hb4093 intr

H. B. 4093

(By Delegates Mezzatesta, Williams,

Martin, Stemple and Hrutkay)

[Introduced January 18, 2002 ; referred to the

Committee on Government Organization 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 twenty-nine-c, relating to the "prescription drug price reduction act"; providing a short title and designating the purpose of the act; setting forth findings, intent and purpose for the legislation; requirements related to appointments to the prescription drug advisory commission; the calling of the first meeting of the commission; creation of the "prescription drug price reduction fund"; setting forth purposes of the fund; setting forth sources for the fund to be funded; providing the secretary of health and human resources may transfer moneys from the fund to elderly low-cost drug programs established or maintained in this state; the establishment of and appointment mechanism for, the prescription drug price reduction advisory commission; requiring the department of health and human resources to propose legislative rules designed to establish procedures for determining maximum retail pricing for prescription drugs; requiring determinations by health and human resources regarding prescription drug prices; requiring secretary of health and human resources with advice of commission to establish maximum pricing for prescription drugs; providing for an appeal procedure for retailers of prescription drugs; providing that violations of article constitute violations under West Virginia Unfair Trade Practices Act; establishment of West Virginia Rx program; indicating that program is designed to utilize manufacturer rebates and pharmacy discounts and providing that the state serves as a pharmacy benefit manager under the program and that department of health and human resources administers the program; setting forth program goals; providing for certain definitions; requiring certain drug manufacturers to enter rebate agreements with the state; providing for how rebate amounts are negotiated; requiring participating retail pharmacies to offer discount prices on prescriptions to qualified residents; requiring secretary of health and human resources to establish discounted prices for drugs covered by rebate agreements; requiring board of pharmacy to propose legislative rules requiring disclosure of savings under Rx program; prohibiting department of health and human resources from imposing transaction charges under Rx program; requiring retail pharmacy to submit claims to department to verify amount charged; requiring department to reimburse pharmacies for discounted prices provided to qualified residents; requiring prescription by legislative rules of professional fees; requiring department to collect utilization data; requiring department to protect confidentiality of certain information; providing that the names of nonparticipating manufacturers and labelers are public information and that the department shall impose prior authorization requirements on such nonparticipating entities; providing for a mechanism to resolve rebate amount discrepancies; requiring the department to make an annual summary report; prescribing obligations of the department under the Rx program; authorizing the department to contract with third parties; requiring the department to administer the program and related programs within perimeters designed to reduce costs and enhance efficiency; requiring department to propose rules; authorizing the department to seek waivers; providing that profiteering in prescription drugs is unlawful; providing for a right of action for injuries caused by a violation of this article; providing for civil violations; providing that a violation of this article is an unfair trade violation; authorizing the attorney general to investigate suspected violations; setting forth provisions for entering into agreements with third parties; prohibiting payment to manufacturers that don?t enter rebate agreements; setting forth a schedule for rebate agreements; setting forth a participation requirement; and, requiring secretary of health and human resources to propose rules for medicaid program requiring additional prior authorization for dispensing drugs from manufacturers and labelers who don?t enter into rebate agreements.

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 twenty-nine-c, to read as follows:
ARTICLE 29C. PRESCRIPTION DRUG PRICE REDUCTION ACT.
§16-29C-1. Short title; purpose.

This article may be known and cited as the "Prescription Drug Price Reduction Act." The Legislature finds that affordability is critical in providing access to prescription drugs for West Virginia residents. This article is enacted by the Legislature as a positive measure to make prescription drugs more affordable for qualified West Virginia residents, thereby increasing the overall health of West Virginia residents, promoting healthy communities and protecting the public health and welfare of West Virginia residents.
§16-29C-2. Findings; intent; purpose.

