House File 2408 - IntroducedA Bill ForAn Act 1relating to prescription drug affordability, including
2the creation of a prescription drug affordability board.
3BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
1 Section 1. NEW SECTION. 135S.1 Definitions.
2As used in this chapter, unless the context otherwise
3requires:
41. “Biologic” means a drug that is produced or distributed
5in accordance with a biologics license issued under 42 C.F.R.
6§601.4.
72. “Biosimilar” means a drug that is produced or distributed
8in accordance with a biologics license application approved
9under 42 C.F.R. §262(k)(3).
103. “Brand-name drug” means a drug that is produced or
11distributed in accordance with an original new drug application
12approved under 21 U.S.C. §355(c). “Brand-name drug” does not
13include an authorized generic drug as defined by 42 C.F.R.
14§447.502.
154. “Drug product” means a brand-name drug, a generic drug, a
16biologic or biosimilar, or an over-the-counter drug.
175. “Employee retirement income security Act plan” or “ERISA
18plan” means any self-funded employee welfare benefit plan
19governed by the requirements of the Employee Retirement Income
20Security Act of 1974, as codified at 29 U.S.C. §1001 et seq.
216. “Generic drug” means any of the following:
22a. A retail drug that is marketed or distributed in
23accordance with an abbreviated new drug application, approved
24under 21 U.S.C.§355(j).
25b. An authorized generic drug as defined by 42 C.F.R.
26§447.502.
27c. A drug that entered the market before 1962 that was not
28originally marketed under a new drug application.
297. “Manufacturer” means an entity that engages in the
30manufacture of a drug product, or that enters into a lease with
31another manufacturer to market and distribute a prescription
32drug product under the entity’s own name, and that sets or
33changes the wholesale acquisition cost of the prescription drug
34product it manufactures or markets.
358. “Over-the-counter drug” means the same as defined in 42
-1-1C.F.R.§447.502.
29. “Prescription drug affordability board” or “board” means
3the prescription drug affordability board created in section
4135S.2.
510. “Prescription drug affordability stakeholder council” or
6“stakeholder council” means the prescription drug affordability
7stakeholder council created in section 135S.4.
811. “Prescription drug product” means a brand-name drug, a
9generic drug, a biologic, or a biosimilar.
10 Sec. 2. NEW SECTION. 135S.2 Prescription drug affordability
11board.
121. A prescription drug affordability board is created
13for the purpose of protecting state residents, particularly
14patients experiencing physical and mental illnesses and
15communities affected by the opioid crisis; state and local
16governments; commercial health plans; health care providers;
17pharmacies; and other stakeholders within the health care
18system from the high costs of prescription drug products.
192. The board shall be composed of five members, appointed by
20the governor, subject to confirmation by the senate, who have
21expertise in health care, health care economics, or clinical
22medicine. A member shall not be an employee of, a board member
23of, or a consultant to, a manufacturer or trade association
24for manufacturers. Any conflict of interest, including
25whether an individual has an association such as a financial
26or personal association that has the potential to bias or has
27the appearance of biasing the individual’s decisions in matters
28related to the board or the conduct of the board’s activities
29shall be disclosed and considered when appointing members to
30the board.
313. The members shall serve five-year terms beginning and
32ending as provided in section 69.19. Membership on the board
33shall be bipartisan as provided in section 69.16 and gender
34balanced as provided in section 69.16A. Vacancies shall be
35filed in the manner of the original appointment. The board
-2-1shall select a chairperson annually.
24. The board shall hire an executive director, general
3counsel, and staff to support the board’s activities, who shall
4each receive a salary as provided in the budget for the board.
5Each member of the board shall receive a per diem and shall be
6reimbursed for all actual and necessary expenses incurred in
7the performance of their duties as a member.
85. A majority of the members of the board shall constitute
9a quorum for the purposes of conducting the business of the
10board.
116. The board shall meet in open session at least four times
12annually to review prescription drug product information. The
13following provisions shall also apply to meetings of the board:
14a. The chairperson may cancel or postpone a meeting if there
15is no business to transact.
16b. The following actions by the board shall be made in open
17session:
18(1) Deliberations on whether to subject a prescription drug
19product to an affordability review.
20(2) Any vote on whether to recommend imposing an upper
21payment limit on purchases and payer reimbursements of
22prescription drug products in the state.
23(3) Any significant decision by the board.
247. The board may meet in closed session to discuss
25proprietary data and information.
268. The board shall provide public notice of each board
27meeting at least two weeks in advance of the meeting.
28Materials for each meeting shall be made available to the
29public at least one week in advance of the meeting.
309. The board shall provide an opportunity for public comment
31at each open meeting of the board. The board shall provide
32the public with the opportunity to submit written comments on
33pending decisions of the board.
