Section 1 of the bill enacts the "Colorado Prescription Drug Price TransparencyAct of 2020", which requires:
- Health insurers, starting in 2021, to submit to the commissioner of insurance (commissioner) information regarding prescription drugs covered under their health insurance plans that the health insurers 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, PBMs, pharmacies, and hospitals when the manufacturer, on or after January 1, 2021, 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, 2021, 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 they paid for in the prior calendar year and the average wholesale price paid for prescription drugs by individuals, small employers, and large employers enrolled in health plans issued by the health insurer or that contain prescription drug benefits managed or administered by the PBM; 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 officers, employees, or board members from a prescription drug manufacturer, PBM, health insurer, or trade association 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 the commissioner determines 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.
Health insurers that fail to report the required data are subject to a fine of up to $10,000 per day per report. Nonprofit organizations are subject to a fine of up to $10,000 for failure to comply with reporting requirements.
Section 2 specifies that failing to ensure that a PBM that a health insurer uses to manage or administer its prescription drug benefits is complying with reporting requirements constitutes an unfair method of competition and an unfair or deceptive act or practice in the business of insurance.
Section 3 specifies that a PBM is an entity that manages or administers prescription drug benefits for a health insurer, either pursuant to a contract or as an entity associated with the health insurer.
Under sections 4 and 5 , 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.
Section 6 requires a health insurer to reduce premiums for the health plans it issues or renews on or after January 1, 2022, to adjust for the rebates the health insurer received from prescription drug manufacturers in the previous plan year.
(Note: This summary applies to this bill as introduced.)