Illinois General Assembly - Full Text of HB3493
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Full Text of HB3493  101st General Assembly




State of Illinois
2019 and 2020


Introduced 2/15/2019, by Rep. Will Guzzardi


New Act
30 ILCS 105/5.891 new

    Creates the Prescription Drug Affordability Act. Defines terms. Creates the Prescription Drug Affordability Board and includes provisions regarding: purpose; members; alternate members; conflict of interest; terms; additional staff; salary; compensation and reimbursement; and meetings. Creates the Prescription Drug Affordability Stakeholder Council and includes provisions regarding: purpose; members; knowledge requirements; terms; and compensation. Provides the manner in which a conflict of interest shall be disclosed. Provides that gifts or donations of services or property that indicate a potential conflict of interest may not be accepted by any member of the Board, Board staff, or third-party contractor. Includes provisions on applicability. Provides that the Board shall identify specified prescription drug products and determine whether each prescription drug product should be subject to a cost review. Provides that if the Board finds that spending on a prescription drug product creates affordability challenges, the Board shall establish an upper payment limit that applies to all purchases and payor reimbursements. Includes provisions regarding remedies and an appeal process. Creates the Prescription Drug Affordability Fund. Provides that the Board shall submit a report to the General Assembly including specified information. Includes a provision on term expiration for Board and Council members. Provides that the Board shall conduct a study of the operation of the generic drug market that includes specified information on or before June 1, 2020. Makes conforming changes in the State Finance Act. Effective immediately.

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HB3493LRB101 10677 RAB 55787 b

1    AN ACT concerning health care.
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
4    Section 1. Short title. This Act may be cited as the
5Prescription Drug Affordability Act.
6    Section 5. Definitions. In this Act:
7    "Biologic" means a drug that is produced or distributed in
8accordance with a biologics license application approved under
942 U.S.C. 447.502.
10    "Biosimilar" means a drug that is produced or distributed
11in accordance with a biologics license application approved
12under 42 U.S.C. 262(k)(3).
13    "Board" means the Prescription Drug Affordability Board.
14    "Brand name drug" means a drug that is produced or
15distributed in accordance with an original new drug application
16approved under 21 U.S.C. 355(c). "Brand name drug" does not
17include an authorized generic drug as defined by 42 CFR
19    "Council" means the Prescription Drug Affordability
20Stakeholder Council.
21    "Generic drug" means:
22        (1) a retail drug that is marketed or distributed in
23    accordance with an abbreviated new drug application,



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1    approved under 21 U.S.C. 355(j);
2        (2) an authorized generic drug as defined by 42 CFR
3    447.502; or
4        (3) a drug that entered the market before 1962 that was
5    not originally marketed under a new drug application.
6    "Manufacturer" means an entity that:
7        (1) engages in the manufacture of a prescription drug
8    product; or
9        (2) enters into a lease with another manufacturer to
10    market and distribute a prescription drug product under the
11    entity's own name; and
12        (3) sets or changes the wholesale acquisition cost of
13    the prescription drug product it manufactures or markets.
14    "Prescription drug product" means a brand name drug, a
15generic drug, a biologic, or a biosimilar.
16    Section 10. Prescription Drug Affordability Board.
17    (a) The Prescription Drug Affordability Board is created.
18    (b) The purpose of the Board is to protect State residents,
19State and local governments, commercial health plans, health
20care providers, pharmacies licensed in this State, and other
21stakeholders within the health care system from the high costs
22of prescription drug products.
23    (c) The Board shall consist of the following members who
24have expertise in health care economics or clinical medicine:
25        (1) one member appointed by the Governor;



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1        (2) one member appointed by the President of the
2    Senate;
3        (3) one member appointed by the Speaker of the House of
4    Representatives;
5        (4) one member appointed by the Attorney General; and
6        (5) one member appointed jointly by the President of
7    the Senate and the Speaker of the House of Representatives,
8    who shall serve as chair of the Board.
9    (d) The Board shall have the following alternate members
10who have expertise in health care economics or clinical
11medicine and who are designated by the Board chair to
12participate in deliberations of the Board when a member is
14        (1) one alternate member appointed by the Governor;
15        (2) one alternate member appointed by the President of
16    the Senate; and
17        (3) one alternate member appointed by the Speaker of
18    the House of Representatives.
19    (e) A member or alternate member may not be an employee,
20Board member, or consultant to a manufacturer or trade
21association for manufacturers.
22    (f) Any conflict of interest, including whether the
23individual has an association, including a financial or
24personal association, that has the potential to bias or has the
25appearance of biasing an individual's decision in matters
26related to the Board or the conduct of the Board's activities,



