RCW ch. 43.71C — Revised Code of Washington Chapter 43.71C RCW — Prescription Drug Costs

RCW 43.71C.010 Definitions. The definitions in this section apply throughout this chapter unless the context clearly requires otherwise. (1) "340B drug" means a drug that has been subject to an offer for reduced prices by a manufacturer under 42 U.S.C. Sec. 256b and is purchased by a covered entity. (2) "Authority" means the health care authority. (3) "Covered drug" means any prescription drug that: (a) A covered manufacturer intends to introduce to the market at a wholesale acquisition cost of $10,000 or more for a course of treatment lasting less than one month or a 30-day supply, whichever period is longer; or (b) Is currently on the market, is manufactured by a covered manufacturer, and has a wholesale acquisition cost of more than $100 for a course of treatment lasting less than one month or a 30-day supply, and, taking into account only price increases that take effect after July 28, 2019, the manufacturer increases the wholesale acquisition cost at least: (i) Twenty percent, including the proposed increase and the cumulative increase over one calendar year prior to the date of the proposed increase; or (ii) Fifty percent, including the proposed increase and the cumulative increase over three calendar years prior to the date of the proposed increase. (4) "Covered entity" means an entity authorized to participate in the federal 340B drug pricing program, as defined in 42 U.S.C. Sec. 256b(a)(4) as of June 11, 2026, and is located in Washington. (5) "Covered manufacturer" means a person, corporation, or other entity engaged in the manufacture of prescription drugs sold in or into Washington state. "Covered manufacturer" does not include a private label distributor or retail pharmacy that sells a drug under the retail pharmacy's store, or a prescription drug repackager. (6) "Health care provider," "health plan," "health carrier," and "carrier" mean the same as in RCW 48.43.005. (7) "Pharmacy benefit manager" means the same as in RCW 48.200.020. (8) "Pharmacy services administrative organization" means an entity that contracts with a pharmacy to act as the pharmacy's agent with respect to matters involving a pharmacy benefit manager, third-party payor, or other entities, including negotiating, executing, or administering contracts with the pharmacy benefit manager, third-party payor, or other entities and provides administrative services to pharmacies. (9) "Prescription drug" means a drug regulated under chapter 69.41 or 69.50 RCW, including generic, brand name, specialty drugs, and biological products that are prescribed for outpatient use and distributed in a retail setting. (10) "Qualifying price increase" means a price increase described in subsection (3)(b) of this section. (11) "Wholesale acquisition cost" or "price" means, with respect to a prescription drug, the manufacturer's list price for the drug to wholesalers or direct purchasers in the United States, excluding any discounts, rebates, or reductions in price, for the most recent month for which the information is available, as reported in wholesale price guides or other publications of prescription drug pricing. [ 2026 c 227 s 8; 2019 c 334 s 2.] NOTES: Severability— RCW 43.71C.020 Health carriers—Cost and utilization data reporting. Beginning October 1, 2019, and on a yearly basis thereafter, a health carrier must submit to the authority the following prescription drug cost and utilization data for the previous calendar year for each health plan it offers in the state: (1) The twenty-five prescription drugs most frequently prescribed by health care providers participating in the plan's network; (2) The twenty-five costliest prescription drugs expressed as a percentage of total plan prescription drug spending, and the plan's total spending for each of these prescription drugs; (3) The twenty-five drugs with the highest year-over-year increase in wholesale acquisition cost, excluding drugs made available for the first time that plan year, and the percentages of the increases for each of these prescription drugs; (4) The portion of the premium that is attributable to each of the following categories of covered prescription drugs, after accounting for all rebates and discounts: (a) Brand name drugs; (b) Generic drugs; and (c) Specialty drugs; (5) The year-over-year increase, calculated on a per member, per month basis and expressed as a percentage, in the total annual cost of each category of covered drugs listed in subsection (4) of this section, after accounting for all rebates and discounts; (6) A comparison, calculated on a per member, per month basis, of the year-over-year increase in the cost of covered drugs to the year-over-year increase in the costs of other contributors to premiums, after accounting for all rebates and discounts; (7) The name of each covered specialty drug; and (8) The names of the twenty-five most frequently prescribed drugs for which the health plan received rebates from pharmaceutical manufacturers. [ 2019 c 334 s 3.] RCW 43.71C.030 Pharmacy benefit managers—Data reporting. (1) By March 1st of each year, a pharmacy benefit manager must submit to the authority the following data from the previous calendar year: (a) All discounts, including the total dollar amount and percentage discount, and all rebates received from a manufacturer for each drug on the pharmacy benefit manager's formularies; (b) The total dollar amount of all discounts and rebates that are