Bill As Introduceds.135

BILL AS INTRODUCEDS.135

2001Page 1

S.135

Introduced by Senator Rivers of Windsor County, Senator Bartlett of Lamoille County, Senator Campbell of Windsor County, Senator Chard of Windham County, Senator McCormack of Windsor County and Senator Shumlin of Windham County

Referred to Committee on

Date:

Subject:Human services; prescription drugs; VScript; the Vermont prescription drug fair pricing program

Statement of purpose: This bill proposes to:

(1) encourage cost-effective use of prescription drugs;

(2) establish consumer protection rules for pharmaceutical companies and pharmacy benefit management companies;

(3) create a temporary emergency pharmaceutical assistance program;

(4) promote the expansion of federally-qualified health centers;

(5) establish a VScript prescription drug insurance program;

(6) establish a VScript catastrophic prescription drug expense program;

(7) require pharmaceutical manufacturers participating in the Medicaid program to pay rebates to the VScript program;

(8) authorize VScript to act as a wholesale purchaser of prescription drugs;

(9) expand eligibility for an unsubsidized VScript rebate benefit to any Vermont individual or organization;

(10) authorize the commissioner of prevention, assistance, transition, and health access to implement prescription drug cost controls;

(11) authorize Vermont’s participation in pharmaceutical manufacturer patient assistance programs; and

(12) establish the Vermont prescription drug fair pricing program.

AN ACT RELATING TO FAIR PRICING OF PRESCRIPTION DRUGS

It is hereby enacted by the General Assembly of the State of Vermont:

Part A. Therapeutic and Cost-Effective Utilization of Prescription Drugs

Sec. 1. 33 V.S.A. § 1998 is added to read:

§ 1998. THERAPEUTIC AND COST-EFFECTIVE UTILIZATION OF

PRESCRIPTION DRUGS

The commissioner of prevention, assistance, transition, and health access shall develop a therapeutic and cost-effective prescription drug education and utilization system designed to promote therapeutic and cost-effective utilization of prescription drugs by patients. In developing the system the commissioner may request the participation of the commissioner of banking, insurance, securities, and health care administration, the commissioner of health, Vermont physicians, hospitals used by Vermont patients, Vermont pharmacists, public and private health benefit plans, consumer representatives, the board of medical practice, the board of osteopathic physicians and surgeons, the board of nursing, the board of pharmacy, any other appropriate licensing boards, and any other interested party. The commissioner is authorized to solicit, accept and spend public and private grants, contributions and other funds to match public funds appropriated to carry out the purposes of this section. The system may include:

(1) the establishment of an electronic database or other information resources containing information indicating which equally effective prescription drug or drugs within the same therapeutic class are the least costly for the consumer and the consumer’s health plan. The electronic database may also include the capability of creating, for the purpose of promoting medicallyappropriate and cost-effective prescription drug utilization, a confidential, individual prescription drug record for participating patients, including the identity of prescribing health care professionals and dispensing pharmacies, within a secure communications network connecting physicians, pharmacists and patients. The database shall be designed for use by physicians, hospitals, pharmacists, consumers, private health insurance plans and public health benefit plans. The database shall be used only for the purposes set forth in this subdivision, and shall not be accessed, used, disclosed or distributed in any manner or format for commercial, marketing or any other purpose. The information contained in the database is exempt from disclosure as a public record under subchapter 3, chapter 5 of Title 1;

(2) the development of a uniform formulary of prescription drugs for use by physicians, hospitals, pharmacists, consumers, private health insurance plans and government health insurance plans. The formulary developed by the commissioner pursuant to this subdivision shall incorporate the following elements:

(A) The formulary shall incorporate the database developed under subdivision (1) of this section, and shall contain standards and procedures for patient access to medically-necessary alternatives to the formulary, and for patient choice of higher cost alternatives to the formulary.

(B) The standards and procedures regulating prescription drug formularies establish by 8 V.S.A. § 4089i shall apply to the use of any formulary developed pursuant to this subdivision by any health insurance plan, except that the commissioner may establish separate standards and procedures as necessary to comply with federal Medicaid laws and regulations.

(C) The formulary developed pursuant to this subdivision shall not be required of any public or private health insurance plan, or any beneficiary of a health insurance plan, including beneficiaries of the Medicaid program, without the approval of the general assembly.