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1shall be considered and disclosed when appointing members and
2alternate members to the Board.
3    (g) To the extent practicable and consistent with federal
4and State law, the membership of the Board shall reflect the
5racial, ethnic, and gender diversity of the State.
6    (h) The term of a member is 5 years.
7    (i) The terms of the members are staggered as required by
8the terms provided for members beginning October 1, 2019.
9    (j) The chair shall hire an executive director, general
10counsel, and staff for the Board.
11    (k) Staff of the Board shall receive a salary as provided
12in the budget of the Board.
13    (l) A member of the Board:
14        (1) may receive compensation as a member of the Board;
15    and
16        (2) is entitled to reimbursement for expenses.
17    (m) Except as provided in paragraphs (1) and (2) of this
18subsection, the Board shall meet in open session at least every
196 weeks to review prescription drug product information.
20        (1) The chair may cancel or postpone a meeting if there
21    are no prescription drug products to review.
22        (2) Notwithstanding the Open Meetings Act, the Board
23    may meet in closed session to discuss proprietary data and
24    information, but a decision of the Board shall be made in
25    open session.
26        (3) Public notice of each Board meeting shall be



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1    provided at least 2 weeks in advance of the meeting.
2        (4) Materials for each Board meeting shall be made
3    available to the public at least one week in advance of the
4    meeting.
5        (5) The Board shall provide an opportunity for public
6    comment at each open meeting of the Board.
7        (6) The Board shall provide the public with the
8    opportunity to provide written comments on pending
9    decisions of the Board.
10        (7) The Board may allow expert testimony at Board
11    meetings, including when the Board meets in closed session.
12        (8) To the extent feasible and practicable, the Board
13    shall access pricing information for prescription drug
14    products by:
15            (i) entering into a memorandum of understanding
16        with another state to which manufacturers already
17        report pricing information; and
18            (ii) accessing other available pricing
19        information.
20        (9) The following actions by the Board shall be made in
21    open session:
22            (i) deliberations on whether to subject a
23        prescription drug product to a cost review under
24        subsection (a) of Section 30; and
25            (ii) any vote on whether to impose an upper payment
26        limit on purchases and payor reimbursements of



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1        prescription drug products in this State.
2        (10) A majority of the members of the Board constitutes
3    a quorum.
4        (11) A member of the board shall recuse themselves from
5    decisions related to a prescription drug product if the
6    member, or immediate family of the member, has received or
7    could receive any of the following:
8            (i) a direct financial benefit of any amount
9        deriving from the result or finding of a study or
10        determination by or for the Board; or
11            (ii) a financial benefit from any person that owns,
12        manufactures, or provides prescription drug products,
13        services, or items to be studied by the Board that in
14        the aggregate exceeds $5,000 per year.
15        A financial benefit as described in this paragraph
16    includes honoraria, fees, stock, the value of the member's
17    or immediate family member's stock holdings, and any direct
18    financial benefit deriving from the finding of a review
19    conducted under this subtitled.
20    Section 15. Prescription Drug Affordability Stakeholder
22    (a) The Prescription Drug Affordability Stakeholder
23Council is created.
24    (b) The purpose of the Council is to provide stakeholder
25input to assist the Board in making decisions as required under



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1this Act.
2    (c) The Council shall consist of 21 members appointed in
3accordance with this subsection.
4        (1) The Speaker of the House of Representatives shall
5    appoint:
6            (i) one representative of a statewide health care
7        advocacy coalition;
8            (ii) one representative of a statewide advocacy
9        organization for seniors;
10            (iii) one representative of a statewide
11        organization for diverse communities;
12            (iv) one representative of a labor union;
13            (v) two health services researchers specializing
14        in prescription drugs; and
15            (vi) one public member at the discretion of the
16        Speaker of the House of Representatives.
17        (2) The President of the Senate shall appoint:
18            (i) one representative of doctors;
19            (ii) one representative of nurses;
20            (iii) one representative of hospitals;
21            (iv) one representative of health insurers;
22            (v) one representative of the Governor's Office of
23        Management and Budget;
24            (vi) one clinical researcher; and
25            (vii) one public member at the discretion of the
26        President of the Senate.



