H. B. 3160

(By Delegates Fleischauer, Compton,

R. Thompson, Evans and Hatfield)

[Introduced March 30, 2001; referred to the
Committee on Banking and Insurance then Finance.]

A BILL to amend chapter sixteen of the code of West Virginia, one thousand nine hundred thirty-one, as amended, by adding thereto a new article, designated article five-t, relating to creating the "West Virginia Prescription Drug Fair Pricing Act"; "Rx Program" established; secretary of the department of health and human resources directed to negotiate on behalf of uninsured to obtain rebates from drug companies and discounts from retail pharmacies; and rules.

Be it enacted by the Legislature of West Virginia:
That chapter sixteen of the code of West Virginia, one thousand nine hundred thirty-one, as amended, be amended by adding thereto a new article, designated article five-t, to read as follows:
ARTICLE 5T. THE WEST VIRGINIA PRESCRIPTION DRUG FAIR PRICING ACT.
§16-5T-1. Short title.
This act shall be called the "West Virginia Prescription Drug Fair Pricing Act."
§16-5T-2. Findings and purpose.
(a) The Legislature finds that
approximately one in four residents of West Virginia have no or wholly inadequate prescription drug insurance coverage.
(1) These uninsured residents pay excessive prices for prescription drugs, far higher prices than are paid by managed care organizations, insurance companies and the federal government for the same medicines and dosages. In many cases, these excessive drug prices have the effect of denying residents access to medically necessary care, and thereby threatening their health and safety.
(2) Many residents require repeated doctor or medical clinic appointments, having gotten sicker because they cannot afford to take the prescriptions prescribed for them. Many residents are admitted to or treated at hospitals each year because they cannot afford the drugs prescribed for them that could have prevented the need for hospitalization. Many others enter expensive institutional care settings because they cannot afford their necessary prescription drugs that could have supported them outside of an institution. In each of these circumstances, state medical assistance programs, including the medicaid program, literally pay the price.
(3) One major reason uninsured residents pay so much for prescription drugs is that, unlike insured residents, they have no prescription benefits manager negotiating a fair price with the drug companies on their behalf.
(4) The state government currently provides prescription drugs and acts as a prescription benefit manager through a variety of health plans and assistance programs.
(5) The state government is the only agent that, as a practical matter, can play an effective role as a market participant on behalf of all residents who are uninsured or underinsured. The state can and should act as a prescription benefit manager, negotiating voluntary drug rebates and using these funds to reimburse retail pharmacies for offering lower drug prices.
(b) Recognizing that the state already acts as a prescription benefit manager for a variety of health plans and assistance programs, this law is enacted to cover new populations by expanding the state's role as a participant in the prescription drug marketplace, negotiating voluntary rebates from drug companies and using the funds to make prescription drugs more affordable to West Virginia residents. Such a program will improve public health and welfare, promote the economic strength of our society, and substantially benefit state health assistance programs, including the medicaid program.
§16-5T-3. Definitions.

As used in this article:

(1) "Department" means the department of health and human resources.
(2) "Labeler" means an entity or person that receives prescription drugs from a manufacturer or wholesaler and repackages those drugs for later retail sale, and that has a labeler code from the federal food and drug administration under 21 Code of Federal Regulations, 207.20 (1999).
(3) "Manufacturer" means a manufacturer of prescription drugs and includes a subsidiary or affiliate of a manufacturer.
(4) "Participating retail pharmacy" means a retail pharmacy or other business licensed to dispense prescription drugs in this state that: (a) Participates in the state Medicaid program; or (b) voluntarily agrees to participate in the Rx program.
(5) "Secretary" means the secretary of the department of health and human resources, or the secretary's designee.
§16-5T-4. Fair prescription drug prices - Rx program implemented

