H.F. 2408 Section 1. NEW SECTION . 135S.1 Definitions. 1 As used in this chapter, unless the context otherwise 2 requires: 3 1. “Biologic” means a drug that is produced or distributed 4 in accordance with a biologics license issued under 42 C.F.R. 5 §601.4. 6 2. “Biosimilar” means a drug that is produced or distributed 7 in accordance with a biologics license application approved 8 under 42 C.F.R. §262(k)(3). 9 3. “Brand-name drug” means a drug that is produced or 10 distributed in accordance with an original new drug application 11 approved under 21 U.S.C. §355(c). “Brand-name drug” does not 12 include an authorized generic drug as defined by 42 C.F.R. 13 §447.502. 14 4. “Drug product” means a brand-name drug, a generic drug, a 15 biologic or biosimilar, or an over-the-counter drug. 16 5. “Employee retirement income security Act plan” or “ERISA 17 plan” means any self-funded employee welfare benefit plan 18 governed by the requirements of the Employee Retirement Income 19 Security Act of 1974, as codified at 29 U.S.C. §1001 et seq. 20 6. “Generic drug” means any of the following: 21 a. A retail drug that is marketed or distributed in 22 accordance with an abbreviated new drug application, approved 23 under 21 U.S.C. §355(j). 24 b. An authorized generic drug as defined by 42 C.F.R. 25 §447.502. 26 c. A drug that entered the market before 1962 that was not 27 originally marketed under a new drug application. 28 7. “Manufacturer” means an entity that engages in the 29 manufacture of a drug product, or that enters into a lease with 30 another manufacturer to market and distribute a prescription 31 drug product under the entity’s own name, and that sets or 32 changes the wholesale acquisition cost of the prescription drug 33 product it manufactures or markets. 34 8. “Over-the-counter drug” means the same as defined in 42 35 -1- LSB 5227YH (1) 90 nls/ko 1/ 13

H.F. 2408 C.F.R. §447.502. 1 9. “Prescription drug affordability board” or “board” means 2 the prescription drug affordability board created in section 3 135S.2. 4 10. “Prescription drug affordability stakeholder council” or 5 “stakeholder council” means the prescription drug affordability 6 stakeholder council created in section 135S.4. 7 11. “Prescription drug product” means a brand-name drug, a 8 generic drug, a biologic, or a biosimilar. 9 Sec. 2. NEW SECTION . 135S.2 Prescription drug affordability 10 board. 11 1. A prescription drug affordability board is created 12 for the purpose of protecting state residents, particularly 13 patients experiencing physical and mental illnesses and 14 communities affected by the opioid crisis; state and local 15 governments; commercial health plans; health care providers; 16 pharmacies; and other stakeholders within the health care 17 system from the high costs of prescription drug products. 18 2. The board shall be composed of five members, appointed by 19 the governor, subject to confirmation by the senate, who have 20 expertise in health care, health care economics, or clinical 21 medicine. A member shall not be an employee of, a board member 22 of, or a consultant to, a manufacturer or trade association 23 for manufacturers. Any conflict of interest, including 24 whether an individual has an association such as a financial 25 or personal association that has the potential to bias or has 26 the appearance of biasing the individual’s decisions in matters 27 related to the board or the conduct of the board’s activities 28 shall be disclosed and considered when appointing members to 29 the board. 30 3. The members shall serve five-year terms beginning and 31 ending as provided in section 69.19. Membership on the board 32 shall be bipartisan as provided in section 69.16 and gender 33 balanced as provided in section 69.16A. Vacancies shall be 34 filed in the manner of the original appointment. The board 35 -2- LSB 5227YH (1) 90 nls/ko 2/ 13