retained by the pharmacy benefit manager for each drug on the pharmacy benefit manager's formularies; (c) Actual total reimbursement amounts for each drug the pharmacy benefit manager pays retail pharmacies after all direct and indirect administrative and other fees that have been retrospectively charged to the pharmacies are applied; (d) The negotiated price health plans pay the pharmacy benefit manager for each drug on the pharmacy benefit manager's formularies; (e) The amount, terms, and conditions relating to copayments, reimbursement options, and other payments or fees associated with a prescription drug benefit plan; (f) Disclosure of any ownership interest the pharmacy benefit manager has in a pharmacy or health plan with which it conducts business; and (g) The results of any appeal filed pursuant to *RCW 19.340.100(3). (2) The information collected pursuant to this section is not subject to public disclosure under chapter 42.56 RCW. (3) The authority may examine or audit the financial records of a pharmacy benefit manager for purposes of ensuring the information submitted under this section is accurate. Information the authority acquires in an examination of financial records pursuant to this subsection is proprietary and confidential. [ 2019 c 334 s 4.] NOTES: *Reviser's note: RCW 43.71C.040 Pharmacy benefit managers—Compliance. (1) No later than March 1st of each calendar year, each pharmacy benefit manager must file with the authority, in the form and detail as required by the authority, a report for the preceding calendar year stating that the pharmacy benefit manager is in compliance with this chapter. (2) A pharmacy benefit manager may not cause or knowingly permit the use of any advertisement, promotion, solicitation, representation, proposal, or offer that is untrue, deceptive, or misleading. (3) An employer-sponsored self-funded health plan or a Taft-Hartley trust health plan may voluntarily provide the data described in subsection (1) of this section. [ 2019 c 334 s 5.] RCW 43.71C.050 Manufacturers—Data reporting. (1) Beginning October 1, 2019, a covered manufacturer must submit to the authority the following data for each covered drug: (a) A description of the specific financial and nonfinancial factors used to make the decision to set or increase the wholesale acquisition cost of the drug. In the event of a price increase, a covered manufacturer must also submit the amount of the increase and an explanation of how these factors explain the increase in the wholesale acquisition cost of the drug; (b) The patent expiration date of the drug if it is under patent; (c) Whether the drug is a multiple source drug, an innovator multiple source drug, a noninnovator multiple source drug, or a single source drug; (d) The itemized cost for production and sales, including the annual manufacturing costs, annual marketing and advertising costs, total research and development costs, total costs of clinical trials and regulation, and total cost for acquisition of the drug; and (e) The total financial assistance given by the manufacturer through assistance programs, rebates, and coupons. (2) For all qualifying price increases of existing drugs, a manufacturer must submit the year the drug was introduced to market and the wholesale acquisition cost of the drug at the time of introduction. (3) If a manufacturer increases the price of an existing drug it has manufactured for the previous five years or more, it must submit a schedule of wholesale acquisition cost increases for the drug for the previous five years. (4) If a manufacturer acquired the drug within the previous five years, it must submit: (a) The wholesale acquisition cost of the drug at the time of acquisition and in the calendar year prior to acquisition; and (b) The name of the company from which the drug was acquired, the date acquired, and the purchase price. (5) Except as provided in subsection (6) of this section, a covered manufacturer must submit the information required by this section: (a) At least 60 days in advance of a qualifying price increase for a covered drug; and (b) Within 30 days of release of a new covered drug to the market. (6) For any drug approved under section 505(j) of the federal food, drug, and cosmetic act, as it existed on July 28, 2019, or a biosimilar approved under section 351(k) of the federal public health service act, as it existed on July 28, 2019, if submitting data in accordance with subsection (5)(a) of this section is not possible 60 days before the price increase, that submission must be made as soon as known but not later than the date of the price increase. (7) Before April 1st of each year, a manufacturer shall report the following information concerning the manufacturer's participation in the federal 340B drug pricing program, as established in 42 U.S.C. Sec. 256b, for the previous calendar year in a manner and format prescribed by the authority: (a) The number of units, by drug, of 340B drugs distributed to each covered entity and contract pharmacy in Washington; (b) The aggregate discounts, by drug, provided to each covered entity and contract pharmacy on 340B drugs reported in (a) of this subsection; and (c) The average 340B discount on each of the top 25 340B drugs dispensed in the state by each manufacturer, including the percentage of the discount imposed due to inflationary rebate, as described in 42 U.S.C. Sec. 1396r-8(c)(2) (A) and (C), and the discount if it were not capped with a maximum rebate amount, as described in 42 