(D) As used in this subdivision, “health insurance plan” means a health benefit plan offered or administered by a health insurer, as defined by subdivision 9402(7) of Title 18. “Heath insurance plan” includes any health benefit plan offered or administered by the state, or any agency or instrumentality of the state;

(3) a program to identify the computer and software needs of professionals involved in the process of prescribing and dispensing drugs, if necessary to ensure access to the therapeutic and cost-effective prescription drug utilization database;

(4) a program of academic detailing and consumer counter-detailing that educates physicians and consumers on the therapeutic and cost-effective utilization of prescription drugs, developed in a manner designed to counteract the marketing efforts of pharmaceutical companies directed at physicians, and to counteract direct-to-consumer advertising, and developed in coordination with similar programs administered throughout the state;

(5) recommendations for continuing medical education opportunities and requirements for Vermont physicians and other health care professionals who prescribe, dispense or administer prescription drugs; and

(6) any other program or activity designed to ensure optimal therapeutic and cost-effective utilization of prescription drugs by patients.

Sec. 2. 26 V.S.A. § 2032(a) is amended to read:

(a) The board shall adopt rules necessary for the performance of its duties, including:

(1) scope of the practice of pharmacy;

(2) qualifications for obtaining licensure;

(3) explanations of appeal and other rights given to licensees, applicants and the public;

(4) standards and procedures permitting the dispensing of drugs prescribed by authorized practitioners by facsimile machine, with suitable safeguards relating to verification and other health and safety issues; and

(5) standards and procedures to monitor and require the maximum practicable use of medically-appropriate generic substitution of prescription drugs authorized under section 4605 of Title 18.

Sec. 3. 26 V.S.A. § 1353(a)(13) is added to read:

(a) The board shall have the following powers and duties:

* * *

(13) To adopt standards and procedures requiring a licensee, when relevant to the individual’s scope of practice in Vermont as determined by the board, to complete an appropriate program of continuing medical education relating to therapeutic and cost-effective prescribing, dispensing or administering prescription drugs, consistent with the recommendations of the commissioner of prevention, assistance, transition, and health access under subdivision 1998(4) of Title 33.

Sec. 4. 26 V.S.A. § 1792(a)(4) is added to read:

(a) In addition to its other powers and duties, the board shall:

* * *

(4) adopt standards and procedures requiring a licensee, when relevant to the individual’s scope of practice in Vermont as determined by the board, to complete an appropriate program of continuing education relating to therapeutic and cost-effective prescribing, dispensing or administering prescription drugs, consistent with the recommendations of the commissioner of prevention, assistance, transition, and health access under subdivision 1998(4) of Title 33.

Sec. 5. REPORT ON THERAPEUTIC AND COST-EFFECTIVE

UTILIZATION OF PRESCRIPTION DRUGS;

APPROPRIATIONS

(a) The commissioner of prevention, assistance, transition, and health access shall report to the governor and the general assembly on or before January 1, 2002 and in each of the succeeding three years with an assessment of the success of the separate programs of the commissioner’s therapeutic and cost-effective utilization of prescription drugs system under Sec. 1 of this act, together with an estimate of the costs and benefits of funding such programs on a statewide basis.

(b) The board of pharmacy shall report to the general assembly on or before January 1 in the year 2002 and in each of the succeeding three years with an evaluation of its success in implementing the provisions of subsection 2032(a) of Title 26.

(c) The sum of $50,000.00 is appropriated from the insurance regulatory and supervision fund to the commissioner of prevention, assistance, transition, and health access in fiscal year 2002 to carry out the purposes of Sec. 1 of this act. Funds allocated for academic detailing and consumer counter-detailing may be matched with federal Medicaid funds to be spent for these purposes. The sum of $50,000.00 is appropriated in federal funds to the commissioner of prevention, assistance, transition, and health access in fiscal year 2002 to carry out the purposes of Sec. 1 of this act.

Part B. Consumer Protection Rules for Pharmaceutical Manufacturers and Pharmacy Benefit Management Companies

Sec. 6. 8 V.S.A. § 4089i is added to read:

§ 4089i. PRESCRIPTION DRUG COVERAGE; FORMULARIES

(a) A health insurance plan shall permit a beneficiary’s health care provider to prescribe a prescription drug not on the plan’s formulary, if:

(1) the formulary choice has not been effective in treating the patient’s condition; or

(2) the formulary choice causes or is reasonably expected to cause adverse or harmful reactions in the enrollee.

