Analysis by the Legislative Reference Bureau
This bill imposes disclosure requirements related to prescription drug costs on
drug manufacturers and health insurers.
First, the bill requires that a manufacturer of a prescription drug whose
wholesale acquisition cost exceeds $40 notify certain purchasers of the drug,
including the state, health insurers, and pharmacy benefit managers doing business
in Wisconsin, when the cost for a course of therapy increases by more than 16 percent.
The notice must be provided at least 60 days prior to the increase to the purchasers
who have registered with the Office of the Commissioner of Insurance to receive
notification. In addition to notifying the purchasers, the manufacturer must provide
OCI with specified information about the increase, including the financial and
nonfinancial factors used to make the decision to increase the drug's cost. Under the
bill, a drug manufacturer must also notify OCI if the manufacturer releases a new
drug whose wholesale acquisition cost exceeds the specialty drug tier threshold
under the Medicare Part D program, which is currently $670 for a one-month supply.
The bill directs OCI to publish the information it receives from manufacturers about
cost increases and high-cost new drugs on its website. A manufacturer who fails to
report information to OCI may be liable for a penalty of $1,000 for each day of the
Second, the bill requires that an insurer issuing health insurance coverage in
this state annually file a report with OCI that identifies which of the plan's covered
drugs have the highest prescription rates and costs and, for large group plans,
provides information about the relationship between prescription drug costs and
premium rates. The bill directs OCI to use this information to annually compile a
report that analyzes the overall impact in this state of drug costs on health care
premiums. The report must be distributed to the legislature and published on OCI's
The people of the state of Wisconsin, represented in senate and assembly, do
enact as follows:
632.863 of the statutes is created to read:
2632.863 Prescription drug manufacturer notifications. (1) Definitions
In this section:
(a) “Course of therapy” means the recommended daily dosage units of a 5
prescription drug pursuant to its prescribing label as approved by the federal food 6
and drug administration for 30 days or for a normal course of treatment that is less 7
than 30 days.
(b) “Manufacturer” means a manufacturer of a prescription drug that is 9
purchased or reimbursed by any of the following:
1. A state or local government purchaser in Wisconsin or an entity acting on 11
behalf of the state or local government.
2. An insurer, as defined in s. 632.745 (15).
3. A pharmacy benefit manager, as defined in s. 632.865 (1) (c).
4. Any other purchaser identified in rules promulgated by the commissioner.
15(2) Notification to purchaser.
A manufacturer of a prescription drug with a 16
wholesale acquisition cost of more than $40 for a course of therapy shall notify each 17
purchaser described in sub. (1) (b) 1. to 4. who registers with the commissioner to 18
receive notification if the increase in the wholesale acquisition cost of the drug 19
exceeds 16 percent, including the proposed increase and the cumulative increases
that occurred within the previous 2 calendar years prior to the current year. The 2
commissioner shall make available to manufacturers a list of purchasers who 3
register to receive notification under this subsection. The notice shall be provided 4
at least 60 days prior to the planned effective date of the increase and shall include 5
all of the following:
(a) The date of the increase.
(b) The current wholesale acquisition cost of the drug.
(c) The dollar amount of the future increase in the wholesale acquisition cost 9
of the drug.
(d) A statement of whether a change or improvement in the drug necessitates 11
the price increase and a description of any change or improvement.
12(3) Notification to commissioner
. A manufacturer required to report an 13
increase in the wholesale acquisition cost of a drug under sub. (2) shall report to the 14
commissioner, at the time and in the format prescribed by the commissioner, all of 15
the following information:
(a) The amount of the increase and a description of the specific financial and 17
nonfinancial factors used to make the decision to increase the cost, including an 18
explanation of how the factors justify the increase.
(b) A schedule of the manufacturer's wholesale acquisition cost increases for 20
the drug during the previous 5 years.
(c) If the drug was acquired by the manufacturer within the previous 5 years, 22
the name of the company from which it was acquired, the date acquired, the purchase 23
price, and the drug's wholesale acquisition cost on the date acquired, the date one 24
year prior to acquisition, and the date the drug was introduced to market.
(d) The patent expiration date of the drug if under patent.
(e) A statement of whether the drug is a multiple source drug, an innovator 2
multiple source drug, a noninnovator multiple source drug, or a single source drug, 3
as each of these terms is defined in 42 USC 1396r
–8 (k) (7) (A).
(f) A description of any change or improvement in the drug that necessitates 5
the cost increase.
(g) The volume of sales of the drug in the United States for the previous year.
7(4) Notification for new drugs.
A manufacturer that introduces a new 8
prescription drug to market at a wholesale acquisition cost that exceeds the specialty 9
tier threshold set by the federal centers for medicare and medicaid services under the 10
Medicare Part D program shall notify the commissioner no later than 3 days after 11
the release of the drug in the commercial market. A manufacturer may make this 12
notification pending approval by the federal food and drug administration if 13
commercial availability is expected within 3 days of approval. No later than 30 days 14
after providing the notification, the manufacturer shall file with the commissioner 15
a report, in a format prescribed by the commissioner, that contains all of the 16
(a) A description of the marketing and pricing plans used in the launch of the 18
drug in the United States and internationally.