(a) The Legislature makes the following findings:

(1) Pharmaceutical companies are charging the citizens of West Virginia excessive prices for prescription drugs, denying West Virginia citizens access to medically necessary health care and thereby threatening their health and safety. Many West Virginia citizens are admitted to or treated at hospitals each year because they can not afford the drugs prescribed for them that could have prevented the need for hospitalization. Many others must enter expensive institutional care settings because they cannot afford their necessary prescription drugs that could have supported them outside of an institution. All West Virginia citizens are threatened by the possibility that when they need medically necessary prescription drugs most they may be unable to afford their doctor?s recommended treatment;

(2) Citizens of West Virginia and other Americans pay the highest prices in the world for prescription drugs, prices that result in extremely high profits for pharmaceutical companies;

(3) Prescription drug costs represent the fastest growing item in health care and are a driving force in rapidly increasing hospital costs and insurance rates;

(4) Excessive pricing for prescription drugs threatens West Virginia?s ability to assist with the health care costs of West Virginia citizens, undermines the financial capacity of West Virginia communities to meet the educational needs of West Virginia children, hurts the ability of the West Virginia business community to provide health insurance coverage to West Virginia?s work force and

has a negative effect on West Virginia?s economy. The Legislature finds that affordability is critical in providing access to prescription drugs for West Virginia residents.

(b) It is the intent of the Legislature to provide access for all West Virginia citizens to medically necessary prescription drugs at the lowest possible prices.

(c) This law is enacted by the Legislature as a positive measure to make prescription drugs more affordable for West Virginia residents, thereby increasing the overall health of our families, benefitting employers and employees and the fiscal strength of our society, promoting healthy communities and increasing the public health and welfare.
§16-29C-3. Appointments; first meeting of prescription drug advisory commission.

All appointments must be completed no later than thirty days following the effective date of this article. The appointing authorities, as identified in section five of this article, shall notify each other in writing upon making their appointments. The governor shall call the first meeting of the commission within thirty days after notification that appointments have been completed. At the first meeting of the commission, the members shall select a chair from among the members.
§16-29C-4. Creation of prescription drug price reduction fund.
(a) There is hereby created in the state treasury a special revolving fund known as the prescription drug price reduction fund. All moneys deposited or accrued in this fund shall be used exclusively:

(1) To reduce or eliminate the costs associated with the procurement of prescription drugs by and for citizens of this state;

(2) To cover administrative costs incurred by the department of health and human resources associated with the administration and furtherance of its obligations as provided for under the provisions of this article: Provided, That no expenditures may be made to cover administrative costs for any fiscal year after two thousand five, except as appropriated by the Legislature;

(3) To receive revenue from manufacturers and labelers who pay rebates as provided in section twelve of this article and any appropriations or allocations specifically designated for the fund;

(4) To reimburse retail pharmacies for discounted prices provided to qualified residents pursuant to section fourteen of this article;

(5) To reimburse the department of health and human resources for contracted services,

administrative and associated computer costs, professional fees paid to participating retail pharmacies and other reasonable program costs; and

(6) To benefit the prescription drug price reduction program.

(b) Moneys from the following sources may be placed into the fund:

(1) All public funds transferred by any public agency to the department of health and human resources prescription drug price reduction program for deposit in the fund as contemplated or permitted by applicable laws;

(2) All private funds contributed, donated or bequeathed by corporations, individuals or other entities to the fund as contemplated and permitted by applicable laws;

(3) Interest which accrued on amounts in the fund from sources identified in subdivisions (1) and (2) of this subsection; and

(4) Any federal financial participation matching the amounts referred to in subdivisions (1), (2) and (3) of this subsection, in accordance with applicable federal law.

(c) Any balance remaining in the prescription drug price reduction fund at the end of any state fiscal year shall not revert to the state treasury but shall remain in this fund and shall be used only in a manner consistent with this article.

(d) Moneys received into the fund shall not be counted or credited as part of the legislative general appropriation to the state prescription price reduction program.

(e) The fund shall be administered by the department of health and human resources. Moneys shall be disbursed from the fund on a quarterly basis. The secretary of the department shall implement the provisions of this article prior to the receipt of any transfer, contribution, donation or bequest from any public or private source.

(f) Except for the payment of administrative costs as provided for in this section, appropriation from this fund for any other purposes is void and prohibited.

(g) Notwithstanding any provision of law to the contrary, surplus funds may also be transferred to any elderly low-cost drug program established or maintained in this state with the approval of the secretary of health and human resources.
§16-29C-5. Prescription drug advisory commission.
(a) The prescription drug advisory commission, referred to in this article as the "commission," is established to review access to and the pricing of prescription drugs for residents of the state, to advise the secretary of the department of health and human resources on prescription drug pricing and to provide periodic reports to the secretary of health and human resources, the governor and the Legislature.