(b) A health insurance plan shall design its prescription drug benefit so as to offer a reasonable range of coverage options for plan beneficiaries, as determined by the commissioner. A prescription drug benefit shall not limit the maximum annual claims covered under the plan in an unreasonable manner, as determined by the commissioner.

(c) A health insurance plan shall engage in cost-effective prescription drug purchasing and other activities designed to promote the financial interests and medical needs of plan beneficiaries.

(d) As used in this section, “health insurance plan” means a health benefit plan offered or administered by a health insurer, as defined by subdivision 9402(7) of Title 18.

(e) This section shall apply to any health insurance policy, subscriber contract and other health benefit plan offered, issued or renewed after October1, 2001.

Sec. 7. 8 V.S.A. § 4089j is added to read:

§ 4089j. PRESCRIPTION DRUG CONSUMER PROTECTION RULES

(a) As used in this section:

(1) “Commissioner” means the commissioner of the department of banking, insurance, securities, and health care administration.

(2) “Pharmaceutical company” means any entity, not including a wholesale distributor of drugs or a retail pharmacy licensed under state law, engaged:

(A) in the production, preparation, propagation, compounding, conversion, or processing of prescription drug products, either directly or indirectly by extraction from substances of natural origin, or independently by means of chemical synthesis, or by a combination of extraction and chemical synthesis; or

(B) in the packaging, repackaging, labeling, relabeling, or distribution of prescription drug products.

(3) “Pharmacy benefit manager” means any person or business entity that administers or otherwise assists with a prescription drug insurance benefit or public assistance benefit for Vermont residents on behalf of a health insurer, an employer-sponsored health benefit plan, or an agency or instrumentality of the state.

(b) The commissioner shall adopt rules establishing consumer protection standards and procedures governing the business activities and practices of pharmaceutical manufacturers, pharmacy benefit management companies, and other persons with the potential to adversely affect the financial and medical interests of Vermont consumers of prescription drugs.

(1) The confidentiality of patient prescription drug records shall be preserved.

(2) The fiduciary relationship that exists between pharmacy benefit managers and the health benefit plans providing a prescription drug benefit to Vermonters shall be maintained, and the fiduciary duties owed to such health benefit plans and the beneficiaries of such health plans shall be identified and enforced.

(3) Vermont prescription drug consumers who are beneficiaries of a health benefit plan that covers prescription drugs shall be protected from pharmaceutical company and pharmacy benefit manager practices and agreements that:

(A) make decisions concerning whether and in what manner to include a prescription drug in the plan’s formulary based on the financial interests of the pharmaceutical company and the pharmacy benefit manager, rather than the financial interests and medical needs of the patient;

(B) establish drug switching programs with physicians, retail pharmacies and other persons, thereby substituting drugs prescribed for the patient for reasons relating to the financial interests of the pharmaceutical company and the pharmacy benefit manager, rather than the financial interests and medical needs of the patient; and

(4) The promotional practices of pharmaceutical companies, including marketing to health care providers and facilitates and direct-to-consumer promotions and advertising, shall not include any unfair or deceptive acts or practices, and shall fully disclose the financial and medical costs and benefits of each prescription drug to the patient;

(5) Pharmaceutical companies and pharmacy benefit managers shall not engage in any business practices adversely affecting the existence of a competitive market for Vermont consumers of prescription drugs; and

(6) The commissioner’s prescription drug consumer protection rules shall include any other consumer protection standards or procedures governing the business activities and practices of pharmaceutical manufacturers, pharmacy benefit management companies, and other persons necessary to protect the financial and medical interests of Vermont prescription drug consumers.

Sec. 8. 8 V.S.A. § 4089k is added to read:

§ 4089k. LICENSING OF PHARMACEUTICAL COMPANIES AND

PHARMACY BENEFIT MANAGERS

(a)(1) No person shall sell a prescription drug in Vermont unless the manufacturer, wholesaler, and retailer of the prescription drug have been licensed by the commissioner.

