Bill Summary – FastDemocracy

CERTIFICATION OF ENROLLMENT
                  SECOND SUBSTITUTE SENATE BILL 5532
                       Chapter 153, Laws of 2022
                               67th Legislature
                             2022 Regular Session
                PRESCRIPTION DRUG AFFORDABILITY BOARD
                      EFFECTIVE DATE: June 9, 2022
Passed by the Senate March 7, 2022                   CERTIFICATE
  Yeas 28 Nays 20
                                       I, Sarah Bannister, Secretary of
                                       the   Senate   of    the  State  of
              DENNY HECK               Washington, do hereby certify that
President of the Senate                the attached is SECOND SUBSTITUTE
                                       SENATE BILL 5532 as passed by the
                                       Senate     and    the    House   of
                                       Representatives on the dates hereon
Passed by the House March 2, 2022      set forth.
  Yeas 57 Nays 39
                                                 SARAH BANNISTER
            LAURIE JINKINS
                                                                     Secretary
Speaker of the House of
Representatives
Approved March 24, 2022 9:12 AM                         FILED
                                                    March 24, 2022
                                               Secretary of State
              JAY INSLEE                       State of Washington
Governor of the State of Washington
                      SECOND SUBSTITUTE SENATE BILL 5532
                            AS AMENDED BY THE HOUSE
                   Passed Legislature - 2022 Regular Session
     State of Washington         67th Legislature     2022 Regular Session
     By Senate Ways & Means (originally sponsored by Senators Keiser,
     Robinson, Conway, Hasegawa, Nobles, Pedersen, Randall, Stanford, and
     C. Wilson)
     READ FIRST TIME 02/07/22.
      AN ACT Relating to establishing a prescription drug affordability
  board; amending RCW 43.71C.100 and 42.30.110; adding a new section to
  chapter 48.43 RCW; adding a new chapter to Title 70 RCW; and creating
  a new section.
 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:
     NEW SECTION.    Sec. 1.    DEFINITIONS. The definitions in this
 section apply throughout this chapter unless the context clearly
 requires otherwise.
     (1) "Authority" means the health care authority.
     (2) "Biological product" has the same meaning as in 42 U.S.C.
 Sec. 262(i)(1).
     (3) "Biosimilar" has the same meaning as in 42 U.S.C. Sec.
 262(i)(2).
     (4) "Board" means the prescription drug affordability board.
     (5) "Excess costs" means:
     (a) Costs of appropriate utilization of a prescription drug that
 exceed the therapeutic benefit relative to other alternative
 treatments; or
     (b) Costs of appropriate utilization of a prescription drug that
 are not sustainable to public and private health care systems over a
 10-year time frame.
                                       p. 1                    2SSB 5532.SL
     (6) "Generic drug" has the same meaning as in RCW 69.48.020.
     (7) "Health carrier" or "carrier" has the same meaning as in RCW
 48.43.005.
     (8) "Manufacturer" means a person, corporation, or other entity
 engaged in the manufacture of prescription drugs sold in or into
 Washington state. "Manufacturer" does not include a private label
 distributor or retail pharmacy that sells a drug under the retail
 pharmacy's store, or a prescription drug repackager.
     (9) "Prescription drug" means a drug regulated under chapter
 69.41 or 69.50 RCW, including generic, brand name, specialty drugs,
 and biological products.
     NEW SECTION. Sec. 2. PRESCRIPTION DRUG AFFORDABILITY BOARD. (1)
 The prescription drug affordability board is established, to include
 five members who have expertise in health care economics or clinical
 medicine appointed by the governor.
     (2) Board members shall serve for a term of five years and
 members may be reappointed by the governor for additional terms.
     (3) No board member or advisory group member may be an employee
 of, a board member of, or consultant to a prescription drug
 manufacturer, pharmacy benefit manager, health carrier, prescription
 drug wholesale distributor, or related trade association, except that
 a representative from the prescription drug industry serving on an
 advisory group may be an employee, consultant, or board member of a
 prescription drug manufacturer or related trade association and shall
 not be deemed to have a conflict of interest pursuant to subsection
 (4) of this section.
     (4)(a) Board members, advisory group members, staff members, and
 contractors providing services on behalf of the board shall recuse
 themselves from any board activity in any case in which they have a
 conflict of interest.
     (b) For the purposes of this section, a conflict of interest
 means an association, including a financial or personal association,
 that has the potential to bias or appear to bias an individual's
 decisions in matters related to the board or the activities of the
 board.
     (5) The board shall establish advisory groups consisting of
 relevant stakeholders, including but not limited to patients and
 patient advocates for the condition treated by the drug and one
 member who is a representative of the prescription drug industry, for
                                     p. 2                     2SSB 5532.SL
 each drug affordability review conducted by the board pursuant to
 section 4 of this act. Advisory group members are immune from civil
 liability for any official act performed in good faith as a member of
 the group.