3410. The board may allow expert testimony at its meetings,
35including when the board meets in closed session.
-3- 111. a. Members of the board shall recuse themselves from
2decisions related to prescription drug products if the member,
3or an immediate family member of the member, has received or
4could receive either of the following:
5(1) A direct financial benefit of any amount deriving from
6the result or finding of a study or determination by or for the
7board.
8(2) A financial benefit from any person that owns,
9manufactures, or provides prescription drug products, services,
10or items to be studied by the board that in the aggregate
11exceeds five thousand dollars per year.
12b. For the purposes of this subsection, a financial benefit
13includes honoraria, fees, stock, the value of the member’s
14or immediate family member’s stock holdings, and any direct
15financial benefit deriving from the finding of a review
16conducted pursuant to this chapter.
1712. a. A conflict of interest shall be disclosed by the
18board when hiring board staff, by the appointing authority when
19appointing members to the board and to the stakeholder council,
20and by the board when a member of the board is recused in any
21final decision resulting from a review of a prescription drug
22product. A conflict of interest shall be disclosed in advance
23of the first open meeting after the conflict is identified or
24within five days after the conflict is identified, whichever
25is sooner.
26b. A conflict of interest disclosed pursuant to this section
27shall be posted on the internet site of the board unless the
28chair of the board recuses the member from any final decision
29resulting from a review of a prescription drug product. Such
30posting shall include the type, nature, and magnitude of the
31interests of the member involved.
3213. Members of the board, the executive director, the
33general counsel, board staff, and third-party contractors shall
34not accept any gift or donation of services or property that
35indicates a potential conflict of interest, or that has the
-4-1appearance of biasing the work of the board.
2 Sec. 3. NEW SECTION. 135S.3 Powers and duties of the board.
31. To the extent practicable, the board shall access pricing
4information for prescription drug products by doing all of the
5following:
6a. Entering into a memorandum of understanding with
7another state to which manufacturers already report pricing
8information.
9b. Assessing spending for prescription drugs in the state.
10c. Accessing other available pricing information based on
11state reporting and transparency requirements.
122. The board may enter into a contract with a qualified,
13independent third party for any service necessary to carry
14out the powers and duties of the board. Unless permission is
15granted by the board, a third party hired by the board shall
16not release, publish, or otherwise use any information to which
17the third party has access under its contract with the board.
183. The board shall adopt rules pursuant to chapter 17A to
19administer this chapter.
20 Sec. 4. NEW SECTION. 135S.4 Prescription drug affordability
21stakeholder council.
221. The board shall create a prescription drug affordability
23stakeholder council for the purpose of providing stakeholder
24input to assist the board in making decisions as required
25under this chapter. The stakeholder council shall consist of
26nineteen members appointed in accordance with this section.
27Members shall include manufacturers of brand-name and generic
28prescription drugs, health care providers that dispense or
29administer prescription drugs, prescription drug suppliers,
30and consumers of prescription drugs. A single organization
31or entity shall not be represented by more than one council
32member.
332. a. Three members shall be appointed by the majority
34leader of the senate, two members shall be appointed by the
35minority leader of the senate, four members shall be appointed
-5-1by the speaker of the house of representatives, three members
2shall be appointed by the minority leader of the house of
3representatives, and seven members shall be appointed by the
4governor, subject to confirmation by the senate.
5b. The members of the stakeholder council shall have
6knowledge in one or more of the following subjects:
7(1) The pharmaceutical business model.
8(2) Supply chain business models.
9(3) The practice of medicine or clinical training.
10(4) Consumer or patient perspectives.
11(5) Health care costs trends and drivers.
12(6) Clinical and health services research.
13(7) The state’s health care marketplace.
14c. The stakeholder council shall select a chairperson and
15a co-chairperson annually from the council membership. The
16members shall serve three-year staggered terms.
17d. A member of the stakeholder council shall not receive
18a per diem but shall be reimbursed for actual and necessary
19expenses incurred in the performance of duties as a member.
20 Sec. 5. NEW SECTION. 135S.5 Drug cost affordability review.
211. The board shall identify the following prescription drug
22products offered for sale in the state:
23a. Brand-name drugs or biologics that, as adjusted annually
24for inflation in accordance with the consumer price index, have
25a launch wholesale acquisition cost of thirty thousand dollars
26or more per year or per course of treatment, or a wholesale
27acquisition cost increase of three thousand dollars or more in
28any consecutive twelve-month period.
29b. Biosimilar drugs that have a launch wholesale acquisition
30cost that is not at least fifteen percent lower than the
31referenced brand biologic at the time the biosimilar is
32launched.