(2) No pharmacy benefit manager shall contract with a health benefit plan that includes Vermont beneficiaries unless the pharmacy benefit manager has been licensed by the commissioner.

(3) No agent or other representative of a manufacturer shall offer in this state any product, promotional or other information during visits to doctors and other health care providers concerning a prescription drug unless the agent or other representative and the agent’s or representative’s manufacturer have been licensed by the commissioner; provided, however, that a license shall not be required for advertising and other marketing activities that the commissioner, in consultation with the attorney general, determines by rule to be constitutionally protected speech.

(b) The commissioner shall establish by rule standards and procedures to carry out the purposes of this subsection. Such rules shall require each licensee to pay an annual fee on or before October 1. The annual license fee for wholesalers, retailers, and agents and other representatives shall be $50.00, except that no annual fee shall be required of retail drug outlets licensed under chapter 36 of Title 26, and of pharmacists licensed under chapter 36 of Title 26 engaged in the practice of pharmacy in a retail drug outlet. The annual license fee for pharmacy benefit managers shall be $2,500.00. The annual license fee for manufacturers shall be $2,500.00. Such license fees shall be deposited into the fair prescription drug price special fund established, to be administered in accordance with the provisions of subchapter 7 of chapter 5 of Title 32. Interest earned shall remain in the fund, and monies in the fund may be spent by the Vermont prescription drug price fairness review board established under section 1997 of this title only for the purpose of supporting the activities of the board, and for any other public purpose authorized by law.

(c) A license granted under this subsection may be revoked upon a finding by the commissioner after notice and opportunity for hearing that:

(1) a provision of this section or a rule adopted under this section has been violated; or

(2) a person has sold a prescription drug at a price in violation of the price established by the Vermont prescription drug price fairness review board under section 1997 of Title 33.

(d) In addition to his or her other powers granted by law, the commissioner shall have all the powers necessary to carry out the purposes of this section, including:

(1) The power to adopt emergency rules to implement programs in a timely manner.

(2) The power to collect from any manufacturer, wholesaler, or retailer of prescription drugs sold in Vermont, and any pharmacy benefit manager of a health benefit plan covering prescription drugs for Vermont beneficiaries such information as is necessary for the commissioner to carry out his or her duties under this section, subject to the rules of the commissioner relating to proprietary information under subdivision (C) of this subdivision (2). Pursuant to the power granted under this subdivision:

(A) Any such manufacturer, wholesaler, or retailer of prescription drugs, and any pharmacy benefit manager shall file with the commissioner, on request, such data, statistics, schedules or information as the commissioner may require to enable the commissioner to carry out his or her duties.

(B) The commissioner shall have the power to examine books and accounts of any manufacturer, wholesaler, or retailer of prescription drugs sold in Vermont, to subpoena witnesses and documents, to administer oaths to witnesses and to examine them on all matters of which the commissioner has jurisdiction.

(C) For the purpose of supporting fair and effective competition and price transparency in the market for prescription drugs, the commissioner, in consultation with the attorney general’s office, shall adopt rules for the designation of information collected by the commissioner under this subdivision (2) as public information, or as proprietary information that shall not be disclosed to any person other than to the commissioner, or to the attorney general for law enforcement purposes.

(e) An aggrieved party may appeal, on the administrative record, any adverse final decision of the commissioner under this section to the superior court pursuant to Rule 74 of the Vermont Rules of Civil Procedure. Appeals of decisions under subsection (c) of this section shall be heard by the court de novo.

Part C. Temporary Emergency Pharmaceutical Assistance Program

Sec. 9. TEMPORARY EMERGENCY PHARMACEUTICAL

ASSISTANCE PROGRAM

(a) On or before June 1, 2001, the office of economic opportunity shall request proposals to award one or more grants to community health centers, free health care clinics, and other nonprofit organizations to assist Vermont residents to purchase prescription drugs at the lowest possible cost, taking into consideration the price of prescription drugs purchased from the federal supply schedule, and the price of prescription drugs purchased in other geographical locations. Priority shall be given to assistance programs for the purchase of drugs at the lowest possible cost through Vermont pharmacies, including purchases through federally-qualified health centers or Veterans’ Administration health care facilities. If such priority assistance for purchasing in Vermont is not feasible, programs may include assistance in the purchase of prescription drugs from other geographical locations. Grants may be awarded for: