An Act To Reduce Prescription Drug Costs by Using International Pricing
Maine Legislature, Session 130, LD 1636
Committee: Health Coverage, Insurance and Financial Services
Sponsors: CLAXTON

Legislative Document
No. 1636
S.P. 520
In Senate, May 5, 2021
An Act To Reduce Prescription Drug Costs by Using International 
Pricing
Received by the Secretary of the Senate on May 3, 2021.  Referred to the Committee on 
Health Coverage, Insurance and Financial Services pursuant to Joint Rule 308.2 and ordered 
printed.
DAREK M. GRANT
Secretary of the Senate
Presented by Senator CLAXTON of Androscoggin.
Be it enacted by the People of the State of Maine as follows:
Sec. 1.  22 MRSA c. 603, sub-c. 1-C is enacted to read:
SUBCHAPTER 1-C
PRESCRIPTION DRUG PRICING
§2688.  International pricing
1.  Definitions.  As used in this section, unless the context otherwise indicates, the 
following terms have the following meanings.
A.  "ERISA plan" means a plan qualified under the federal Employee Retirement 
Income Security Act of 1974. 
B.  "Health plan" has the same meaning as in Title 24-A, section 4301-A, subsection 
7.
C.  "Participating ERISA plan" means an ERISA plan that has elected to participate in 
the requirements and restrictions of this section as described in subsection 3.
D.  "Prescription drug" has the same meaning as in Title 32, section 13702-A, 
subsection 30.
E.  "Referenced drugs" means prescription drugs subject to a referenced rate. 
F.  "Referenced rate" means the maximum rate established by the Superintendent of 
Insurance using the wholesale acquisition cost and other pricing data described in 
subsection 4.
G.  "State entity" means any agency of State Government that purchases prescription 
drugs on behalf of the State for a person whose health care is paid for by the State, 
including any agent, vendor, fiscal agent, contractor or other party acting on behalf of 
the State.  "State entity" does not include the medical assistance program established 
under 42 United States Code, Section 1396 et seq.
H.  "Wholesale acquisition cost" has the same meaning as in 42 United States Code, 
Section 1395w-3a.
2.  Payment in excess of referenced rate prohibited.  The following practices are 
prohibited.
A.  It is a violation of this section for a state entity or health plan or participating ERISA 
plan to purchase referenced drugs to be dispensed or delivered to a consumer in the 
State, whether directly or through a distributor, for a cost higher than the referenced 
rate as determined in subsection 4. Contracts entered into by a state entity or health 
plan or participating ERISA plan and a 3rd party for the purchase of prescription drugs 
shall expressly provide that rates paid for referenced drugs may not exceed the 
referenced rate.
B.  It is a violation of this section for a retail pharmacy licensed in this State to purchase 
for sale or distribution to a person whose health care is provided by a state entity or 
health plan or participating ERISA plan a referenced drug for a cost that exceeds the 
referenced rate.
3. ERISA plan opt-in.  An ERISA plan may elect to participate in the provisions of 
this section. Any ERISA plan that desires its purchase of prescription drugs to be subject 
to the prohibition described in subsection 2 shall notify the Superintendent of Insurance in 
writing by December 15th of each year.
4. Referenced drugs determined.  The following provisions govern the determination 
of referenced drugs.
A.  By April 30th of each calendar year, the Executive Director of Health Insurance in 
the Department of Administrative and Financial Services, Bureau of Human 
Resources, Division of State Employee Health Insurance shall transmit to the 
Superintendent of Insurance a list of the 250 most costly prescription drugs based upon 
net price times utilization.  For each of these prescription drugs, the Executive Director 
of Health Insurance shall also provide the total net spent on each of those prescription 
drugs for the previous calendar year.
B.  Using the information described in paragraph A, by June 30th of each year the 
Superintendent of Insurance shall create and publish a list of 250 referenced drugs that 
are subject to the referenced rate.
C.  The Superintendent of Insurance shall determine the referenced rate by comparing 
the wholesale acquisition cost to the cost in official publications of the governments of 
the Canadian provinces of Ontario, Quebec, British Columbia and Alberta,
D.  The referenced rate for each prescription drug must be calculated as the lowest cost 
among the resources described in paragraph C and the wholesale acquisition cost.  If a 
specific referenced drug is not included within resources described in paragraph C, the 
Superintendent of Insurance shall use for the purpose of determining the referenced 
rate the ceiling price for drugs as reported in official publications of the government of 
Canada.
E.  The determination by the Superintendent of Insurance of which prescription drugs 
to include on the list of referenced drugs must be based upon an analysis of the savings 
that could be achieved by subjecting those prescription drugs to the referenced rate. In 
making this determination, the Superintendent of Insurance shall consult with the 
Executive Director of Health Insurance and the president of the Maine Board of 
Pharmacy.
