2021 - 2022 LEGISLATURE
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2021 SENATE BILL 540
September 2, 2021 - Introduced by Senators SMITH, ERPENBACH, AGARD, BEWLEY,
CARPENTER, JOHNSON, LARSON, PFAFF and RINGHAND, cosponsored by
Representatives SUBECK, HESSELBEIN, ANDERSON, CABRAL-GUEVARA, CONLEY,
CONSIDINE, DOYLE, EMERSON, HEBL, HONG, MILROY, L. MYERS, NEUBAUER, S.
RODRIGUEZ, SHANKLAND, SHELTON, SINICKI, SNODGRASS, SPREITZER, STUBBS,
VINING and VRUWINK. Referred to Committee on Government Operations,
Legal Review and Consumer Protection.
1 AN ACT to create 15.07 (3) (bm) 7., 15.735 and subchapter VI (title) of chapter
2 601 [precedes 601.78] of the statutes; relating to: creating a prescription drug
3 affordability review board and granting rule-making authority.
Analysis by the Legislative Reference Bureau
This bill creates a prescription drug affordability review board, whose purpose
is to protect Wisconsin residents and other stakeholders from the high costs of
prescription drugs. The board consists of the commissioner of insurance and the
following members, all of whom are appointed by the governor for four-year terms:
1. Two members who represent the pharmaceutical drug industry, at least one
of whom is a licensed pharmacist.
2. Two members who represent the health insurance industry.
3. Two members who represent the health care industry, at least one of whom
is a licensed practitioner.
4. Two members who represent the interests of the public.
The bill requires the board to meet in open session at least four times per year
to review prescription drug pricing information. The board must provide at least two
weeks' public notice of its meetings, make the meeting's materials publicly available
at least one week prior to meeting, and provide the opportunity for public comment.
The bill imposes conflict of interest requirements for the board relating to recusal
and public disclosure of certain conflicts. The bill directs the board to access and
assess drug pricing information, to the extent practicable, by accessing and assessing
information from other states, by assessing spending for the drug in Wisconsin, and
by accessing other available pricing information.
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SENATE BILL 540
Under the bill, the board must conduct drug cost affordability reviews. The first
step in the reviews is for the board to identify prescription drugs whose increase in
wholesale acquisition cost exceeds specified thresholds and other prescription drugs
that may create affordability challenges for the health care system in Wisconsin. For
each identified prescription drug, the board must determine whether to conduct an
affordability review by seeking stakeholder input and considering the average
patient cost share for the drug. During an affordability review, the board must
determine whether use of the prescription drug that is fully consistent with the
labeling approved by the federal Food and Drug Administration or standard medical
practice has led or will lead to an affordability challenge for the health care system
in Wisconsin. In making this determination, the bill requires the board to consider
a variety of factors, which include the following:
1. The drug's wholesale acquisition cost.
2. The average monetary price concession, discount, or rebate the
manufacturer provides, or is expected to provide, for the drug to health plans.
3. The total amount of price concessions, discounts, and rebates the
manufacturer provides to each pharmacy benefit manager for the drug.
4. The price at which therapeutic alternatives have been sold and the average
monetary concession, discount, or rebate the manufacturer provides, or is expected
to provide, to health plan payors and pharmacy benefit managers for therapeutic
alternatives.
5. The costs to health plans based on patient access consistent with federal
labeled indications and recognized standard medical practice.
6. The impact on patient access resulting from the drug's cost relative to
insurance benefit design.
7. The current or expected dollar value of drug–specific patient access
programs that are supported by the manufacturer.
8. The relative financial impacts to health, medical, or social services costs that
can be quantified and compared to baseline effects of existing therapeutic
alternatives.
9. The average patient copay or other cost sharing for the drug.
If the board determines that a prescription drug will lead to an affordability
challenge, the bill directs the board to establish an upper payment limit for that drug
that applies to all purchases and payor reimbursements of the drug dispensed or
administered to individuals in Wisconsin. In establishing the upper payment limit,
the board must consider the cost of administering the drug, the cost of delivering it
to consumers, and other relevant administrative costs. For certain drugs, the board
must solicit information from the manufacturer regarding the price increase and, if
the board determines that the price increase is not a result of the need for increased
manufacturing capacity or other effort to improve patient access during a public
health emergency, the board must establish an upper payment limit equal to the
drug's cost prior to the price increase.