(b) The estimated volume of patients that may be prescribed the drug.
(c) A statement of whether the drug was granted breakthrough therapy 21
designation or priority review by the federal food and drug administration prior to 22
(d) The date and price of acquisition if the drug was not developed by the 24
1(5) Limits on disclosure
. A manufacturer may limit the information reported 2
to the commissioner under sub. (3) or (4) to information that is in the public domain 3
or publicly available.
4(6) Public disclosure of information
. The commissioner shall publish the 5
information it receives under subs. (3) and (4) on its Internet site within 60 days of 6
receiving the information from a manufacturer. The information shall be published 7
in a manner that identifies the information that is disclosed on a per-drug basis and 8
may not be aggregated in a manner that does not allow identification of each drug.
. A manufacturer that fails to provide information to the 10
commissioner under sub. (3) or (4) when due may be subject to a $1,000 penalty for 11
each day the manufacturer fails to provide the information. The commissioner may 12
reduce or waive a penalty under this subsection for good cause. The commissioner 13
may commence civil proceedings to enforce this subsection if a manufacturer fails to 14
provide any information required under sub. (3) or (4) when due.
632.864 of the statutes is created to read:
16632.864 Reporting related to prescription drug costs. (1)
In this section:
(a) “Covered prescription drug” means a drug covered under a disability 18
insurance policy or group health benefit plan that is dispensed at a plan pharmacy, 19
network pharmacy, or mail order pharmacy for outpatient use.
(b) “Group health benefit plan” has the meaning given in s. 632.745 (9).
(c) “Insurer” has the meaning given in s. 632.745 (15).
(d) “Specialty drug” means a drug whose cost exceeds the specialty tier 23
threshold set by the federal centers for medicare and medicaid services under the 24
Medicare Part D program.
Annually no later than October 1, an insurer shall file a report with the 2
commissioner that contains all of the following information for each health benefit 3
plan covering individuals in this state or eligible employees of one or more employers 4
in this state:
(a) The 25 covered prescription drugs that are most frequently prescribed.
(b) The 25 covered prescription drugs that are the most costly as measured by 7
total annual plan spending.
(c) The 25 covered prescription drugs with the highest year-over-year increase 9
in total annual plan spending.
Annually no later than October 1, an insurer issuing a group health benefit 11
plan in the large group market, as defined in s. 632.745 (17), shall file with the 12
commissioner a report, in a format prescribed by the commissioner, that contains all 13
of the following:
(a) For each of the following categories of covered prescription drugs, the 15
percentage of the premium that is attributable to prescription drug costs for the prior 16
year and the year-over-year increase, as a percentage, in per-member, per-month 17
total health insurer spending:
1. Generic drugs excluding specialty generic drugs.
2. Brand name drugs excluding specialty drugs.
3. Brand name and generic specialty drugs.
(b) The year-over-year increase in per-member, per-month costs for drug 22
prices compared to other components of the premium.
(c) The specialty tier formulary list.
(d) The percentage of the premium that is attributable to prescription drugs 2
administered in a doctor's office that are covered under the medical benefit as 3
separate from the pharmacy benefit, if available.
(e) If the insurer uses a pharmacy benefit manager, the name of the pharmacy 5
benefit manager and a statement identifying the components of the plan's 6
prescription drug coverage that are managed by the pharmacy benefit manager.
Annually no later than February 1, the commissioner shall compile the 8
information received in the prior year under subs. (2) and (3) into a report that 9
demonstrates the overall impact in this state of drug costs on health care premiums. 10
The data in the report shall be aggregated and may not reveal information specific 11
to individual insurers. The report shall be submitted to the chief clerk of each house 12
of the legislature, for distribution to the legislature under s. 13.172 (2), and published 13
on the commissioner's Internet site.
632.865 (2) (c) of the statutes is created to read:
(c) A pharmacy benefit manager who receives notice under s. 16
632.863 (2) of an increase in a wholesale acquisition cost of a prescription drug shall 17
notify any contracting purchaser that provides coverage to more than 500 18
individuals of the increase in cost.
(1) Report by legislative audit bureau.
No later than
January 1, 2023, the 21
legislative audit bureau shall submit a report to the chief clerk of each house of the 22
legislature, for distribution to the legislature under s. 13.172 (2), that analyzes the 23
effectiveness of this act in addressing the following goals:
(a) Promoting transparency in pharmaceutical pricing for the state and other 25
(b) Enhancing understanding about pharmaceutical spending trends.
(c) Assisting the state and other payers in management of pharmaceutical drug 3
This act takes effect on January 1, 2020.