33c. (1) Generic drugs that, as adjusted for inflation in
34accordance with the consumer price index, have a wholesale
35acquisition cost of one hundred dollars or more for any of the
-6-1following:
2(a) A thirty-day supply lasting a patient for a period
3of thirty consecutive days based on the recommended dosage
4approved for labeling by the United States food and drug
5administration.
6(b) A supply lasting a patient fewer than thirty consecutive
7days based on the recommended dosage approved for labeling by
8the United States food and drug administration.
9(c) One unit of the drug if the labeling approved by the
10United States food and drug administration does not recommend
11any finite dosage.
12(2) Generic drugs that, as adjusted for inflation in
13accordance with the consumer price index, have a wholesale
14acquisition cost that increased by two hundred percent or
15more during the immediately preceding twelve-month period, as
16determined by the difference between the resulting wholesale
17acquisition cost and the average of the wholesale acquisition
18cost reported over the immediately preceding twelve months.
19d. Other prescription drug products that may create
20affordability challenges for the state health care system and
21for patients, including drugs used to address public health
22emergencies.
232. a. After identifying prescription drug products as
24required by subsection 1, the board shall determine whether
25to conduct an affordability review for each identified
26prescription drug product by seeking stakeholder council input
27about the prescription drug product and considering the average
28patient cost share of the prescription drug product.
29b. Relevant information for conducting an affordability
30review may include any document or research related to the
31manufacturer’s selection of the introductory price or a price
32increase of the prescription drug product, including lifecycle
33management, net average prices in the state, market competition
34and context, projected revenue, and the estimated value or cost
35effectiveness of the prescription drug product. Failure of a
-7-1manufacturer to provide the board with relevant information for
2an affordability review shall not affect the board’s authority
3to conduct such a review.
43. An affordability review conducted by the board shall
5determine whether the prescription drug product that is fully
6consistent with the labeling approved by the United States food
7and drug administration or standard medical practice has led or
8will lead to affordability challenges for the state health care
9system or high out-of-pocket costs for patients. To the extent
10practicable, in determining whether a prescription drug product
11has led or will lead to an affordability challenge, the board
12shall consider the following factors:
13a. The wholesale acquisition cost for the prescription drug
14product sold in the state.
15b. The average monetary price concession, discount, or
16rebate the manufacturer provides, or is expected to provide,
17to health plans in the state as reported by manufacturers
18and health plans, expressed as a percentage of the wholesale
19acquisition cost for the prescription drug product under
20review.
21c. The total amount of the price concession, discount, or
22rebate the manufacturer provides to each pharmacy benefits
23manager operating in the state for the prescription drug
24product under review, as reported by manufacturers and pharmacy
25benefits managers, expressed as a percentage of the wholesale
26acquisition cost for the prescription drug under review.
27d. The price at which therapeutic alternatives have been
28sold in the state.
29e. The average monetary concession, discount, or rebate the
30manufacturer provides, or is expected to provide, to health
31plan payors and pharmacy benefits managers in the state for
32therapeutic alternatives.
33f. The cost to health plans based on patient access
34consistent with the United State food and drug administration
35label indications and recognized standard medical practice.
-8- 1g. The impact on patient access resulting from the cost of
2the prescription drug product relative to insurance benefit
3design.
4h. The current or expected dollar value of drug-specific
5patient access programs that are supported by the manufacturer.
6i. The relative financial impacts to the costs of health,
7medical, or social services as can be quantified and compared
8to baseline effects of existing therapeutic alternatives.
9j. The average patient copay or other cost-sharing for the
10prescription drug product in the state.
11k. Any information a manufacturer chooses to provide.
12l. Any other factors as determined by the board through
13rules adopted by the board.
144. If the board finds that the spending on a prescription
15drug product reviewed under this section has led or will lead
16to an affordability challenge, the board shall submit a report
17to the general assembly of the board’s findings, including
18a recommended upper payment limit for the prescription drug
19product. The upper payment limit recommendation shall be made
20after considering the cost of administering the prescription
21drug product, the cost of delivering the prescription drug
22product to consumers, and other relevant administrative costs
23related to the prescription drug product.
245. Any information submitted to the board in accordance with
25this section shall be subject to public inspection only to the
26extent provided under section 22.1.
276. This section shall not be construed to prevent a
28manufacturer from marketing a prescription drug product
29approved by the United States food and drug administration in
30this state while the prescription drug product is under review
31by the board.
32 Sec. 6. NEW SECTION. 135S.6 Reporting requirements.
331. On or before December 31, 2024, and annually thereafter,
34the board shall submit a report to the general assembly that
35includes all of the following:
-9- 1a. Price trends for prescription drug products sold,
2distributed, and administered in the state.
