall include the type, nature and magnitude of the interests of the member involved.

J. Members and alternate members of the board, board staff and third   party contractors may not accept any gift or donation of services or property that indicates a potential conflict of interest or has the appearance of biasing the work of the board.

K. For the purposes of this section, "financial benefit" includes honoraria, fees, stock, the value of the member's or immediate family member's stock holdings and any direct financial benefit deriving from the finding of a review conducted under this article.END_STATUTE

START_STATUTE36-4003. Powers and duties of the board

A. To the extent practicable, the board shall access pricing information for prescription drug products by:

1. Entering into a memorandum of understanding with another state to which manufacturers already report pricing information.

2. Accessing other available pricing information.

B. In addition to any other powers prescribed in this article, the board may:

1. Adopt rules to implement this article.

2. Enter into a contract with a qualified, independent third-party contractor for any service necessary to carry out the powers and duties of the board.

C. Unless permission is granted by the board, a third-party contractor hired by the board may not release, publish or otherwise use any information to which the third party has access under its contract with the board.END_STATUTE

START_STATUTE36-4004. Prescription drug affordability stakeholder council; membership

A. The prescription drug AFFORDABILITY stakeholder council is established to provide stakeholder input to assist the board in making decisions as required under this article. The stakeholder council consists of the following members who are appointed as follows:

1. One representative of a statewide health care advocacy coalition who is appointed by the speaker of the house of representatives.

2. One representative of a statewide advocacy organization for seniors who is appointed by the speaker of the house of representatives.

3. One representative of a statewide organization for diverse communities who is appointed by the speaker of the house of representatives.

4. One representative of a labor union who is appointed by the speaker of the house of representatives.

5. Two health services researchers specializing in prescription drug products who are appointed by the speaker of the house of representatives.

6. One public member who is appointed by the speaker of the house of representatives.

7. One representative of a statewide association advocating for doctors who is appointed by the president of the senate.

8. One representative of a statewide association advocating for nurses who is appointed by the president of the senate.

9. One representative of hospitals in this state who is appointed by the president of the senate.

10. One representative of health insurers in this state who is appointed by the president of the senate.

11. One representative of the department of administration who is appointed by the president of the senate.

12. One clinical researcher who is appointed by the president of the senate.

13. One public member who is appointed by the president of the senate.

14. One representative of a brand-name drug corporation who is appointed by the governor.

15. One representative of a generic drug corporation who is appointed by the governor.

16. One representative of employers in this state who is appointed by the governor.

17. One representative of pharmacy benefits managers who is appointed by the governor.

18. One representative of pharmacists in this state who is appointed by the governor.

19. One pharmacologist who is appointed by the governor.

20. One public member who is appointed by the governor.

B. The members of the stakeholder council shall have knowledge in at least one of the following areas:

1. The pharmaceutical business model.

2. Supply chain business models.

3. The practice of medicine or clinical training.

4. Consumer or patient perspectives.

5. Health care costs trends and drivers.

6. Clinical and health services research.

7. This state's health care marketplace.

C. The chairperson of the board shall appoint two members of the stakeholder council to be cochairpersons.   The term of each stakeholder council member is three years.

D. Members of the stakeholder council may not receive compensation but may receive reimbursement for expenses necessarily incurred in attending stakeholder council meetings. END_STATUTE

START_STATUTE36-4005. Identification; prescription drug products; drug cost affordability review; rules; upper-payment limits

A. The board shall identify prescription drug products that are:

1. Brand-name drugs or biologics that, as adjusted annually for inflation in accordance with the consumer price index, have either:

(a) A launch wholesale acquisition cost of $30,000 or more per year or course of treatment.

(b) A wholesale acquisition cost increase of $3,000 or more in any twelve-month period, or course of treatment if less than twelve months.

2. Biosimilar drugs that have a launch wholesale acquisition cost that is not at least fifteen percent lower than the referenced brand biologic at the time the biosimilars are launched.

3. Generic drugs that, as adjusted annually for inflation in accordance with the consumer price index, have a wholesale acquisition cost either:

(a) Of $100 or more for one of the following:

(i) A thirty   day supply lasting a patient for a period of thirty co