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1        (3) The Governor shall appoint:
2            (i) one representative of brand name drug
3        corporations;
4            (ii) one representative of generic drug
5        corporations;
6            (iii) one representative of employers;
7            (iv) one representative of pharmacy benefit
8        managers;
9            (v) one representative of pharmacists;
10            (vi) one pharmacologist; and
11            (vii) one public member at the discretion of the
12        Governor.
13    (d) The members of the Council shall have knowledge of one
14or more of the following:
15        (1) the pharmaceutical business model;
16        (2) supply chain business models;
17        (3) the practice of medicine or clinical training;
18        (4) consumer or patient perspectives;
19        (5) health care costs trends and drivers;
20        (6) clinical and health services research; or
21        (7) the State's health care marketplace.
22    (e) To the extent practicable and consistent with federal
23and State law, the membership of the Council shall reflect the
24racial, ethnic, and gender diversity of this State.
25    (f) From among the membership of the Council, the Board
26chair shall appoint 2 members to be co-chairs of the Council.



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1    (g) The term of a member is 3 years.
2    (h) The initial members of the Council shall serve
3staggered terms as required by the terms provided for members
4beginning October 1, 2019.
5    (i) A member of the Council may not receive compensation as
6a member of the Council, but is entitled to reimbursement for
8    Section 20. Conflict of interest.
9    (a) A conflict of interest shall be disclosed in the
10following manner:
11        (1) by the Board when hiring Board staff;
12        (2) by the appointing authority when appointing
13    members and alternate members to the Board and members to
14    the Council; and
15        (3) by the Board, describing any recusal by a member of
16    the Board in any final decision resulting from a review of
17    a prescription drug product.
18    (b) A conflict of interest shall be disclosed:
19        (1) in advance of the first open meeting after the
20    conflict is identified; and
21        (2) within 5 days after the conflict is identified.
22    (c) A conflict of interest disclosed under subsection (a)
23shall be posted on the website of the Board unless the chair of
24the Board recuses the member from any final decision resulting
25from a review of a prescription drug product.



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1    (d) A post under subsection (c) shall include the type,
2nature, and magnitude of the interests of the member involved.
3    Section 25. Gifts and donations. A member of the Board,
4Board staff, and third-party contractor may not accept any gift
5or donation of services or property that indicate a potential
6conflict of interest or have the appearance of biasing the work
7of the Board.
8    Section 30. Application; cost review.
9    (a) This Section does not apply to a prescription drug
10product used in an in-patient setting if the drug is regulated
11by the Department of Financial and Professional Regulation.
12    (b) Nothing in this Section may be construed to prevent a
13manufacturer from marketing a prescription drug product
14approved by the Federal Food and Drug Administration while the
15product is under review by the Board.
16    (c) Nothing in this Act may be construed to effect:
17        (1) an entity's eligibility for the federal Drug
18    Pricing Program under Section 340B of the federal Public
19    Health Service Act; or
20        (2) the discounts that are available to an entity that
21    is eligible for the federal Drug Pricing Discount Program
22    under Section 340B of the federal Public Health Service
23    Act.
24    (d) The Board shall identify the following prescription



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1drug products and determine whether each identified
2prescription drug product should be subject to a cost review as
3described in subsection (g):
4        (1) brand-name drugs and biologics that, as adjusted
5    annually for inflation in accordance with the Consumer
6    Price Index, have:
7            (i) a launch wholesale acquisition cost of $30,000
8        or more for a year or course of treatment; or
9            (ii) a wholesale acquisition cost increase of
10        $3,000 or more in any 12-month period, or course of
11        treatment if less than 12 months;
12        (2) biosimilar drugs that have a launch wholesale
13    acquisition cost that is not at least 15% lower than the
14    referenced brand biologic at the time the biosimilar is
15    launched;
16        (3) generic drugs that, as adjusted annually for
17    inflation in accordance with the Consumer Price Index, have
18    a wholesale acquisition cost:
19            (i) of $100 or more for:
20                (A) a 30-day supply lasting a patient for a
21            period 30 consecutive days based on the
22            recommended dosage approved for labeling by the
23            Federal Drug Administration;
24                (B) a supply lasting a patient for fewer than
25            30 days based on the recommended dosage approved
26            for labeling by the Federal Drug Administration;