H.F. 2408 shall select a chairperson annually. 1 4. The board shall hire an executive director, general 2 counsel, and staff to support the board’s activities, who shall 3 each receive a salary as provided in the budget for the board. 4 Each member of the board shall receive a per diem and shall be 5 reimbursed for all actual and necessary expenses incurred in 6 the performance of their duties as a member. 7 5. A majority of the members of the board shall constitute 8 a quorum for the purposes of conducting the business of the 9 board. 10 6. The board shall meet in open session at least four times 11 annually to review prescription drug product information. The 12 following provisions shall also apply to meetings of the board: 13 a. The chairperson may cancel or postpone a meeting if there 14 is no business to transact. 15 b. The following actions by the board shall be made in open 16 session: 17 (1) Deliberations on whether to subject a prescription drug 18 product to an affordability review. 19 (2) Any vote on whether to recommend imposing an upper 20 payment limit on purchases and payer reimbursements of 21 prescription drug products in the state. 22 (3) Any significant decision by the board. 23 7. The board may meet in closed session to discuss 24 proprietary data and information. 25 8. The board shall provide public notice of each board 26 meeting at least two weeks in advance of the meeting. 27 Materials for each meeting shall be made available to the 28 public at least one week in advance of the meeting. 29 9. The board shall provide an opportunity for public comment 30 at each open meeting of the board. The board shall provide 31 the public with the opportunity to submit written comments on 32 pending decisions of the board. 33 10. The board may allow expert testimony at its meetings, 34 including when the board meets in closed session. 35 -3- LSB 5227YH (1) 90 nls/ko 3/ 13

H.F. 2408 11. a. Members of the board shall recuse themselves from 1 decisions related to prescription drug products if the member, 2 or an immediate family member of the member, has received or 3 could receive either of the following: 4 (1) A direct financial benefit of any amount deriving from 5 the result or finding of a study or determination by or for the 6 board. 7 (2) A financial benefit from any person that owns, 8 manufactures, or provides prescription drug products, services, 9 or items to be studied by the board that in the aggregate 10 exceeds five thousand dollars per year. 11 b. For the purposes of this subsection, a financial benefit 12 includes honoraria, fees, stock, the value of the member’s 13 or immediate family member’s stock holdings, and any direct 14 financial benefit deriving from the finding of a review 15 conducted pursuant to this chapter. 16 12. a. A conflict of interest shall be disclosed by the 17 board when hiring board staff, by the appointing authority when 18 appointing members to the board and to the stakeholder council, 19 and by the board when a member of the board is recused in any 20 final decision resulting from a review of a prescription drug 21 product. A conflict of interest shall be disclosed in advance 22 of the first open meeting after the conflict is identified or 23 within five days after the conflict is identified, whichever 24 is sooner. 25 b. A conflict of interest disclosed pursuant to this section 26 shall be posted on the internet site of the board unless the 27 chair of the board recuses the member from any final decision 28 resulting from a review of a prescription drug product. Such 29 posting shall include the type, nature, and magnitude of the 30 interests of the member involved. 31 13. Members of the board, the executive director, the 32 general counsel, board staff, and third-party contractors shall 33 not accept any gift or donation of services or property that 34 indicates a potential conflict of interest, or that has the 35 -4- LSB 5227YH (1) 90 nls/ko 4/ 13

H.F. 2408 appearance of biasing the work of the board. 1 Sec. 3. NEW SECTION . 135S.3 Powers and duties of the board. 2 1. To the extent practicable, the board shall access pricing 3 information for prescription drug products by doing all of the 4 following: 5 a. Entering into a memorandum of understanding with 6 another state to which manufacturers already report pricing 7 information. 8 b. Assessing spending for prescription drugs in the state. 9 c. Accessing other available pricing information based on 10 state reporting and transparency requirements. 11 2. The board may enter into a contract with a qualified, 12 independent third party for any service necessary to carry 13 out the powers and duties of the board. Unless permission is 14 granted by the board, a third party hired by the board shall 15 not release, publish, or otherwise use any information to which 16 the third party has access under its contract with the board. 17 3. The board shall adopt rules pursuant to chapter 17A to 18 administer this chapter. 19 Sec. 4. NEW SECTION . 135S.4 Prescription drug affordability 20 stakeholder council. 21 1. The board shall create a prescription drug affordability 22 stakeholder council for the purpose of providing stakeholder 23 input to assist the board in making decisions as required 24 under this chapter. The stakeholder council shall consist of 25 nineteen members appointed in accordance with this section. 26 Members shall include manufacturers of brand-name and generic 27 prescription drugs, health care providers that dispense or 28 administer prescription drugs, prescription drug suppliers, 29 and consumers of prescription drugs. A single organization 30 or entity shall not be represented by more than one council 31 member. 32 2. a. Three members shall be appointed by the majority 33 leader of the senate, two members shall be appointed by the 34 minority leader of the senate, four members shall be appointed 35 -5- LSB 5227YH (1) 90 nls/ko 5/ 13

