Bill Text: IL HB3957 | 2023-2024 | 103rd General Assembly | Enrolled

NOTE: There are more recent revisions of this legislation. Read Latest Draft

---

Bill Title: Reinserts the provisions of the introduced bill with the following changes. Sets forth legislative findings. Provides that the Director of Healthcare and Family Services or Director of Central Management Services shall (rather than may) notify the Attorney General of any increase in the price of any essential off-patent or generic drug under the Medical Assistance Program under the Illinois Public Aid Code or a State health plan, respectively, that amounts to price gouging. Provides that a notice sent by the Attorney General to the manufacturer or wholesale drug distributor of an essential off-patent or generic drug shall serve as a litigation hold regarding documents and communications about that drug. Provides that upon petition of the Attorney General, a circuit court may issue an order imposing a civil penalty of up to $10,000 per day (rather than only $10,000) for each violation of the Act or providing for the Attorney General's recovery of costs and disbursements incurred in bringing an action against a manufacturer found to be in violation of the Act. Makes other changes. Effective January 1, 2024.

Spectrum: Partisan Bill (Democrat 76-1)

Status: (Passed) 2023-07-28 - Public Act . . . . . . . . . 103-0367 [HB3957 Detail]

Download: Illinois-2023-HB3957-Enrolled.html

---

HB3957 Enrolled LRB103 29676 CPF 56079 b
AN ACT concerning regulation.
Be it enacted by the People of the State of Illinois,
represented in the General Assembly:
Section 1. Short title. This Act may be cited as the
Pharmaceutical and Health Affordability: Restrictions on
Manufacturers' Amoral Behavior through Reasonable Oversight
Act.
Section 2. Legislative Findings.
(a) The General Assembly finds that public reports by
Congress and the news media have demonstrated the devastating
impact that increasing drug prices can have on the 60% of
Americans and 90% of seniors that take prescription drugs.
(b) The General Assembly further finds that public reports
describe a repeated pattern and practice of price gouging by
certain prescription drug manufacturers once they acquire the
ownership rights for a new generic drug.
(c) The General Assembly further finds that price gouging
has forced patients to choose between copayments exceeding
tens of thousands of dollars per year and risking their health
to find a more affordable drug.
(d) The General Assembly further finds that this choice
has led patients to delay or forgo necessary medications
creating greater health risks and complications.

HB3957 Enrolled - 2 - LRB103 29676 CPF 56079 b
(e) The General Assembly concludes that addressing
accessibility of these life-saving medications is a matter of
health, safety, and welfare for the People of the State of
Illinois.
Section 5. Definitions. As used in this Act:
"Essential off-patent or generic drug" means any
prescription drug sold within the State:
(1) for which all exclusive marketing rights, if any,
granted under the Federal Food, Drug, and Cosmetic Act,
Section 351 of the federal Public Health Service Act, and
federal patent law have expired;
(2) that appears on the model list of essential
medicines most recently adopted by the World Health
Organization or that has been designated by the United
States Secretary of Health and Human Services as an
essential medicine due to its efficacy in treating a
life-threatening health condition or a chronic health
condition that substantially impairs an individual's
ability to engage in activities of daily living; and
(3) that is actively manufactured and marketed for
sale in the United States by 3 or fewer manufacturers.
"Essential off-patent or generic drug" includes any
drug-device combination product used for the delivery of a
drug for which all exclusive marketing rights, if any, granted
under the Federal Food, Drug, and Cosmetic Act, Section 351 of

HB3957 Enrolled - 3 - LRB103 29676 CPF 56079 b
the federal Public Health Service Act, and federal patent law
have expired.
"Manufacturer" has the meaning provided in Section 15 of
the Wholesale Drug Distribution Licensing Act. "Manufacturer"
does not include an entity operating as a wholesale drug
distributor as defined in Section 15 of the Wholesale Drug
Distribution Licensing Act.
"Price gouging" means an unconscionable increase in a
prescription drug's price that:
(1) would result in the wholesale acquisition cost of
a 30-day supply of the essential off-patent or generic
drug exceeding $20 and would result in an increase in the
wholesale acquisition cost of the essential off-patent or
generic drug of:
(A) 30% or more within the preceding year;
(B) 50% or more within the preceding 3 years; or
(C) 75% or more within the preceding 5 years; and
(2) is otherwise excessive and unduly burdens
consumers because of the importance of the essential
off-patent or generic drug to their health and because of
insufficient competition in the marketplace.
"Price gouging" does not include a price increase that can
be reasonably justified by:
(1) an increase in the cost of producing the essential
off-patent or generic drug; or
(2) the cost of appropriate expansion of access to the