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1            or
2                (C) one unit of the drug if the labeling
3            approved by the Federal Drug Administration does
4            not recommend a finite dosage; and
5            (ii) that increased by 200% or more during the
6        preceding 12-month period, as determined by the
7        difference between the resulting wholesale acquisition
8        cost and the average of the wholesale acquisition cost
9        reported over the preceding 12-months; and
10        (4) in consultation with the Council, prescription
11    drug products that may create affordability challenges for
12    the State healthcare system, including patients.
13    (e) After identifying a prescription drug product as
14required by subsection (d), the Board shall determine whether
15to conduct a cost review as described in subsection (d) for
16each identified prescription drug product by:
17        (1) seeking Council input about the prescription drug
18    product; and
19        (2) considering the average cost share of the
20    prescription drug product.
21    (f) To the extent there is no publicly available
22information to conduct a cost review as described in subsection
23(d), the Board shall request the information from the
24manufacturer of the prescription drug product. The information
25to conduct a cost review may include any document and research
26related to the manufacturer's selection of the introductory



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1price or price increase of the prescription drug product,
2including life-cycle management, net average price in this
3State, market competition and context, projected revenue, and
4the estimated value or cost-effectiveness of the prescription
5drug product. The failure of a manufacturer to provide the
6Board with the information requested under this subsection does
7not affect the authority of the Board to conduct a review as
8described in subsection (g) or establish an upper payment limit
9as authorized under subsection (h).
10    (g) If the Board conducts a review of the cost of a
11prescription drug product, the review shall determine if
12utilization of the prescription drug product, that is fully
13consistent with the labeling approved by the Federal Food and
14Drug Administration or standard medical practice, has led or
15will lead to affordability challenges for the State health care
16system or high out-of-pocket costs for patients. To the extent
17feasible, the Board shall consider the following factors in
18determining whether a prescription drug product identified
19under subsection (d) has or will lead to an affordability
20challenge for the State health care system, including patients:
21        (1) the wholesale acquisition cost for the
22    prescription drug product sold in this State;
23        (2) the average monetary price concession, discount,
24    or rebate the manufacturer provides to health plans in this
25    State or is expected to provide to health plans in this
26    State as reported by manufacturers and health plans,



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1    expressed as a percent of the wholesale acquisition cost
2    for the prescription drug product under review;
3        (3) the total amount of the price concession, discount,
4    or rebate the manufacturer provides to each pharmacy
5    benefit manager operating in this State for the
6    prescription drug product under review, as reported by
7    manufacturers and pharmacy benefit managers, expressed as
8    a percent of the wholesale acquisition costs;
9        (4) the price at which therapeutic alternatives have
10    been sold in this State;
11        (5) the average monetary concession, discount, or
12    rebate the manufacturer provides or is expected to provide
13    to health plan payors and pharmacy benefit managers in this
14    State for therapeutic alternatives;
15        (6) the costs to health plans based on patient access
16    consistent with Federal Food and Drug Administration
17    labeled indications;
18        (7) the impact on patient access resulting from the
19    cost of the prescription drug product relative to insurance
20    benefit design;
21        (8) the current or expected dollar value of
22    drug-specific patient access programs that are supported
23    by the manufacturer:
24        (9) the relative financial impacts to health, medical,
25    or social services costs as can be quantified and compared
26    to baseline effects of existing therapeutic alternatives;



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1        (10) the average patient co-pay or other cost-sharing
2    for the prescription drug product in this State; and
3        (11) any other factors as determined by the Board.
4    If the Board is unable to determine whether a prescription
5drug product will produce or has produced challenges to the
6affordability of the drug for the State health care system,
7using the factors listed in this subsection, the Board may
8consider the following factors:
9        (i) the manufacturer's research and development costs,
10    as indicated on the manufacturer's federal tax filing or
11    information filed with the Federal Securities and Exchange
12    Commission for the most recent tax year in proportion to
13    the manufacturer's sales in this State;
14        (ii) the portion of direct-to-consumer marketing costs
15    eligible for favorable federal tax treatment in the most
16    recent tax year, that are specific to the prescription drug
17    product under review and that are multiplied by the ration
18    of total manufacturer in-State sales to total manufacturer
19    sales in the United States for the product under review;
20        (iii) gross and net manufacturer revenues for the most
21    recent tax year;
22        (iv) any additional factors proposed by the
23    manufacturer that the Board considers relevant; and
24        (v) any additional factors as established by the Board.
25    (h) If the Board finds that the spending on a prescription
26drug product reviewed under this Section creates affordability