(b) The commission consists of the following twelve members:

(1) Three members of the public, appointed by the president of the Senate, one of whom must represent the interests of seniors. Of the initial appointees, one must be appointed for a two-year term and two for three-year terms;

(2) Three members of the public, appointed by the speaker of the House, one of whom must represent the interests of seniors. Of the initial appointees, one must be appointed for a two-year term and two for three-year terms;

(3) Two members of the health care community who are authorized by the laws of this state to prescribe drugs, appointed by the governor. Of the initial appointees, one must be appointed for a two-year term and one for a three-year term;

(4) Two pharmacists, appointed by the governor. Of the initial appointees, one must be appointed for a two-year term and one for a three-year term. To be appointed to and remain on the commission, each pharmacist must:

(A) Be licensed to practice pharmacy and be engaged in the practice of retail pharmacy in this state;

(B) Have at least five years of experience in this state as a licensed pharmacist; and

(5) One member of the West Virginia hospital finance authority, to be designated by the governor, and the secretary of the department of health and human resources, or his or her designee, who shall serve as ex officio, nonvoting members.

(c) With the exception of the initial appointees, all members of the commission serve for terms of three years and may be reappointed. With the exception of the pharmacist members, if the profession or qualifications of a commission member change during the term of commission membership, the member may continue to complete the term for which the appointment was made.

(d) The commission shall meet at least four times per year. The members shall select a chair from among the members. Additional meetings may be called by the chair.

(e) The duties of the commission include the following:

(1) To review access to prescription drugs for residents of the state, including, but not limited to, pricing and affordability information;

(2) To advise the secretary of the department of health and human resources on access to prescription drugs and prescription drug prices, including, but not limited to, insurance and third party payments for prescription drugs, the need for maximum retail prices and, if maximum retail prices are established, the procedures for adoption and periodic review of maximum retail prices,

the procedures for establishing maximum retail prices for new prescription drugs and for reviewing maximum retail prices of selected drugs and the procedures for phasing out or terminating maximum retail prices;

(3) To advise the secretary of the department of health and human resources relative to the proposal of legislative rules necessary to implement this article; and

(4) To report to the secretary of the department of health and human resources, the Legislature and the governor by the first day of April, two thousand four, and annually thereafter by the second week in January, including in the report any recommendations for action regarding access to and the pricing of prescription drugs.

(f) The department shall provide staffing for the commission.

(g) Public members not otherwise compensated by their employers or other entities whom they represent are entitled to receive reimbursement of necessary expenses and a per diem allowance equal to the legislative per diem allowance for their attendance at authorized meetings of the commission.

(h) In performing its duties, the commission shall work with the department of health and human resources and the West Virginia board of pharmacy.
S16-29C-6. Emergency drug pricing.
In order to achieve the public health purposes provided in this article, maximum retail prices for prescription drugs sold in West Virginia may be established pursuant to this section.

(a) The following provisions apply to determinations regarding maximum retail prices for prescription drugs and to the procedures for establishing those prices:

(1) By the first day of July, two thousand four, the department of health and human resources shall propose legislative rules in accordance with article three, chapter twenty-nine-a of this code, establishing the procedures for adoption and periodic review of maximum retail prices, the procedures for establishing maximum retail prices for new prescription drugs and for reviewing maximum retail prices of selected drugs and the procedures for phasing out or terminating maximum retail prices. Prior to proposing the legislative rules, the secretary of the department of health and human resources shall consult with and consider the recommendations of the commission regarding the rules;

(2) By the fifth day of January two thousand five, the secretary of health and human resources shall determine whether the cost of prescription drugs provided to qualified residents under the West Virginia Rx program pursuant to this article is reasonably comparable to the lowest cost paid for the same drugs for delivery or dispensation in the state. In making this determination the following provisions apply:

(A) The secretary of the department of health and human resources shall review prescription drug use in the Medicaid program using data from the most recent six-month period for which data is available;

(B) Using the data reviewed in subparagraph (A), the secretary of health and human resources shall determine the one hundred drugs for which the most units were provided and the one hundred drugs for which the total cost was the highest;