U.S.C. Sec. 1396r-8(c)(2)(D). (8) The information submitted pursuant to this section is not subject to public disclosure under chapter 42.56 RCW. [ 2026 c 227 s 9; 2019 c 334 s 6.] NOTES: Severability— RCW 43.71C.060 Manufacturers—Notice of new drug applications. (1) Beginning October 1, 2019, a manufacturer must submit written notice, in a form and manner specified by the authority, informing the authority that the manufacturer has filed with the FDA: (a) A new drug application or biologics license application for a pipeline drug; or (b) A biologics license application for a biological product. (2) The notice must be filed within sixty days of the manufacturer receiving the applicable FDA approval date. (3) Upon receipt of the notice, the authority may request from the manufacturer the following information if it believes the drug will have a significant impact on state expenditures: (a) The primary disease, condition, or therapeutic area studied in connection with the new drug, and whether the drug is therapeutically indicated for such disease, condition, or therapeutic area; (b) Each route of administration studied for the drug; (c) Clinical trial comparators for the drug; (d) The date at which the FDA must complete its review of the drug application pursuant to the federal prescription drug user fee act of 1992 (106 Stat. 4491; P.L. 102-571); (e) Whether the FDA has designated the drug an orphan drug, a fast track product, or a breakthrough therapy; and (f) Whether the FDA has designated the drug for accelerated approval, priority review, or if the drug contains a new molecular entity. (4) A manufacturer may limit the information reported pursuant to this section to that which is otherwise in the public domain or publicly reported. (5) The information collected pursuant to this section is not subject to public disclosure under chapter 42.56 RCW. [ 2019 c 334 s 7.] RCW 43.71C.070 Manufacturers—Notice of price increases. (1) Beginning October 1, 2019, a manufacturer of a covered drug must notify the authority of a qualifying price increase in writing at least sixty days prior to the planned effective date of the increase. The notice must include: (a) The date of the increase, the current wholesale acquisition cost of the prescription drug, and the dollar amount of the future increase in the wholesale acquisition cost of the prescription drug; and (b) A statement regarding whether a change or improvement in the drug necessitates the price increase. If so, the manufacturer shall describe the change or improvement. (2) For any drug approved under section 505(j) of the federal food, drug, and cosmetic act, as it existed on July 28, 2019, or a biosimilar approved under section 351(k) of the federal public health service act, as it existed on July 28, 2019, if notification is not possible sixty days before the price increase, that submission must be made as soon as known but not later than the date of the price increase. (3) The information submitted pursuant to this section is not subject to public disclosure under chapter 42.56 RCW. (4) By December 1, 2020, the authority must provide recommendations on how to provide advance notice of price increases to purchasers consistent with state and federal law. [ 2019 c 334 s 8.] RCW 43.71C.080 Pharmacy services administrative organizations—Data reporting. (1) Beginning October 1, 2019, and on a yearly basis thereafter, a pharmacy services administrative organization representing a pharmacy or pharmacy chain in the state must submit to the authority the following data from the previous calendar year: (a) The negotiated reimbursement rate of the twenty-five prescription drugs with the highest reimbursement rate; (b) The twenty-five prescription drugs with the largest year-to-year change in reimbursement rate, expressed as a percentage and dollar amount; and (c) The schedule of fees charged to pharmacies for the services provided by the pharmacy services administrative organization. (2) Any pharmacy services administrative organization whose revenue is generated from flat service fees not connected to drug prices or volume, and paid by the pharmacy, is exempt from reporting. [ 2019 c 334 s 9.] RCW 43.71C.090 Enforcement. The authority may assess a fine of up to $1,000 per day for failure to comply with the requirements of RCW 43.71C.020 through 43.71C.080 and RCW 43.71C.130 and 43.71C.140. The assessment of a fine under this section is subject to review under the administrative procedure act, chapter 34.05 RCW. Fines collected under this section must be deposited in the medicaid fraud penalty account created in RCW 74.09.215. [ 2026 c 227 s 10; 2019 c 334 s 11.] NOTES: Severability— RCW 43.71C.100 Annual report—Data confidentiality. (1)(a) The authority shall compile and analyze the data submitted by health carriers, pharmacy benefit managers, manufacturers, and pharmacy services administrative organizations pursuant to this chapter and prepare an annual report for the public and the legislature synthesizing the data to demonstrate the overall impact that drug costs, rebates, and other discounts have on health care premiums. (b) For data related to the 340B drug pricing program, the annual report shall include: (i) Data submitted under RCW 43.71C.050(7) aggregated to not reveal information from specific manufacturers; (ii) Data submitted under RCW 43.71C.130(1) (a), (h) through (j), and (m) by covered entity; and (iii) Data submitted pursuant to RCW 43.71C.130(1) (b) through (g), (k), and (l) aggregated