H.F. 2408 by the speaker of the house of representatives, three members 1 shall be appointed by the minority leader of the house of 2 representatives, and seven members shall be appointed by the 3 governor, subject to confirmation by the senate. 4 b. The members of the stakeholder council shall have 5 knowledge in one or more of the following subjects: 6 (1) The pharmaceutical business model. 7 (2) Supply chain business models. 8 (3) The practice of medicine or clinical training. 9 (4) Consumer or patient perspectives. 10 (5) Health care costs trends and drivers. 11 (6) Clinical and health services research. 12 (7) The state’s health care marketplace. 13 c. The stakeholder council shall select a chairperson and 14 a co-chairperson annually from the council membership. The 15 members shall serve three-year staggered terms. 16 d. A member of the stakeholder council shall not receive 17 a per diem but shall be reimbursed for actual and necessary 18 expenses incurred in the performance of duties as a member. 19 Sec. 5. NEW SECTION . 135S.5 Drug cost affordability review. 20 1. The board shall identify the following prescription drug 21 products offered for sale in the state: 22 a. Brand-name drugs or biologics that, as adjusted annually 23 for inflation in accordance with the consumer price index, have 24 a launch wholesale acquisition cost of thirty thousand dollars 25 or more per year or per course of treatment, or a wholesale 26 acquisition cost increase of three thousand dollars or more in 27 any consecutive twelve-month period. 28 b. Biosimilar drugs that have a launch wholesale acquisition 29 cost that is not at least fifteen percent lower than the 30 referenced brand biologic at the time the biosimilar is 31 launched. 32 c. (1) Generic drugs that, as adjusted for inflation in 33 accordance with the consumer price index, have a wholesale 34 acquisition cost of one hundred dollars or more for any of the 35 -6- LSB 5227YH (1) 90 nls/ko 6/ 13

H.F. 2408 following: 1 (a) A thirty-day supply lasting a patient for a period 2 of thirty consecutive days based on the recommended dosage 3 approved for labeling by the United States food and drug 4 administration. 5 (b) A supply lasting a patient fewer than thirty consecutive 6 days based on the recommended dosage approved for labeling by 7 the United States food and drug administration. 8 (c) One unit of the drug if the labeling approved by the 9 United States food and drug administration does not recommend 10 any finite dosage. 11 (2) Generic drugs that, as adjusted for inflation in 12 accordance with the consumer price index, have a wholesale 13 acquisition cost that increased by two hundred percent or 14 more during the immediately preceding twelve-month period, as 15 determined by the difference between the resulting wholesale 16 acquisition cost and the average of the wholesale acquisition 17 cost reported over the immediately preceding twelve months. 18 d. Other prescription drug products that may create 19 affordability challenges for the state health care system and 20 for patients, including drugs used to address public health 21 emergencies. 22 2. a. After identifying prescription drug products as 23 required by subsection 1, the board shall determine whether 24 to conduct an affordability review for each identified 25 prescription drug product by seeking stakeholder council input 26 about the prescription drug product and considering the average 27 patient cost share of the prescription drug product. 28 b. Relevant information for conducting an affordability 29 review may include any document or research related to the 30 manufacturer’s selection of the introductory price or a price 31 increase of the prescription drug product, including lifecycle 32 management, net average prices in the state, market competition 33 and context, projected revenue, and the estimated value or cost 34 effectiveness of the prescription drug product. Failure of a 35 -7- LSB 5227YH (1) 90 nls/ko 7/ 13