(C) For each prescription drug listed in subparagraph (B) of this subdivision, the secretary of the department of health and human resources shall determine the cost for each drug for qualified residents provided those drugs under the West Virginia Rx program on a certain date. The average cost for each such drug shall be calculated;

(D) For each prescription drug listed, pursuant to subparagraph (B) of this subsection, the secretary of the department of health and human resources shall determine the lowest cost for each drug paid by any purchaser on the date that is used, pursuant to the provisions of subparagraph (C) of this subdivision, for delivery or dispensation in the state, taking into consideration the federal supply schedule and prices paid by pharmaceutical benefits managers and by large purchasers and excluding drugs purchased through the West Virginia Rx program. The average cost for each such drug shall be calculated;

(3) If the average cost for one or more prescription drugs is not reasonably comparable to the average lowest cost for the same drug or drugs as determined pursuant to the provisions of subparagraph (D) of this subdivision, the secretary of the department of health and human resources shall establish maximum retail prices for any or all prescription drugs sold in the state. Maximum prescription drug prices established under this subparagraph must take effect the first day of July, two thousand five;

(4) In establishing maximum retail prices, the secretary of the department of health and human resources shall consider the advice of the commission and shall follow procedures set forth by existing legislative rules applicable to the department.

(b) In making a determination the secretary of the department of health and human resources may rely on pricing information on a selected number of prescription drugs if that list is representative of the prescription drug needs of the residents of the state and is made public as part of the process of establishing maximum retail prices.

(c) The secretary of the department of health and human resources may take actions that he or she determines necessary if there is a severe limitation or shortage of or lack of access to prescription drugs in the state that could threaten or endanger the public health or welfare.
§16-29C-7. Appeals.

A retailer of prescription drugs may appeal the maximum retail price of a prescription drug established pursuant to this article in accordance with the West Virginia Administrative Procedures Act contained in article five, chapter twenty-nine-a of this code.
§16-29C-8. Enforcement.
A violation consisting of the maximum retail prices established under this section is a violation of the West Virginia Unfair Trade Practices Act.
§16-29C-9. West Virginia Rx program established. Program to be administered by secretary of health and human resources.

The West Virginia Rx program, referred to in this article as the "program," is established to reduce prescription drug prices for residents of the state. The program is designed for the state to utilize manufacturer rebates and pharmacy discounts to reduce prescription drug prices. In implementing the program, the state shall serve as a pharmacy benefit manager in establishing rebates and discounts on behalf of qualified residents.

The secretary of health and human resources shall administer the program and exercise the powers and jurisdiction associated with the administration.
§16-29C-10. Program goals.

The Legislature finds that affordability is critical in providing access to prescription drugs for West Virginia residents. This article is enacted by the Legislature to enable the state to act as a pharmacy benefit manager in order to make prescription drugs more affordable for qualified West Virginia residents, thereby increasing the overall health of West Virginia residents, promoting healthy communities and protecting the public health and welfare.

It is not the intention of the state to discourage employers from offering or paying for prescription drug benefits for their employees or to replace employer-sponsored prescription drug benefit plans that provide benefits comparable to those made available to qualified West Virginia residents under this article.
§16-29C-ll. Definitions.
As used in this article, unless the context otherwise indicates, the following terms have the following meanings:

(a)

"Average wholesale price" means 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.

(b) "Initial discounted price" means a price, that is less than or equal to the average wholesale price, minus six percent, plus any dispensing fee provided for under the provisions of any applicable law.

(c) "Labeler" means an entity or person that receives prescription drugs from a manufacturer or wholesaler and repackages those drugs for later retail sale.

(d) "Participating retail pharmacy" or "retail pharmacy" means a retail pharmacy located in this state, or another business licensed to dispense prescription drugs in this state, that participates in the program and that provides discounted prices to residents as provided in section fourteen of this article.

(e) "Pharmacy benefit manager" means an entity that procures prescription drugs at a negotiated rate under a contract.

(f) "Qualified resident" means a resident of the state who has obtained from the department of health and human resources, a West Virginia Rx enrollment card.

(g) "Secondary discounted price" means a price that is equal to or less than the initial discounted price minus the amount of any rebate paid by the state to the participating retail pharmacy.