HB3957 Enrolled - 4 - LRB103 29676 CPF 56079 b
essential off-patent or generic drug to promote public
health.
"State health plan" means the program of health benefits
under the State Employees Group Insurance Act of 1971.
"Wholesale acquisition cost" has the meaning provided in
42 U.S.C. 1395w-3a.
"Wholesale drug distributor" has the meaning provided in
Section 15 of the Wholesale Drug Distribution Licensing Act.
Section 10. Price gouging prohibited.
(a) A manufacturer or wholesale drug distributor shall not
engage in price gouging in the sale of an essential off-patent
or generic drug that is ultimately sold in Illinois.
It is not a violation of this Act for a wholesale
distributor to increase the price of an essential off-patent
or generic drug if the price increase is directly attributable
to an increase in the wholesale acquisition cost for the
essential off-patent or generic drug imposed on the wholesale
drug distributor by the manufacturer of the drug.
For the purpose of the enforcement of this Act, the
Director of Healthcare and Family Services shall notify the
Attorney General of any increase in the price of any essential
off-patent or generic drug under the Medical Assistance
Program under Section V of the Illinois Public Aid Code that
amounts to price gouging.
(b) If the Attorney General has reason to believe that a

HB3957 Enrolled - 5 - LRB103 29676 CPF 56079 b
manufacturer or wholesale drug distributor of an essential
off-patent or generic drug has violated this Act, then the
Attorney General may send a notice to the manufacturer or the
wholesale drug distributor requesting a statement:
(1) itemizing the components of the cost of producing
the essential off-patent or generic drug;
(2) identifying the circumstances and timing of an
increase in materials or manufacturing costs that caused
an increase in the wholesale acquisition cost of the
essential off-patent or generic drug within the 5-year
period preceding the date of the price increase;
(3) identifying the circumstances and timing of any
expenditures made by the manufacturer to expand access to
the essential off-patent or generic drug and explaining
any improvement in public health associated with those
expenditures;
(4) identifying any communications with competitors of
distributors about that drug and any price changes; the
request for a statement shall serve as a litigation hold
regarding documents and communications about that drug;
and
(5) providing any other information that the
manufacturer or wholesale drug distributor believes to be
relevant to a determination of whether a violation of this
Act has occurred.
Within 45 days after receipt of the request, the

HB3957 Enrolled - 6 - LRB103 29676 CPF 56079 b
manufacturer or wholesale drug distributor shall submit the
statement to the Attorney General.
To accomplish the objectives and carry out the duties
prescribed in this Act, the Attorney General may issue
subpoenas or examine under oath any person to determine
whether a manufacturer or wholesale drug distributor has
violated this Act.
(c) Upon petition of the Attorney General, a circuit court
may issue an order:
(1) compelling a manufacturer or a wholesale drug
distributor:
(A) to provide a statement required under
subsection (b); or
(B) to produce specific records or other documents
requested by the Attorney General that may be relevant
to a determination of whether a violation of this Act
has occurred;
(2) restraining or enjoining a violation of this Act;
(3) restoring to any consumer, including a third-party
payor, any money acquired as a result of a price increase
that violates this Act;
(4) requiring a manufacturer or wholesale drug
distributor that has engaged in price gouging in the sale
of an essential off-patent or generic drug to make the
drug available to participants in the State health plan or
Medical Assistance Program under Section V of the Illinois

HB3957 Enrolled - 7 - LRB103 29676 CPF 56079 b
Public Aid Code for a period of up to one year at the price
at which the drug was made available to participants in
Illinois immediately before the violation of this Act;
(5) imposing a civil penalty of up to $10,000 per day
for each violation of this Act;
(6) providing for the Attorney General's recovery of
costs and disbursements incurred in bringing an action
against a manufacturer found to be in violation of this
Act, including the costs of investigation and reasonable
attorney's fees; or
(7) granting any other relief.
In response to any petition brought by the Attorney
General under this Section, a manufacturer or wholesale drug
distributor who is alleged to have violated this Act may not
assert as a defense that the manufacturer or wholesale drug
distributor did not directly sell a product to a consumer
residing in Illinois.
(d) Any financial information provided by a manufacturer
or a wholesale drug distributor to the Attorney General in
accordance with this Section may not be disclosed to the
public by the Attorney General. The financial information,
while in the possession of the Attorney General, shall be
exempt from disclosure by the Attorney General under the
Freedom of Information Act. Notwithstanding the other
provisions of this subsection, if it appears to the Attorney
General that a manufacturer or wholesale drug distributor has

HB3957 Enrolled - 8 - LRB103 29676 CPF 56079 b
engaged in or is engaging in any practice declared to be in
violation of this Act and that legal proceedings would be in
the public interest, then the Attorney General may disclose
any financial information provided in accordance with this
Section in support of the filing of an action in the circuit
court.
Section 99. Effective date. This Act takes effect January
1, 2024.