H.F. 2408 manufacturer to provide the board with relevant information for 1 an affordability review shall not affect the board’s authority 2 to conduct such a review. 3 3. An affordability review conducted by the board shall 4 determine whether the prescription drug product that is fully 5 consistent with the labeling approved by the United States food 6 and drug administration or standard medical practice has led or 7 will lead to affordability challenges for the state health care 8 system or high out-of-pocket costs for patients. To the extent 9 practicable, in determining whether a prescription drug product 10 has led or will lead to an affordability challenge, the board 11 shall consider the following factors: 12 a. The wholesale acquisition cost for the prescription drug 13 product sold in the state. 14 b. The average monetary price concession, discount, or 15 rebate the manufacturer provides, or is expected to provide, 16 to health plans in the state as reported by manufacturers 17 and health plans, expressed as a percentage of the wholesale 18 acquisition cost for the prescription drug product under 19 review. 20 c. The total amount of the price concession, discount, or 21 rebate the manufacturer provides to each pharmacy benefits 22 manager operating in the state for the prescription drug 23 product under review, as reported by manufacturers and pharmacy 24 benefits managers, expressed as a percentage of the wholesale 25 acquisition cost for the prescription drug under review. 26 d. The price at which therapeutic alternatives have been 27 sold in the state. 28 e. The average monetary concession, discount, or rebate the 29 manufacturer provides, or is expected to provide, to health 30 plan payors and pharmacy benefits managers in the state for 31 therapeutic alternatives. 32 f. The cost to health plans based on patient access 33 consistent with the United State food and drug administration 34 label indications and recognized standard medical practice. 35 -8- LSB 5227YH (1) 90 nls/ko 8/ 13

H.F. 2408 g. The impact on patient access resulting from the cost of 1 the prescription drug product relative to insurance benefit 2 design. 3 h. The current or expected dollar value of drug-specific 4 patient access programs that are supported by the manufacturer. 5 i. The relative financial impacts to the costs of health, 6 medical, or social services as can be quantified and compared 7 to baseline effects of existing therapeutic alternatives. 8 j. The average patient copay or other cost-sharing for the 9 prescription drug product in the state. 10 k. Any information a manufacturer chooses to provide. 11 l. Any other factors as determined by the board through 12 rules adopted by the board. 13 4. If the board finds that the spending on a prescription 14 drug product reviewed under this section has led or will lead 15 to an affordability challenge, the board shall submit a report 16 to the general assembly of the board’s findings, including 17 a recommended upper payment limit for the prescription drug 18 product. The upper payment limit recommendation shall be made 19 after considering the cost of administering the prescription 20 drug product, the cost of delivering the prescription drug 21 product to consumers, and other relevant administrative costs 22 related to the prescription drug product. 23 5. Any information submitted to the board in accordance with 24 this section shall be subject to public inspection only to the 25 extent provided under section 22.1. 26 6. This section shall not be construed to prevent a 27 manufacturer from marketing a prescription drug product 28 approved by the United States food and drug administration in 29 this state while the prescription drug product is under review 30 by the board. 31 Sec. 6. NEW SECTION . 135S.6 Reporting requirements. 32 1. On or before December 31, 2024, and annually thereafter, 33 the board shall submit a report to the general assembly that 34 includes all of the following: 35 -9- LSB 5227YH (1) 90 nls/ko 9/ 13

H.F. 2408 a. Price trends for prescription drug products sold, 1 distributed, and administered in the state. 2 b. Any recommendations regarding further legislation needed 3 to improve prescription drug affordability in the state. 4 2. On or before July 1, 2025, the board shall submit 5 a report to the general assembly on the operation of the 6 generic drug market in the United States, including a review 7 of physician-administered drugs, that considers the prices of 8 generic drugs on a year-over-year basis, the degree to which 9 generic drug prices affect yearly insurance premium changes, 10 annual changes in insurance cost-sharing for generic drugs, 11 the potential for and history of drug shortages, the degree 12 to which generic drug prices affect yearly state Medicaid 13 spending, and any other relevant issues. 14 EXPLANATION 15 The inclusion of this explanation does not constitute agreement with 16 the explanation’s substance by the members of the general assembly. 17 This bill relates to prescription drug affordability 18 measures, including the creation of a prescription drug 19 affordability board. 20 The bill provides definitions used in the bill. 21 The bill creates the prescription drug affordability board 22 (board) for the purpose of protecting stakeholders within the 23 health care system from the high costs of prescription drug 24 products (product or products). The bill provides for the 25 membership and functioning of the board; the hiring of an 26 executive director and other staff for the board; salaries, 27 per diems, and reimbursement of expenses of the executive 28 director, general counsel, staff, and members; and other 29 provisions that apply to the meetings of the board. The board 30 shall meet in open session at least four times annually to 31 review product information, and may meet in closed session to 32 discuss proprietary data and information. The board shall 33 provide public notice of each board meeting at least two weeks 34 in advance of the meeting, make materials for each meeting 35 -10- LSB 5227YH (1) 90 nls/ko 10/ 13