     (6) The authority shall provide administrative support to the
 board and any advisory group of the board and shall adopt rules
 governing their operation that shall include how and when the board
 will use and discuss confidential information that is exempt from
 public disclosure. The rules adopted under this subsection may not go
 into effect until at least 90 days after the next regular legislative
 session.
     (7) Board members shall be compensated for participation in the
 work of the board in accordance with a personal services contract to
 be executed after appointment and before commencement of activities
 related to the work of the board.
     (8) A simple majority of the board's membership constitutes a
 quorum for the purpose of conducting business.
     (9) All meetings of the board must be open and public, except
 that the board may hold executive sessions to the extent permitted by
 chapter 42.30 RCW.
     (10) The board may not hold its first meeting until at least one
 year after the authority publishes its first report on the impact
 that drug costs, rebates, and other discounts have on health care
 premiums pursuant to RCW 43.71C.100.
     (11) The board must coordinate and collaborate with the
 authority, other boards, work groups, and commissions related to
 prescription drug costs and emerging therapies, including but not
 limited to the health care cost transparency board established in
 chapter 70.390 RCW, and the universal health care commission
 established in RCW 41.05.840. All coordination and collaboration by
 the board pursuant to this subsection must comply with chapter 42.30
 RCW, the open public meetings act.
     (12)   The   board   may  collaborate   with  prescription   drug
 affordability boards established in other states.
     NEW SECTION. Sec. 3. AUTHORITY TO REVIEW DRUG PRICES. By June
 30, 2023, and annually thereafter, utilizing data collected pursuant
 to chapter 43.71C RCW, the all-payer health care claims database, or
 other data deemed relevant by the board, the board must identify
 prescription drugs that have been on the market for at least seven
                                     p. 3                     2SSB 5532.SL
 years, are dispensed at a retail, specialty, or mail-order pharmacy,
 are not designated by the United States food and drug administration
 under 21 U.S.C. Sec. 360bb as a drug solely for the treatment of a
 rare disease or condition, and meet the following thresholds:
     (1) Brand name prescription drugs and biologic products that:
     (a) Have a wholesale acquisition cost of $60,000 or more per year
 or course of treatment lasting less than one year; or
     (b) Have a price increase of 15 percent or more in any 12-month
 period or for a course of treatment lasting less than 12 months, or a
 50 percent cumulative increase over three years;
     (2) A biosimilar product with an initial wholesale acquisition
 cost that is not at least 15 percent lower than the reference
 biological product; and
     (3) Generic drugs with a wholesale acquisition cost of $100 or
 more for a 30-day supply or less that has increased in price by 200
 percent or more in the preceding 12 months.
     NEW SECTION.   Sec. 4.   AFFORDABILITY REVIEWS. (1) The board may
 choose to conduct an affordability review of up to 24 prescription
 drugs per year identified pursuant to section 3 of this act. When
 deciding whether to conduct a review, the board shall consider:
     (a) The class of the prescription drug and whether any
 therapeutically equivalent prescription drugs are available for sale;
     (b) Input from relevant advisory groups established pursuant to
 section 2 of this act; and
     (c) The average patient's out-of-pocket cost for the drug.
     (2) For prescription drugs chosen for an affordability review,
 the board must determine whether the prescription drug has led or
 will lead to excess costs to patients. The board may examine publicly
 available information as well as collect confidential and proprietary
 information from the prescription drug manufacturer and other
 relevant sources.
     (3) A manufacturer must submit all requested information to the
 board within 30 days of the request.
     (4) The authority may assess a fine of up to $100,000 against a
 manufacturer for each failure to comply with an information request
 from the board. The process for the assessment of a fine under this
 subsection shall be established by the authority in rule and is
 subject to review under the administrative procedure act, chapter
 34.05 RCW. The rules adopted under this subsection may not go into
                                     p. 4                     2SSB 5532.SL
 effect until at least 90 days after the next regular legislative
 session.
     (5) When conducting a review, the board shall consider:
     (a) The relevant factors contributing to the price paid for the
 prescription   drug,  including   the   wholesale  acquisition   cost,
 discounts, rebates, or other price concessions;
     (b) The average patient copay or other cost sharing for the drug;
     (c) The effect of the price on consumers' access to the drug in
 the state;
     (d) Orphan drug status;
     (e) The dollar value and accessibility of patient assistance
 programs offered by the manufacturer for the drug;
     (f) The price and availability of therapeutic alternatives;
     (g) Input from:
     (i) Patients affected by the condition or disease treated by the
 drug; and
     (ii) Individuals with medical or scientific expertise related to
 the condition or disease treated by the drug;
     (h) Any other information the drug manufacturer or other relevant
 entity chooses to provide;
     (i) The impact of pharmacy benefit manager policies on the price
 consumers pay for the drug; and
     (j) Any other relevant factors as determined by the board.