3b. Any recommendations regarding further legislation needed
4to improve prescription drug affordability in the state.
52. On or before July 1, 2025, the board shall submit
6a report to the general assembly on the operation of the
7generic drug market in the United States, including a review
8of physician-administered drugs, that considers the prices of
9generic drugs on a year-over-year basis, the degree to which
10generic drug prices affect yearly insurance premium changes,
11annual changes in insurance cost-sharing for generic drugs,
12the potential for and history of drug shortages, the degree
13to which generic drug prices affect yearly state Medicaid
14spending, and any other relevant issues.
15EXPLANATION
16The inclusion of this explanation does not constitute agreement with
17the explanation’s substance by the members of the general assembly.
18This bill relates to prescription drug affordability
19measures, including the creation of a prescription drug
20affordability board.
21The bill provides definitions used in the bill.
22The bill creates the prescription drug affordability board
23(board) for the purpose of protecting stakeholders within the
24health care system from the high costs of prescription drug
25products (product or products). The bill provides for the
26membership and functioning of the board; the hiring of an
27executive director and other staff for the board; salaries,
28per diems, and reimbursement of expenses of the executive
29director, general counsel, staff, and members; and other
30provisions that apply to the meetings of the board. The board
31shall meet in open session at least four times annually to
32review product information, and may meet in closed session to
33discuss proprietary data and information. The board shall
34provide public notice of each board meeting at least two weeks
35in advance of the meeting, make materials for each meeting
-10-1available to the public in advance of the meeting, provide an
2opportunity for public comment at each open meeting of the
3board, and provide the opportunity for the public to submit
4written comments on pending decisions of the board.
5The board may allow expert testimony at its meetings,
6including when the board meets in closed session. Members
7of the board shall recuse themselves from decisions related
8to products if the member, or an immediate family member of
9the member, has received or could receive certain financial
10benefits from the work of the board. The bill provides for
11disclosure of conflicts of interest relative to the work of the
12board, and prohibits the members of the board, the executive
13director, the general counsel, board staff, and third-party
14contractors from accepting certain gifts or donations.
15The bill provides that, to the extent practicable, the board
16shall access pricing information for products through various
17means including by entering into memoranda of understanding
18with another state to which manufacturers already report
19pricing information; assessing spending for prescription
20drugs in this state; and accessing other available pricing
21information based on state reporting and transparency
22requirements. The board may enter into a contract with a
23qualified, independent third party for any service necessary to
24carry out the powers and duties of the board, and shall adopt
25rules to administer the bill.
26The bill requires the board to create a prescription drug
27affordability stakeholder council (council) to assist the
28board in making decisions. The council shall consist of 19
29members including manufacturers of brand-name and generic
30prescription drugs, providers that dispense or administer
31prescription drugs, prescription drug suppliers, and consumers
32of prescription drugs. Members are appointed by the majority
33leader of the senate, the minority leader of the senate, the
34speaker of the house of representatives, the minority leader of
35the house of representatives, and the governor. The members of
-11-1the council shall have knowledge in certain areas as specified
2in the bill. The bill provides for the annual selection of a
3chairperson and co-chairperson, terms, and reimbursement of
4actual and necessary expenses of the members.
5The board is required to identify certain brand-name drugs
6or biologics, biosimilars, generic drugs, and other products
7that may create affordability challenges for the state health
8care system and for patients, including drugs used to address
9public health emergencies.
10After identifying the products, the board shall determine
11whether to conduct an affordability review by seeking council
12input about the product and considering the average patient
13cost share of the product. The bill specifies relevant
14information that may be included in conducting an affordability
15review. If the board finds that the spending on a product
16reviewed has led or will lead to an affordability challenge,
17the board shall submit a report to the general assembly of the
18board’s findings, including a recommended upper payment limit.
19The upper pay limit for the product shall be determined by
20considering the cost of administering the product, the cost
21of delivering the product to consumers, and other relevant
22administrative costs related to the product. Any information
23submitted to the board in accordance with the bill is subject
24to public inspection only to the extent provided under the
25state’s open records law.
26The bill requires the board, on or before December 31, 2024,
27and annually thereafter, to submit to the general assembly a
28report that includes price trends for products in the state;
29and any recommendations regarding further legislation needed
30to improve prescription drug affordability in the state. On
31or before July 1, 2025, the board shall submit a report to the
32general assembly on the operation of the generic drug market in
33the United States that considers the prices of generic drugs
34on a year-over-year basis, the degree to which generic drug
35prices affect yearly insurance premium changes, annual changes
-12-1in insurance cost-sharing for generic drugs, the potential for
2and history of drug shortages, the degree to which generic drug
3prices affect yearly state Medicaid spending, and any other
4relevant issues.
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