Rhode Island Has Introduced Drug Price Transparency Legislation

March 04, 2021

The Rhode Island House of Representatives has introduced House Bill 5494 ("H.B. 5494"), which would create the Drug Cost Transparency Act ("Act"). The Act would require a pharmaceutical drug manufacturer to annually report to the Director of the Department of Business Regulation ("Director") the current wholesale acquisition cost ("WAC") of its FDA-approved drugs sold in or into Rhode Island by the 15th day of each calendar year.

Additionally, manufacturers of prescription drugs with a WAC of $100 or more for a 30-day supply would have to submit a report to the Director within 30 calendar days when either of the following occurs:

  • A WAC increase of 40% or more over the preceding 3 calendar years; or
  • A WAC increase of 15% or more in the preceding calendar year.

Required information would include, but not be limited to:

  • The name of the drug;
  • Whether the drug is brand name or generic;
  • Effective date of the change in WAC;
  • Aggregate, company-level research and development costs for the most recent year for which final audit data is available;
  • The name(s) of the manufacturer's drugs that have received FDA approval or have lost patent exclusivity in the preceding 3 calendar years; and
  • A statement regarding the factor(s) that caused the increase in WAC, and an explanation of the role that each factor had on the drug's cost.

The quality and information and data submitted must follow the quality and information and data in the manufacturer's annual Securities and Exchange Commission Form 10-K, or any other public disclosure.

The Director would be required to develop a public website and publish the submitted reports on the state website within 60 days after receipt of any reports required by the Act.

H.B. 5494 would not apply to wholesale distributors of biological products, pharmacists, or retailers or to "a manufacturer whose only prescribed products are classified as Class I by the U.S. Food and Drug Administration, are exempt from pre-market notification under 21 U.S.C. 360 § 510(k) of the Federal Food, Drug and Cosmetic Act, and are sold over the counter without a prescription."

The Director would be authorized to assess an administrative penalty on any person or entity that violates any provision of the Act or any rules or regulations issued by the Director in furtherance of the Act.

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