     (6) In performing an affordability review of a drug the board may
 consider the following factors:
     (a) Life-cycle management;
     (b) The average cost of the drug in the state;
     (c) Market competition and context;
     (d) Projected revenue;
     (e) Off-label usage of the drug; and
     (f) Any additional factors identified by the board.
     (7) All information collected by the board pursuant to this
 section is confidential and not subject to public disclosure under
 chapter 42.56 RCW.
     (8) The board shall publicize which prescription drugs are
 subject to an affordability review before the review begins.
     NEW SECTION.   Sec. 5.   UPPER PAYMENT LIMITS. (1) The authority
 must adopt rules setting forth a methodology established by the board
 for setting upper payment limits for prescription drugs the board has
                                     p. 5                     2SSB 5532.SL
 determined have led or will lead to excess costs based on its
 affordability review. The rules adopted under this subsection may not
 go into effect until at least 90 days after the next regular
 legislative session. Each year, the board may set an upper payment
 limit for up to 12 prescription drugs.
     (2) The methodology must take into consideration:
     (a) The cost of administering the drug;
     (b) The cost of delivering the drug to patients;
     (c) The status of the drug on the drug shortage list published by
 the United States food and drug administration; and
     (d) Other relevant administrative costs related to the production
 and delivery of the drug.
     (3) The methodology determined by the board must not use quality-
 adjusted life years that take into account a patient's age or
 severity of illness or disability to identify subpopulations for
 which a prescription drug would be less cost-effective. For any
 prescription drug that extends life, the board's analysis of cost-
 effectiveness may not employ a measure or metric which assigns a
 reduced value to the life extension provided by a treatment based on
 a preexisting disability or chronic health condition of the
 individuals whom the treatment would benefit.
     (4) Before setting an upper payment limit for a drug, the board
 must post notice of the proposed upper payment limit on the
 authority's website, including an explanation of the factors
 considered when setting the proposed limit and instructions to submit
 written comment. The board must provide 30 days to submit public
 comment.
     (5) The board must monitor the supply of drugs for which it sets
 an upper payment limit and may suspend that limit if there is a
 shortage of the drug in the state.
     (6) An upper payment limit for a prescription drug established by
 the board applies to all purchases of the drug by any entity and
 reimbursements for a claim for the drug by a health carrier, or a
 health plan offered under chapter 41.05 RCW, when the drug is
 dispensed or administered to an individual in the state in person, by
 mail, or by other means.
     (7) An employer-sponsored self-funded plan may elect to be
 subject to the upper payment limits as established by the board.
     (8) The board must establish an effective date for each upper
 payment limit, provided that the upper payment limit may not go into
                                     p. 6                     2SSB 5532.SL
 effect until at least 90 days after the next regular legislative
 session and that the date is at least six months after the adoption
 of the upper payment limit and applies only to purchases, contracts,
 and plans that are issued on or renewed after the effective date.
     (9) Any entity affected by a decision of the board may request an
 appeal within 30 days of the board's decision, and the board must
 rule on the appeal within 60 days. Board rulings are subject to
 judicial review pursuant to chapter 34.05 RCW.
     (10) For any upper payment limit set by the board, the board must
 notify the manufacturer of the drug and the manufacturer must inform
 the board if it is able to make the drug available for sale in the
 state and include a rationale for its decision. The board must
 annually report to the relevant committees of the legislature
 detailing the manufacturers' responses.
     (11) The board may reassess the upper payment limit for any drug
 annually based on current economic factors.
     (12) The board may not establish an upper payment limit for any
 prescription drug before January 1, 2027.
     (13)(a) Any individual denied coverage by a health carrier for a
 prescription drug because the drug was unavailable due to an upper
 payment limit established by the board, may seek review of the denial
 pursuant to RCW 48.43.530 and 48.43.535.
     (b) If it is determined that the prescription drug should be
 covered based on medical necessity, the carrier may disregard the
 upper payment limit and must provide coverage for the drug.
     NEW SECTION. Sec. 6. USE OF SAVINGS. (1) Any savings generated
 for a health plan, as defined in RCW 48.43.005, or a health plan
 offered under chapter 41.05 RCW that are attributable to the
 establishment of an upper payment limit established by the board must
 be used to reduce costs to consumers, prioritizing the reduction of
 out-of-pocket costs for prescription drugs.
     (2) By January 1, 2024, the board must establish a formula for
 calculating savings for the purpose of complying with this section.
     (3) By March 1st of the year following the effective date of the
 first upper payment