(h) "West Virginia Rx enrollment card" means a card issued to persons determined to be qualified residents by the department of health and human resources. The enrollment card shall entitle qualified residents to the benefits of reduced prescription drug pricing as provided and intended by the provisions of this article: Provided, That the secretary of the department of health and human resources shall propose legislative rules in accordance with article five, chapter twenty-nine-a of this code that shall prescribe criteria and eligibility requirements based on financial and medical needs of applicants for the enrollment card.
§16-29C-12. Rebate agreement.

A drug manufacturer or labeler that sells prescription drugs in this state pursuant to any state authorized program requiring discounted prices or any other publicly supported pharmaceutical assistance program shall enter into a rebate agreement with the department for this program. The rebate agreement must require the manufacturer or labeler to make rebate payments to the state each calendar quarter or according to a schedule established by the secretary of health and human resources.
§16-29C-13. Rebate amount.

(a) The secretary of health and human resources shall negotiate the amount of the rebate required from a manufacturer or labeler in accordance with this section.

(b)

The secretary of health and human resources shall take 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 information on prescription drug prices and price discounts.

(c) The secretary of health and human resources shall use his or her best efforts to obtain an initial rebate amount equal to or greater than the rebate calculated under the Medicaid program pursuant to 42 United States Code, Section 1396r-8.

(d) With respect to any rebate, the secretary of the department of health and human resources shall use his or her best efforts to obtain an amount equal to or greater than the amount of any discount, rebate or price reduction for prescription drugs provided to the federal government.
§16-29C-14. Discounted prices for qualified residents.
(a) Any participating retail pharmacy that sells prescription drugs covered by a rebate agreement pursuant to section twelve of this article shall discount the retail price of those drugs sold to qualified residents.

(b) The secretary of the department of health and human resources 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.

(c) Beginning the first day of January, two thousand four, a participating retail pharmacy shall offer the initial discounted price.

(d) No later than the first day of October, two thousand four, a participating retail pharmacy shall offer the secondary discounted price.

(e) In determining the amount of discounted prices, the secretary of the department of health and human resources shall consider an average of all rebates provided pursuant to section twelve of this article, weighted by sales of drugs subject to these rebates over the most recent twelve-month period for which the information is available.
§16-29C-15. Operation of program.
(a) The requirements of this section apply to participating retail pharmacies.

(b) The West Virginia board of pharmacy shall propose legislative rules pursuant to article three, chapter twenty-nine-a of this code, requiring disclosure by participating retail pharmacies to qualified residents of the amount of savings provided as a result of the program. The rules must consider and protect information that is proprietary in nature.

(c) The secretary of the department of health and human resources may not impose transaction charges under this program on retail pharmacies that submit claims or receive payments under the program.

(d) A participating retail pharmacy shall submit claims to the department to verify the amount charged to qualified residents under sections twelve and thirteen of this article.

(e) On a weekly or biweekly basis, the department of health and human resources must reimburse a participating retail pharmacy for discounted prices provided to qualified residents under section twelve of this article and for professional fees, which must be prescribed by legislative rule, proposed pursuant to article three, chapter twenty-nine-a of this code, by the secretary of health and human resources. The amount of the initial professional fee must be set at three dollars per prescription.

(f) The department of health and human resources shall collect utilization data from the participating retail pharmacies submitting claims necessary to calculate the mount 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.

§16-29C-16. Action with regard to nonparticipating manufacturers and labelers.

The names of manufacturers and labelers who do not enter into rebate agreements pursuant to this article are public information. The department shall impose prior authorization requirements in the Medicaid program provided for under chapter nine of this code, as permitted by law, for the dispensing of prescription drugs provided by those manufacturers and labelers.
§16-29C-17. Discrepancies in rebate amounts.
(a) Discrepancies in rebate amounts must be resolved using the process established in this section.

(b) 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.

(c) 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.