by entity type, as specified in 42 U.S.C. Sec. 256b(a)(4). (c) The annual report must also include: (i) The authority's costs for the preceding calendar year to collect and report data related to the 340B drug pricing program; (ii) A description of the foreseeable necessary costs to the authority for collecting and reporting data related to the 340B drug pricing program, as used as the basis for the filing fee described in RCW 43.71C.140; and (iii) The amount of filing fees collected under RCW 43.71C.140. (2)(a) Except as provided in (b) of this subsection, the data in the report must be aggregated and must not reveal information specific to individual health carriers, pharmacy benefit managers, pharmacy services administrative organizations, individual prescription drugs, individual classes of prescription drugs, individual manufacturers, or discount amounts paid in connection with individual prescription drugs. (b) Data reported under RCW 43.71C.130(1) (a), (h) through (j), and (m) may be reported without further aggregation and may identify the manufacturer, covered entity, and contract pharmacy. (3) Beginning January 1, 2021, and by each January 1st thereafter, the authority must publish the report on its website. (4) Except for the report, data submitted under RCW 43.71C.130(1) (a), (h) through (j), and (m), and as provided in subsection (5) of this section, the authority shall keep confidential all data submitted pursuant to this chapter. (5) For purposes of public policy, upon request of a Washington state legislator, the authority must provide all data provided pursuant to RCW 43.71C.020 through 43.71C.080, and RCW 43.71C.130 and any analysis prepared by the authority to the requesting legislator. Any information provided pursuant to this subsection is not subject to public disclosure under chapter 42.56 RCW and must be kept confidential within the legislature. (6) For the purpose of reviewing drug prices and conducting affordability reviews, the prescription drug affordability board, as established in chapter 70.405 RCW, and the health care cost transparency board, established in chapter 70.390 RCW, may access all data collected pursuant to RCW 43.71C.020 through 43.71C.080 and any analysis prepared by the authority. (7)(a) Except as provided in (b) of this subsection, the data collected pursuant to this chapter is not subject to public disclosure under chapter 42.56 RCW. Any information provided pursuant to this section must be kept confidential and may not be publicly released. Recipients of data under subsection (6) of this section shall: (i) Follow all rules adopted by the authority regarding appropriate data use and protection; and (ii) Acknowledge that the recipient is responsible for any liability arising from misuse of the data and that the recipient does not have any conflicts under the ethics in public service act that would prevent the recipient from accessing or using the data. (b) Data submitted by covered entities under RCW 43.71C.130(1) (a), (h) through (j), and (m) is not confidential and may be publicly released. [ 2026 c 227 s 11; 2022 c 153 s 11; 2019 c 334 s 10.] NOTES: Severability— RCW 43.71C.110 Rule making. The authority may adopt any rules necessary to implement the requirements of this chapter. [ 2019 c 334 s 13.] RCW 43.71C.120 Information sharing. Information collected pursuant to this chapter may be shared with the health care cost transparency board established under chapter 70.390 RCW, subject to the same disclosure restrictions applicable under this chapter. [ 2024 c 80 s 6.] RCW 43.71C.130 340B drug pricing program—Report—Penalty. (1) Annually, on or before April 1st following the conclusion of the covered entity's fiscal year, a covered entity located in Washington that is a federally qualified health center as defined in 42 U.S.C. Sec. 1396d(l)(2)(B) or a hospital defined in 42 U.S.C. Sec. 256b(a)(4)(L) through (O) shall report the following information to the authority concerning the covered entity's participation in the 340B program for the previous fiscal year: (a) The following information for the covered entity: (i) Name; (ii) Service address; (iii) 340B program identification number; (iv) Designation of entity type, as specified in 42 U.S.C. Sec. 256b(a)(4); and (v) The national taxpayer identification number; (b) The aggregate acquisition cost for all 340B drugs obtained under the 340B program and dispensed to applicable patients; (c) The aggregate payment amount received for all 340B drugs obtained under the 340B program and dispensed to applicable patients; (d) The aggregate acquisition cost for administered outpatient 340B drugs obtained under the 340B program and administered to applicable patients; (e) The total savings on the 340B administered outpatient drugs based on the calculation of the difference between the aggregate acquisition cost of 340B drugs and the aggregate price of the drugs if not purchased through the 340B program; (f) The aggregate acquisition cost for 340B drugs and aggregate payments made to pharmacies that are under contract with the covered entity to receive and dispense 340B drugs on behalf of the covered entity; (g) The number of claims for prescription drugs described in (c) and (d) of this subsection; (h) Using the most up-to-date and available data, how the covered entity uses any savings from participating in the 340B program including, but not limited to, the amount of savings used for the provision of charity care, community benefits, or a similar