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1challenges for the State health care system, including
2patients, the Board shall establish an upper payment limit that
3applies to all purchases and payor reimbursements of the
4prescription drug product in this State.
5    (i) Any information submitted to the Board related to a
6cost review conducted in accordance with subsection (g) shall
7be subject to public inspection.
8    Section 35. Remedies. The Attorney General may pursue any
9available remedy under State law when enforcing this Act.
10    Section 40. Appeal of Board decisions.
11    (a) A person aggrieved by a decision of the Board may
12request an appeal of the decision within 30 days after the
13finding of the Board.
14    (b) The Board shall hear the appeal and make a final
15decision within 60 days of the hearing.
16    (c) Any person aggrieved by a final decision of the Board
17may petition for judicial review.
18    Section 45. Prescription Drug Affordability Board Fund.
19    (a) In this Section, "fund" means the Prescription Drug
20Affordability Board Fund.
21    (b) The Prescription Drug Affordability Board Fund is
22created. The fund shall be used only to provide funding for the
23Board and for the purposes authorized under this Act including



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1any costs expended by any State agency to implement this Act.
2    (c) Subject to subsection (g), the Board shall be funded by
3an assessment on all manufacturers. The Board shall determine
4the amount of the assessment required under this subsection
5based on each manufacturer's relative share of gross revenue
6from drug sales.
7    (d) The Board shall pay all moneys collected from the
8assessment into the fund.
9    (e) Any investment earnings shall be retained to the credit
10of the fund.
11    (f) This Section may not be construed to prohibit the fund
12from receiving moneys from any other source.
13    (g) The Board shall be established using general funds,
14which shall be repaid to the State with the assessments
15required under subsection (c).
16    Section 50. Report. The Board shall submit to the General
17Assembly a report that includes:
18    (1) price trends for prescription drug products;
19    (2) the number of prescription drug products that were
20subject to Board review, including the results of the review
21and the number and disposition of appeals and judicial reviews
22of Board decisions; and
23    (3) any recommendations the Board may have on further
24legislation needed to make prescription drug products more
25affordable in this State.



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1    Section 55. Term expiration. The terms of:
2    (1) the initial members of the Board as established by
3Section 10 of this Act, shall expire as follows:
4        (i) one member in 2022,
5        (ii) two members in 2023; and
6        (iii) two members, including the chair of the Board, in
7    2024; and
8    (2) the initial members of the Council as established by
9Section 15 of this Act shall expire as follows:
10        (i) seven members in 2022;
11        (ii) seven members in 2023; and
12        (iii) seven members in 2024.
13    Section 60. Study. On or before June 1, 2020, the Board
15    (1) conduct a study of the operation of the generic drug
16market in the United States that includes a review of physician
17administered drugs and considers:
18        (i) the prices of generic drugs on a year-over-year
19    basis;
20        (ii) the degree to which generic drug prices affect
21    yearly insurance premium changes;
22        (iii) annual changes in insurance cost-sharing for
23    generic drugs;
24        (iv) the potential for and history of drug shortages;



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1        (v) the degree to which generic drug prices affect
2    yearly State Medicaid spending; and
3        (vi) any other relevant study questions; and
4    (2) report to the General Assembly on its findings.
5    Section 97. Severability. If any provision of this Act or
6the application thereof to any person or circumstance is held
7invalid for any reason in a court of competent jurisdiction,
8the invalidity does not affect other provisions or any other
9application of this Act that can be given effect without the
10invalid provision or application, and for this purpose the
11provisions of this Act are declared severable.
12    Section 900. The State Finance Act is amended by adding
13Section 5.891 as follows:
14    (30 ILCS 105/5.891 new)
15    Sec. 5.891. The Prescription Drug Affordability Board
17    Section 999. Effective date. This Act takes effect upon
18becoming law.