HB2880 101ST GENERAL ASSEMBLY

LRB101 04901 HLH 49910 b

101ST GENERAL ASSEMBLY
State of Illinois
2019 and 2020
HB2880

Introduced , by Rep. Will Guzzardi

SYNOPSIS AS INTRODUCED:

New Act
30 ILCS 105/5.891 new

Creates the Prescription Drug Price Increase Tax Act. Imposes a tax on each establishment that makes the first sale of a covered outpatient drug within the State. Provides that the term "first sale" means an initial sale of a covered outpatient drug from a manufacturer to a wholesaler or from a wholesaler to a pharmacy. Provides that the tax shall be charged against and paid by the establishment making the first sale and shall not be added as a separate charge or line item or otherwise passed down on any invoice to the customer. Provides that the proceeds shall be deposited into the Prescription Drug Fairness Fund and used by the Department of Healthcare and Family Services. Amends the State Finance Act to create the Prescription Drug Fairness Fund.

FISCAL NOTE ACT MAY APPLY

A BILL FOR

AN ACT concerning revenue.

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 Prescription Drug Price Increase Tax Act.

Section 5. Definitions. As used in this Act:

"Average manufacturer price" has the meaning given to that term in 42 U.S.C. 1396r-8.

"Baseline average manufacturer price" means the average manufacturer price for the dosage, form, and strength of the covered outpatient drug for the first full calendar quarter after the day on which the drug was first marketed.

"Covered outpatient drug" has the meaning given to that term in 42 U.S.C. 1396r-8.

"First sale" means an initial sale of a covered outpatient drug from a manufacturer to a wholesaler or, if the sale from the manufacturer to the wholesaler is not subject to the tax under this Act, from the wholesaler to a pharmacy. Any such sale of a covered outpatient drug within the State shall be presumed to be the first sale of the covered outpatient drug unless the seller can prove that the tax is due from another establishment within the chain of title.

"Inflation-adjusted baseline average manufacturer price" means the baseline average manufacturer price increased by the percentage by which the Consumer Price Index for All Urban Consumers (United States city average) for the month before the month in which the sale occurs exceeds that index for the month before the first month of the first full calendar quarter after the day on which the drug was first marketed, regardless of whether the covered outpatient drug has been sold or transferred to an entity, including a division or subsidiary of the manufacturer, after the first day of that quarter.

Section 10. Tax imposed.

(a) On and after January 1, 2020, any establishment that makes the first sale of a covered outpatient drug within the State is liable for a tax equal to 100% of the difference between the gross amount received for the first sale of the covered outpatient drug and the inflation-adjusted baseline average manufacturer price of the covered outpatient drug.

(b) This tax shall be charged against and paid by the establishment making the first sale and shall not be added as a separate charge or line item or otherwise passed down on any invoice to the customer.

(c) Any invoice associated with the first sale of a covered outpatient drug shall state the establishment making the sale's liability for the tax and include the establishment's name, address, and taxpayer identification number. This invoice shall also include identifying information, as defined by the Department of Healthcare and Family Services, for the covered outpatient drug or drugs associated with the first sale, the date of the sale, the purchaser, the number of units sold, and any other information required by the Department of Healthcare and Family Services. A copy of this invoice shall be made available to any subsequent seller or purchaser of the covered outpatient drugs detailed on the invoice as evidence that the subsequent seller or purchaser is not liable for the tax. The Department of Healthcare and Family Services may adopt rules concerning the information required and may allow for such invoices to be transmitted and stored electronically, including allowing sellers to maintain records of the invoice on behalf of purchasers.

Section 15. Returns. On or before the twentieth day of each calendar month, every establishment that makes a first sale of a covered outpatient drug within the State during the preceding calendar month shall file a return with the Department of Revenue, stating:

(1) the name of the establishment;

(2) the address of the establishment's principal place of business;

(3) the amount of tax due; and

(4) such other information as the Department of Revenue may require.

If a taxpayer fails to sign a return within 30 days after the proper notice and demand for signature by the Department of Revenue, the return shall be considered valid and any amount shown to be due on the return shall be deemed assessed.

Section 20. Recordkeeping. Any establishment liable for any tax under this Act shall maintain auditable records of sales made and taxes paid for a period of at least 3 years unless the Department of Revenue establishes a different retention period by rule. Those records shall be available to the Department of Revenue for inspection or audit upon request.

Section 25. Retailers' Occupation Tax Act. All of the provisions of Sections 5a, 5b, 5c, 5d, 5e, 5f, 5g, 5i and 5j of the Retailers' Occupation Tax Act, which are not inconsistent with this Act, and Section 3-7 of the Uniform Penalty and Interest Act, shall apply, as far as practicable, to the subject matter of this Act to the same extent as if such provisions were included herein.

Section 30. Payment into the Prescription Drug Fairness Fund. The proceeds collected from the tax imposed under this Act shall be deposited into the Prescription Drug Fairness Fund, a special fund created in the State treasury. Moneys in the Fund shall be used, subject to appropriation, by the Department of Healthcare and Family Services.

Section 90. The State Finance Act is amended by adding Section 5.891 as follows:

(30 ILCS 105/5.891 new)

Sec. 5.891. The Prescription Drug Fairness Fund.