program of providing unreimbursed or subsidized health care; (i) The aggregate payments made to any other entity that is not a covered entity and is not a contract pharmacy as described in (f) of this subsection for managing any aspect of the covered entity's 340B program; (j) The aggregate payment made or expense for administering the 340B program; (k) The aggregate number of prescription drugs dispensed to patients for which a payment was reported under (c) of this subsection and the estimated number of prescription drugs administered to patients for which a cost was reported under (d) of this subsection; (l) The percentage of the covered entity's pharmacy claims that were for prescription drugs obtained under the 340B program; and (m) The number and percentage of low-income patients of the covered entity that were served by a sliding fee scale for a prescription drug dispensed or administered under the 340B program. (2) The information required to be reported under subsection (1) of this section must be reported by payer type, if the information is available to the covered entity, including the following: (a) Commercial; (b) Medicaid; (c) Medicare; and (d) Uninsured. (3) The authority shall prepare a template reporting form for covered entities to use to fulfill the reporting requirements of this section. (4)(a) The authority may issue a fine, in accordance with RCW 43.71C.090, of $1,000 per day for a covered entity that fails to provide the information required by this section by the date required. (b) A covered entity must be afforded an opportunity to correct a violation of this section before a fine may be issued. If the covered entity provides the information required by this section within 30 calendar days of receiving the written notice of a violation, then the authority shall not issue a penalty. [ 2026 c 227 s 5.] RCW 43.71C.140 340B data—Filing fee—Rules. (1) For manufacturers and covered entities required to report 340B data to the authority under RCW 43.71C.130 and 43.71C.050, the authority may establish a filing fee to support costs to administer the 340B data collection and reporting required by this chapter. (2) The filing fee shall be set by the authority at a level necessary to cover the cost to the authority for collecting and reporting the 340B data. Manufacturers required to report data under RCW 43.71C.050 and covered entities required to report data under RCW 43.71C.130 shall pay the fee annually, in a form and manner determined by the authority. (3) The filing fees must be established in accordance with the following: (a) The filing fee for covered entities must be tiered based on the covered entity's gross operating revenue; (b) The filing fee for manufacturers must be tiered in a manner determined by the authority; and (c) The filing fees for covered entities and manufacturers must be set at levels that generally reflect the numbers of covered entities and manufacturers required to report under RCW 43.71C.130 and 43.71C.050 and the authority's relative costs in collecting and reporting data from covered entities and manufacturers, except that the filing fee for covered entities must not be set at a level intended to cover more than 25 percent of the authority's costs for collecting and reporting 340B data. (4) The authority may recommend modifications to the filing fee structure for covered entities and manufacturers in its annual report under RCW 43.71C.100. (5) The filing fees must be deposited in the 340B program reporting account created under RCW 43.71C.150. (6) The authority may adopt rules to implement this section. [ 2026 c 227 s 6.] NOTES: Severability— RCW 43.71C.150 340B program reporting account. The 340B program reporting account is created in the state treasury. All receipts from filing fees collected pursuant to RCW 43.71C.140 must be deposited into the account. Moneys in the account may be spent only after appropriation. Expenditures from the account may be used only by the authority and only for collecting and reporting data relating to the 340B drug pricing program. [ 2026 c 227 s 7.] NOTES: Severability— RCW 43.71C.800 Joint state strategies—Development and implementation recommendations. The authority must contact the California office of statewide health planning and development and the Oregon department of consumer and business services to develop strategies to reduce prescription drug costs and increase prescription drug cost transparency. The authority must make recommendations to the legislature for implementing joint state strategies, which may include a joint purchasing agreement, by January 1, 2020. [ 2019 c 334 s 12.] RCW 43.71C.900 Findings—2019 c 334. The legislature finds that the state of Washington has substantial public interest in the following: (1) The price and cost of prescription drugs. Washington state is a major purchaser through the department of corrections, the health care authority, and other entities acting on behalf of a state purchaser; (2) Enacting this chapter to provide notice and disclosure of information relating to the cost and pricing of prescription drugs in order to provide accountability to the state for prescription drug pricing; (3) Rising drug costs and consumer ability to access prescription drugs; and (4) Containing prescription drug costs. It is essential to understand the drivers and impacts of these costs, as transparency is typically the first step toward cost containment and greater consumer access to needed prescription drugs. [ 2019 c 334 s 1.]