Maine Enacts Canadian Benchmark Pricing Law to Study Prescription Drug Cost Savings | Knowledge

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Earlier this month, Maine Democratic Governor Janet Mills signed legislation (SP 520/LD 1636) directing the Maine Health Data Organization (MHDO) to report annually on the potential savings if certain drugs were subject to a benchmark rate, which is the lowest available price among the four largest provinces in Canada and the cost of Wholesale Acquisition (WAC), effective January 1, 2023. Certain provisions that would likely have been subject to legal challenge have been removed from the final legislation. These and other important aspects of the enacted law are discussed below, along with an update on other states that have introduced legislation that incorporates Canadian benchmark pricing requirements.

Determination of reference tariffs and public disclosure of information

The new law requires the MHDO to use disclosures submitted by manufacturers, distributors and pharmacy benefit managers under 22 MRSA § 8732

  • identify the 100 most expensive prescription drugs and the 100 most frequently prescribed prescription drugs in the state
  • determine the benchmark price for each drug identified by selecting the lowest cost from the official publications of the governments of Ontario, Quebec, British Columbia and Alberta (or, if not included in these resources, the ceiling price as shown in other official publications) and the WAC for the “most recent 12 month period”
  • calculate the savings that could be made by subjecting these drugs to the reference price

By January 1, 2023, and annually thereafter, the MHDO is required to post a report containing the above information on a publicly accessible website and submit copies to the Office of Affordable Healthcare, Maine Prescription Drug Affordability Board and the standing committee of the legislature with jurisdiction over health data reporting and prescription drug issues.

Other prohibitions, requirements and penalties removed

Notably, the enacted law omits prohibitions and requirements for payers, pharmacies, manufacturers and distributors originally proposed in May 2021, based on model legislation written by the National Academy for State Health Policy (NASHP). These provisions would likely have been the subject of legal challenges had they been passed. As presented, the initial bill aimed, among other things, to

  • prohibit state entities, health plans, Employees Retirement Income Security Act participating plans, and retail pharmacies from purchasing referenced drugs at a cost above the referenced rate
  • prohibit manufacturers and distributors of a listed drug from removing the drug from sale or distribution in the state “for the purpose of avoiding the effect of rate limitations” (subject to a $500,000 penalty $)
  • requiring manufacturers who wish to withdraw a listed drug for another reason to provide written notice of withdrawal to the Superintendent of Insurance and the Attorney General 180 days prior to withdrawal (subject to a $500,000 penalty)

History of Canadian legislation on benchmark prices from other states

Several states have introduced laws that incorporate Canadian benchmark pricing requirements, including:

  • Hawaii introduced legislation based on the NASHP model (HB 18/SB 604) on January 20, 2021. It was postponed to the 2022 regular session on December 10, 2021.
  • Oklahoma introduced legislation based on the NASHP model (SB 734) on February 1, 2021. It passed Senate appropriations on March 1, 2021.
  • North Carolina introduced legislation based on the NASHP model (HB 643) on April 21, 2021. It was referred to the House Committee on Rules, Scheduling, and Operations on April 26, 2021.
  • Rhode Island introduced legislation based on the NASHP model (HB 7877) on March 4, 2022. The House Health and Human Services Committee recommended that the measure be held up for further study on March 29, 2022.

While some provisions were removed from final legislation in Maine, stakeholders should closely monitor the implementation of this new law and other state legislative efforts. As we’ve seen lately, state legislators have successfully passed drug pricing legislation against drugmakers, and Maine’s new legislation reflects one more step in a larger legislative agenda.

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