F.  The Superintendent of Insurance may adopt rules to carry out the purposes of this 
subchapter. Rules adopted pursuant to this paragraph are routine technical rules under 
Title 5, chapter 375, subchapter 2-A.
5.  Registered agent and office within State.  Any entity that sells, distributes, 
delivers or offers for sale any prescription drug in the State shall maintain a registered agent 
and office within the State.
6.  Use of savings.  The following provisions govern the use of savings generated as a 
result of the requirements in subsection 2.
A.  Any savings generated as a result of the requirements in subsection 2 must be used 
to reduce costs to consumers. A state entity, health plan or participating ERISA plan 
shall calculate its savings and use the savings directly to reduce costs for its members.
B.  No later than April 1st of each calendar year, each state entity, health plan and 
participating ERISA plan subject to this section shall submit to the Superintendent of 
Insurance a report describing the savings achieved for each referenced drug for the 
previous calendar year and how those savings were used to achieve the requirements 
of paragraph A.
7.  Enforcement.  Each violation of this section is subject to a fine of $1,000. Each 
individual transaction in violation of subsection 2 is a separate violation.  The Attorney 
General is authorized to enforce the provisions of this section on behalf of any state entity 
or consumers of prescription drugs.
8.  Prohibition on withdrawal of referenced drugs for sale.  The following 
provisions govern the withdrawal of a referenced drug.
A.  It is a violation of this section for any manufacturer or distributor of a referenced 
drug to withdraw that drug from sale or distribution within this State for the purpose of 
avoiding the effect of the rate limitations set forth in subsection 2.
B.  Any manufacturer that intends to withdraw a referenced drug from sale or 
distribution from within the State shall provide a notice of withdrawal in writing to the 
Superintendent of Insurance and to the Attorney General 180 days prior to such 
withdrawal.
C.  The Superintendent of Insurance shall assess a penalty of $500,000 on any entity, 
including any manufacturer or distributor of a referenced drug, that the superintendent 
determines has withdrawn a referenced drug from distribution or sale in the State in 
violation of paragraphs A or B.
Sec. 2.  Purpose; legislative findings.  The purpose of this Act is to protect the 
safety, health and economic well-being of the people of this State by safeguarding them 
from the negative and harmful effects of excessive and unconscionable prices for 
prescription drugs. In enacting this section, the Legislature finds that:
1.  Access to prescription drugs is necessary for the people of this State to maintain or 
acquire good health;
2.  Excessive prices negatively affect the ability of the people of this State to obtain 
prescription drugs, and price increases that exceed reasonable levels endanger the health 
and safety of the people of this State;
3.  Excessive prices for prescription drugs threaten the economic well-being of the 
people of this State and endanger their ability to pay for other necessary and essential goods 
and services, including housing, food and utilities;
4.  Excessive prices for prescription drugs contribute significantly to a dramatic and 
unsustainable rise in health care costs and health insurance that threaten the overall ability 
of the people of this State to obtain health coverage and maintain or acquire good health;
5.  Excessive prices for prescription drugs contribute significantly to rising state costs 
for health care provided and paid for through health insurance programs for public 
employees, including employees of the State, municipalities and counties, school districts, 
institutions of higher education and retirees whose health care costs are funded by public 
programs, thereby threatening the ability of the State to fund those programs adequately 
and further threatening the ability of the State to fund other programs necessary for the 
public good and safety, such as public education and public safety;
6.  Because the costs of prescription drugs and health insurance are tax-deductible, 
excessive costs for prescription drugs result in a reduction in the tax base and a consequent 
reduction in state revenue;
7.  The costs to consumers, health plans and the State for prescription drug coverage is 
higher than the costs in other countries because the prices charged by manufacturers and 
distributors of drugs in this State are higher; and
8.  Based on findings in subsections 1 to 7, the Legislature finds that excessive prices 
for prescription drugs threaten the safety and well-being of the people of this State and 
finds it is necessary to act in order to protect the people of this State from the negative 
effects of excessive costs.
SUMMARY
This bill requires the Superintendent of Insurance to create a list of 250 referenced 
drugs that are subject to a referenced rate.  The referenced rate must be calculated as the 
lowest cost from official publications of certain Canadian provincial government agencies 
and the wholesale acquisition cost.  A state entity, health plan or participating plan qualified 
under the federal Employee Retirement Income Security Act of 1974 must purchase 
referenced drugs to be dispensed or delivered to a consumer of this State at a cost equal to 
or lower than the referenced rate.  Any savings generated as a result must be used to reduce 
costs to consumers.