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Prescription Drug Cost Reduction Measures

Concerning measures to reduce prescription drug costs, and, in connection therewith, creating the "Colorado Prescription Drug Cost Reduction Act of 2019" to require health insurers, prescription drug manufacturers, pharmacy benefit management firms, and nonprofit organizations to report specified information about the costs of prescription drugs to the commissioner of insurance; to direct the commissioner to analyze the information and submit a report regarding the effects of prescription drug costs on health insurance premiums; to preclude pharmacy benefit management firms from retroactively reducing payments to pharmacies; and to require carriers to reduce consumer cost sharing for prescription drugs to reflect rebates the carrier or pharmacy benefit management firm received.
2019 Regular Session
Health Care & Health Insurance
Bill Summary

Section 1 of the bill enacts the "Colorado Prescription Drug Cost Reduction Act of 2019", which requires:

  • Health insurers, starting in 2020, to submit to the commissioner of insurance (commissioner) information regarding prescription drugs covered under their health insurance plans that the plan paid for in the preceding calendar year, including information about rebates received from prescription drug manufacturers, a certification regarding how rebates were accounted for in insurance premiums, and a list of all pharmacy benefit management firms (PBMs) with whom they contract;
  • Prescription drug manufacturers to notify the commissioner, state purchasers, health insurers, and PBMs when the manufacturer, on or after January 1, 2020, increases the price of certain prescription drugs by more than specified amounts or introduces a new specialty drug in the commercial market;
  • Prescription drug manufacturers, within 15 days after the end of each calendar quarter that starts on or after January 1, 2020, to provide specified information to the commissioner regarding the drugs about which the manufacturer notified purchasers;
  • Health insurers or, if applicable, PBMs to annually report specified information to the commissioner regarding rebates and administrative fees received from manufacturers for prescription drugs for which they received the required notice from a manufacturer; and
  • Certain nonprofit organizations to compile and submit to the commissioner an annual report indicating the amount of each payment, donation, subsidy, or thing of value received by the nonprofit organization or its executive director, chief operating officer, board of directors, or any member of the board of directors from a prescription drug manufacturer, PBM, or health insurer and the percentage of the nonprofit organization's total gross income that is attributable to those payments, donations, subsidies, or things of value.

The commissioner is required to post the information received from health insurers, prescription drug manufacturers, PBMs, and nonprofit organizations on the division of insurance's website, excluding any information that is proprietary. Additionally, the commissioner, or a disinterested third-party contractor, is to analyze the data reported by health insurers, prescription drug manufacturers, PBMs, and nonprofit organizations and other relevant information to determine the effect of prescription drug costs on health insurance premiums. The commissioner is to publish a report each year, submit the report to the governor and specified legislative committees, and present the report during annual "State Measurement for Accountable, Responsive, and Transparent (SMART) Government Act" hearings. The commissioner is authorized to adopt rules as necessary to implement the requirements of the bill.

Section 2 prohibits PBMs from retroactively reducing payment on a clean claim submitted by a pharmacy unless the PBM determines, through an audit conducted in accordance with state law, that the claim was not a clean claim. Health insurers that contract with PBMs must ensure that the PBMs are complying with this prohibition and the reporting requirements and are subject to penalties for failure to do so.

Section 3 requires a carrier to reduce the cost sharing a covered person is required to pay for prescription drugs by an amount equal to the greater of 51% of the average aggregate rebates received by the carrier for all prescription drugs, including price protection rebates, or an amount that ensures cost sharing will not exceed 125% of the carrier's cost for the prescription drug.

Under sections 5 and 6 , a prescription drug manufacturer that fails to notify purchasers or fails to report required data to the commissioner is subject to discipline by the state board of pharmacy, including a penalty of up to $10,000 per day for each day the manufacturer fails to comply with the notice or reporting requirements. The commissioner is to report manufacturer violations to the state board of pharmacy. Additionally, health insurers that fail to report the required data are subject to a fine of up to $10,000 per day.

Sections 7 and 8 of the bill make conforming amendments necessary to harmonize the bill with the title 12 recodification bill, House Bill 19-1172.
(Note: This summary applies to this bill as introduced.)




Bill Text


Sponsor Type Legislators
Prime Sponsor

Rep. D. Jackson, Rep. S. Jaquez Lewis
Sen. K. Donovan, Sen. J. Ginal


Rep. D. Roberts


The effective date for bills enacted without a safety clause is August 7, 2024, if the General Assembly adjourns sine die on May 8, 2024, unless otherwise specified. Details