H.F. 2408 available to the public in advance of the meeting, provide an 1 opportunity for public comment at each open meeting of the 2 board, and provide the opportunity for the public to submit 3 written comments on pending decisions of the board. 4 The board may allow expert testimony at its meetings, 5 including when the board meets in closed session. Members 6 of the board shall recuse themselves from decisions related 7 to products if the member, or an immediate family member of 8 the member, has received or could receive certain financial 9 benefits from the work of the board. The bill provides for 10 disclosure of conflicts of interest relative to the work of the 11 board, and prohibits the members of the board, the executive 12 director, the general counsel, board staff, and third-party 13 contractors from accepting certain gifts or donations. 14 The bill provides that, to the extent practicable, the board 15 shall access pricing information for products through various 16 means including by entering into memoranda of understanding 17 with another state to which manufacturers already report 18 pricing information; assessing spending for prescription 19 drugs in this state; and accessing other available pricing 20 information based on state reporting and transparency 21 requirements. The board may enter into a contract with a 22 qualified, independent third party for any service necessary to 23 carry out the powers and duties of the board, and shall adopt 24 rules to administer the bill. 25 The bill requires the board to create a prescription drug 26 affordability stakeholder council (council) to assist the 27 board in making decisions. The council shall consist of 19 28 members including manufacturers of brand-name and generic 29 prescription drugs, providers that dispense or administer 30 prescription drugs, prescription drug suppliers, and consumers 31 of prescription drugs. Members are appointed by the majority 32 leader of the senate, the minority leader of the senate, the 33 speaker of the house of representatives, the minority leader of 34 the house of representatives, and the governor. The members of 35 -11- LSB 5227YH (1) 90 nls/ko 11/ 13

H.F. 2408 the council shall have knowledge in certain areas as specified 1 in the bill. The bill provides for the annual selection of a 2 chairperson and co-chairperson, terms, and reimbursement of 3 actual and necessary expenses of the members. 4 The board is required to identify certain brand-name drugs 5 or biologics, biosimilars, generic drugs, and other products 6 that may create affordability challenges for the state health 7 care system and for patients, including drugs used to address 8 public health emergencies. 9 After identifying the products, the board shall determine 10 whether to conduct an affordability review by seeking council 11 input about the product and considering the average patient 12 cost share of the product. The bill specifies relevant 13 information that may be included in conducting an affordability 14 review. If the board finds that the spending on a product 15 reviewed has led or will lead to an affordability challenge, 16 the board shall submit a report to the general assembly of the 17 board’s findings, including a recommended upper payment limit. 18 The upper pay limit for the product shall be determined by 19 considering the cost of administering the product, the cost 20 of delivering the product to consumers, and other relevant 21 administrative costs related to the product. Any information 22 submitted to the board in accordance with the bill is subject 23 to public inspection only to the extent provided under the 24 state’s open records law. 25 The bill requires the board, on or before December 31, 2024, 26 and annually thereafter, to submit to the general assembly a 27 report that includes price trends for products in the state; 28 and any recommendations regarding further legislation needed 29 to improve prescription drug affordability in the state. On 30 or before July 1, 2025, the board shall submit a report to the 31 general assembly on the operation of the generic drug market in 32 the United States that considers the prices of generic drugs 33 on a year-over-year basis, the degree to which generic drug 34 prices affect yearly insurance premium changes, annual changes 35 -12- LSB 5227YH (1) 90 nls/ko 12/ 13