.
(a) Program established. -- The Rx program is established within the department to lower prescription drug prices for uninsured and underinsured residents of the state.
(b) Rebate agreement. -- A drug manufacturer or labeler that sells prescription drugs in the state may voluntarily elect to enter into a rebate agreement with the department.
(c) Rebate amount. -- The secretary shall negotiate the terms of the rebate from a manufacturer or labeler, taking into consideration the rebate calculated under the medicaid rebate program pursuant to 42 United States Code, Section 1396r-8, the average wholesale price of prescription drugs, and any other available information on prescription drug prices and price discounts.
(d) Failure to agree. -- If the secretary and a drug manufacturer or labeler fail to reach agreement on the terms of a rebate, the secretary shall prompt a review of whether to place those manufacturer's or labeler's products on the prior authorization list for the state medicaid program in accordance with section fifteen, article five, chapter nine of this code and take similar actions involving prior authorization or formularies for any other state-funded prescription drug program. The secretary shall propose rules for legislative approval in accordance with the provisions of article three, chapter twenty-nine-a of this code creating procedures for the implementation of this subsection (d). The names of manufacturers and labelers that do not enter into rebate agreements are public information and the department shall release this information to the public. The secretary shall also publicize to doctors, pharmacists, and other health professionals information about the relative cost of drugs produced by manufacturers and labelers that enter into rebate agreements compared to those who do not enter into rebate agreements.
(e) Discounted prices for Rx program participants. -- A participating retail pharmacy shall discount the price of prescription drugs sold to Rx program participants.
(1) The department shall establish discounted prices for drugs covered by a rebate agreement and shall promote the use of efficacious and reduced-cost drugs, taking into consideration reduced prices for state and federally capped drug programs, differential dispensing fees, administrative overhead and incentive payments.
(2) Beginning on the first day of July, two thousand two, a participating retail pharmacy shall offer prescription drugs at or below the average wholesale price, minus 6%, plus a dispensing fee designated by the secretary. These initial price levels shall be calculated by the secretary and the dispensing fee may not be less than that provided under the state medicaid program. The average wholesale price is the wholesale price charged on a specific commodity that is assigned by the drug manufacturer and is listed in a nationally recognized drug pricing file.
(3) No later than the first day of January, two thousand three, a participating retail pharmacy shall offer prescription drugs at or below the initial price levels specified in subdivision (2), subsection (e) of this section minus the amount of any rebate paid by the state to the retail pharmacy. These discounted price levels shall be calculated by the secretary. In determining the discounted price levels, the secretary shall consider an average of all rebates weighted by sales of drugs subject to these rebates over the most recent twelve-month period for which the information is available.
(f) Eligibility for individuals to participate in the Rx program. -- All residents of the state are eligible to participate in the Rx program. The department shall establish simplified procedures for issuing Rx program enrollment cards to eligible residents. The department shall undertake outreach efforts to build public awareness of the Rx program and maximize enrollment by eligible residents.
§16-5T-5. Operation of the Rx program.
(a) The West Virginia board of pharmacy shall propose rules for legislative approval in accordance with the provisions of article three, chapter twenty-nine-a of this code requiring disclosure by retail pharmacies to Rx program participants of the amount of savings provided as a result of the Rx program. The rules must protect information that is proprietary in nature.
(b) The department may not impose transaction charges on retail pharmacies that submit claims or receive payments under the Rx program.
(c) A retail pharmacy shall submit claims to the department to verify the amount charged to Rx program participants.
(d) On a weekly or biweekly basis, the department shall reimburse a retail pharmacy for discounted prices provided to Rx program participants and dispensing fees set by the secretary.
(e) The department shall collect from the retail pharmacies utilization data necessary to calculate the amount of the rebate from the manufacturer or labeler. The department shall protect the confidentiality of all information subject to confidentiality protection under state or federal law, rule or regulation.
§16-5T-6. Discrepancies in rebate amounts.
Discrepancies in rebate amounts must be resolved using the process established in this section:
(1) If there is a discrepancy in the manufacturer's or labeler's favor between the amount claimed by a pharmacy and the amount rebated by the manufacturer or labeler, the department, at the department's expense, may hire a mutually agreed-upon independent auditor. If a discrepancy still exists following the audit, the manufacturer or labeler shall justify the reason for the discrepancy or make payment to the department for any additional amount due;
(2) If there is a discrepancy against the interest of the manufacturer or labeler in the information provided by the department to the manufacturer or labeler regarding the manufacturer's or labeler's rebate, the manufacturer or labeler, at the manufacturer's or labeler's expense, may hire a mutually agreed-upon independent auditor to verify the accuracy of the data supplied to the department. If a discrepancy still exists following the audit, the department shall justify the reason for the discrepancy or refund to the manufacturer any excess payment made by the manufacturer or labeler;
(3) Following the procedures established in subdivision (1) or (2) of this section, either the department or the manufacturer or labeler may request a hearing. Supporting documentation must accompany the request for a hearing.
§16-5T-7. "Rx Dedicated Fund."
There is established in the state treasury a special revenue fund designated the "Rx dedicated fund"

The "Rx dedicated fund" is established to receive revenue from manufacturers and labelers who pay rebates and any appropriations or allocations designated for the fund. The purposes of the fund are to reimburse retail pharmacies for discounted prices provided to Rx program participants, and reimburse the department for the costs of administering the program, including contracted services, computer costs, professional fees paid to retail pharmacies and other reasonable program costs. The Rx dedicated fund is a nonlapsing dedicated fund. Interest on Rx dedicated fund balances accrues to the fund.
§16-5T-8. Annual summary report.
The department shall report the enrollment and financial status of the Rx program to the Legislature by the thirty-first day of December each year.
§16-5T-9. Coordination with other programs.
Where the secretary finds that it is beneficial to both the Rx program and another state program, including the state medicaid program, to combine drug pricing negotiations to maximize drug rebates, the secretary shall do so.
§16-5T-10. Rulemaking.
Except as otherwise provided in subsection (a), section five of this article, the secretary shall propose rules for legislative approval in accordance with the provisions of article three, chapter twenty-nine-a of this code to implement the provisions of this article.
§16-5T-11. Waivers.
The department may seek any waivers of federal law, rule or regulation necessary to implement the provisions of this article.

NOTE:

This article is new; therefore, strike-throughs and underscoring have been omitted.