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SENATE BILL 540
For further information see the state fiscal estimate, which will be printed as
an appendix to this bill.
The people of the state of Wisconsin, represented in senate and assembly, do
enact as follows:
1 SECTION 1. 15.07 (3) (bm) 7. of the statutes is created to read:
2 15.07 (3) (bm) 7. The prescription drug affordability review board shall meet
3 at least 4 times each year.
4 SECTION 2. 15.735 of the statutes is created to read:
5 15.735 Same; attached board. (1) There is created a prescription drug
6 affordability review board attached to the office of the commissioner of insurance
7 under s. 15.03. The board shall consist of the following members:
8 (a) The commissioner of insurance or his or her designee.
9 (b) Two members appointed for 4-year terms who represent the
10 pharmaceutical drug industry, including pharmaceutical drug manufacturers and
11 wholesalers. At least one of the members appointed under this paragraph shall be
12 a licensed pharmacist.
13 (c) Two members appointed for 4-year terms who represent the health
14 insurance industry, including insurers and pharmacy benefit managers.
15 (d) Two members appointed for 4-year terms who represent the health care
16 industry, including hospitals, physicians, pharmacies, and pharmacists. At least one
17 of the members appointed under this paragraph shall be a licensed practitioner.
18 (e) Two members appointed for 4-year terms who represent the interests of the
19 public.
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SENATE BILL 540 SECTION 2
1 (2) A member appointed under sub. (1) may not be an employee of, a board
2 member of, or a consultant to a drug manufacturer or trade association for drug
3 manufacturers.
4 (3) Any conflict of interest, including any financial or personal association, that
5 has the potential to bias or has the appearance of biasing an individual's decision in
6 matters related to the board or the conduct of the board's activities shall be
7 considered and disclosed when appointing that individual to the board under sub.
8 (1).
9 SECTION 3. Subchapter VI (title) of chapter 601 [precedes 601.78] of the
10 statutes is created to read:
11 CHAPTER 601
12 SUBCHAPTER VI
13 PRESCRIPTION DRUG
14 AFFORDABILITY REVIEW BOARD
15 601.78 Definitions. In this subchapter:
16 (1) “Biologic” means a drug that is produced or distributed in accordance with
17 a biologics license application approved under 21 CFR 601.20.
18 (2) “Biosimilar” means a drug that is produced or distributed in accordance
19 with a biologics license application approved under 42 USC 262 (k) (3).
20 (3) “Board” means the prescription drug affordability review board established
21 under s. 15.735 (1).
22 (4) “Brand name drug” means a drug that is produced or distributed in
23 accordance with an original new drug application approved under 21 USC 355 (c),
24 other than an authorized generic drug, as defined in 42 CFR 447.502.
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1 (5) “Drug product” means a brand name drug, a generic drug, a biologic, a
2 biosimilar, or an over-the-counter drug.
3 (6) “Financial benefit” includes an honoraria, fee, stock, the value of the stock
4 holdings of a member of the board or any immediate family member, as defined in
5 s. 97.605 (4) (a) 2., and any direct financial benefit deriving from the finding of a
6 review conducted under s. 601.79.
7 (7) “Generic drug” means any of the following:
8 (a) A retail drug that is marketed or distributed in accordance with an
9 abbreviated new drug application approved under 21 USC 355 (j).
10 (b) An authorized generic drug, as defined in 42 CFR 447.502.
11 (c) A drug that entered the market prior to 1962 and was not originally
12 marketed under a new drug application.
13 (8) “Manufacturer” means an entity that does all of the following:
14 (a) Engages in the manufacture of a drug product or enters into a lease with
15 another manufacturer to market and distribute a prescription drug product under
16 the entity's own name.
17 (b) Sets or changes the wholesale acquisition cost of the drug product or
18 prescription drug product described in par. (a).
19 (9) “Over-the-counter drug” means a drug intended for human use that does
20 not require a prescription and meets the requirements of 21CFR parts 328 to 364.
21 (10) “Pharmacy benefit manager” has the meaning given in s. 632.865 (1) (c).
22 (11) “Prescription drug product” means a brand name drug, a generic drug, a
23 biologic, or a biosimilar.
24 601.785 Prescription drug affordability review board. (1) MISSION. The
25 purpose of the board is to protect state residents, the state, local governments, health
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1 plans, health care providers, pharmacies licensed in this state, and other
2 stakeholders of the health care system in this state from the high costs of prescription
3 drug products.
4 (2) POWERS AND DUTIES. (a) The board shall do all of the following:
5 1. Meet in open session at least 4 times per year to review prescription drug
6 product pricing information, except that the chair may cancel or postpone a meeting
7 if there is no business to transact.
8 2. To the extent practicable, access and assess pricing information for
9 prescription drug products by doing all of the following:
10 a. Accessing and assessing information from other states by entering into
11 memoranda of understanding with other states to which manufacturers report
12 pricing information.
13 b. Assessing spending for specific prescription drug products in this state.
14 c. Accessing other available pricing information.
15 (b) The board may:
16 1. Promulgate rules for the administration of this subchapter.
17 2. Enter into a contract with an independent 3rd party for any service
18 necessary to carry out the powers and duties of the board. Unless written permission
19 is granted by the board, any person with whom the board contracts may not release,
20 publish, or otherwise use any information to which the person has access under the
21 contract.
22 (3) MEETING REQUIREMENTS. (a) Pursuant to s. 19.84, the board shall provide
23 public notice of each board meeting at least 2 weeks prior to the meeting and shall
24 make the materials for each meeting publicly available at least one week prior to the
25 meeting.
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1 (b) Notwithstanding s. 19.84 (2), the board shall provide an opportunity for
2 public comment at each open meeting and shall provide the public with the
3 opportunity to provide written comments on pending decisions of the board.
4 (c) Notwithstanding subch. V of ch. 19, any portion of a meeting of the board
5 concerning proprietary data and information shall be conducted in closed session
6 and shall in all respects remain confidential.
7 (d) The board may allow expert testimony at any meeting, including when the
8 board meets in closed session.
9 (4) CONFLICTS OF INTEREST. (a) A member of the board shall recuse himself or
10 herself from a decision by the board relating to a prescription drug product if the
11 member or an immediate family member, as defined in s. 97.605 (4) (a) 2., has
12 received or could receive any of the following:
13 1. A direct financial benefit deriving from a determination, or a finding of a
14 study or review, by the board relating to the prescription drug product.
15 2. A financial benefit in excess of $5,000 in a calendar year from any person who
16 owns, manufactures, or provides a prescription drug product to be studied or
17 reviewed by the board.
18 (b) A conflict of interest shall be disclosed by the board when hiring board staff,
19 by the appointing authority when appointing members to the board, and by the board
20 when a member of the board is recused from any final decision resulting from a
21 review of a prescription drug product.
22 (c) A conflict of interest shall be disclosed no later than 5 days after the conflict
23 is identified, except that, if the conflict is identified within 5 days of an open meeting
24 of the board, the conflict shall be disclosed prior to the meeting.
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1 (d) The board shall disclose a conflict of interest under this subsection on the
2 board's Internet site unless the chair of the board recuses the member from a final
3 decision resulting from a review of the prescription drug product. The disclosure
4 shall include the type, nature, and magnitude of the interests of the member
5 involved.
6 (e) A member of the board or a 3rd-party contractor may not accept any gift or
7 donation of services or property that indicates a potential conflict of interest or has
8 the appearance of biasing the work of the board.
9 601.79 Drug cost affordability review. (1) IDENTIFICATION OF DRUGS. The
10 board shall identify prescription drug products that are any of the following:
11 (a) A brand name drug or biologic that, as adjusted annually to reflect
12 adjustments to the U.S. consumer price index for all urban consumers, U.S. city
13 average, as determined by the U.S. department of labor, has a launch wholesale
14 acquisition cost of at least $30,000 per year or course of treatment or whose wholesale
15 acquisition cost increased at least $3,000 during a 12–month period.
16 (b) A biosimilar drug that has a launch wholesale acquisition cost that is not
17 at least 15 percent lower than the referenced brand biologic at the time the biosimilar
18 is launched.
19 (c) A generic drug that has a wholesale acquisition cost, as adjusted annually
20 to reflect adjustments to the U.S. consumer price index for all urban consumers, U.S.
21 city average, as determined by the U.S. department of labor, that meets all of the
22 following conditions:
23 1. Is at least $100 for a supply lasting a patient for a period of 30 consecutive
24 days based on the recommended dosage approved for labeling by the U.S. food and
25 drug administration, a supply lasting a patient for fewer than 30 days based on the
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1 recommended dosage approved for labeling by the federal food and drug
2 administration, or one unit of the drug if the labeling approved by the federal food
3 and drug administration