(d) Following the procedures established in this section, either the department or the manufacturer or labeler may request an administrative hearing pursuant to article five, chapter twenty-nine-a of this code. Supporting documentation must accompany the request for a hearing.
§16-29C-18. Annual summary report.
The department shall report the enrollment and financial status of the program to the Legislature by the second week in January each year.
§16-29C-19. Obligations of department.
The department shall establish simplified procedures for determining eligibility and issuing West Virginia Rx enrollment cards to qualified residents and shall undertake outreach efforts to build public awareness of the program and maximize enrollment of qualified residents. The department may adjust the requirements and terms of the program to accommodate any new federally funded prescription drug programs.
§16-29C-20. Contracting.
The department may contract with a third party to administer any or all components of the program, including, but not limited to, outreach, eligibility, claims, administration and rebate recovery and redistribution.
§16-29C-21. Medical assistance programs.
The department of health and human resources shall administer the program and other medical and pharmaceutical assistance programs, as provided for under this article, in a manner that is advantageous to the programs and to the enrollees in those programs. In implementing the requirements of this article the department may coordinate the other programs and this program and may take actions to enhance efficiency, reduce the cost of prescription drugs and maximize the benefits to the programs and enrollees, including providing the benefits of this program to enrollees in other programs.
§16-29C-22. Rule making.
The department shall propose legislative rules in accordance with article three, chapter twenty-nine-a of this code to implement the provisions of this article.
§16-29C-23. Waivers.
The department may seek any waivers of federal law, rule or regulation necessary to implement the provisions of this article.
§16-29C-24. Profiteering in prescription drugs.

(a) The Legislature finds that prescription drugs are a necessity of life to many citizens of this state. Profiteering in prescription drugs is unlawful and is subject to the provisions of this article. The provisions of this article apply to manufacturers, distributors and labelers of prescription drugs.

(b) As used in this article, unless the context otherwise indicates, the following terms have the following meanings:

(1) "Labeler" means an entity or person that receives prescription drugs from a manufacturer or wholesaler and repackages those drugs for later retail sale.

(2) "Manufacturer" means a manufacturer of prescription drugs and includes a subsidiary or affiliate of a manufacturer.

(c) A manufacturer, distributor or labeler of prescription drugs engages in illegal profiteering if that manufacturer, distributor or labeler:

(1) Exacts or demands an unconscionable price;

(2) Exacts or demands prices or terms that lead to any unjust or unreasonable profit;

(3) Discriminates unreasonably against any person in the sale, exchange, distribution or handling of prescription drugs dispensed or delivered in the state; or

(4) Intentionally prevents, limits, lessens or restricts the sale or distribution of prescription drugs in this state in retaliation for the provisions of this article.
§16-29C-25. Right of action and damages.
The secretary of the department of health and human resources, with the aid of the state attorney general, may bring a civil action in any circuit court where proper venue lies for injuries sustained by any person, group of persons, the state or a political subdivision of the state, when the injury was caused by a violation of this article. There is a right to a jury trial in any action brought in a circuit court under this section. If the secretary of the department of health and human resources prevails, the defendant shall pay three times the amount of damages and the costs of suit, including necessary and reasonable investigative costs, reasonable expert fees and reasonable attorney?s fees. For a willful or repeated violation of this section, punitive damages may be awarded. After deduction of the costs incurred in the litigation, the damages shall be equitably distributed by the secretary to all injured parties.
§16-29C-26. Civil violation.
Each violation of this section is a civil violation for which the secretary of the department of health and human resources, with the aid of the state attorney general, may obtain, in addition to other remedies, injunctive relief and a civil penalty in an amount not to exceed one hundred thousand dollars, plus the costs of suit, including necessary and reasonable investigative costs, reasonable expert fees and reasonable attorney?s fees.
§16-29C-27. Unfair trade practice.
A violation of this article is also a violation of the West Virginia Unfair Trade Practices Act.
§16-29C-28. Investigation by attorney general.
The attorney general, upon the attorney general?s own initiative or upon petition of the secretary of the department of health and human resources or of fifty or more residents of this state, shall investigate suspected violations of this article. The attorney general may require, by summons, the attendance and testimony of witnesses and the production of books and papers before the attorney general related to any such matter under investigation. The summons must be served in the same manner as summonses for witnesses in criminal cases, and all provisions of law related to criminal cases apply to summonses issued under this section so far as they are applicable. All investigations or hearings under this section to which witnesses are summoned or called upon to testify or to produce books, records or correspondence are public or private, at the choice of the person summoned, and must be held in the county where the act to be investigated is alleged to have been committed, or if the investigation is on petition, it must be held in the county in which the petitioners reside. A judge of the circuit court may by order, upon application of the attorney general, compel the attendance of witnesses, the production of books and papers, including correspondence, and the giving of testimony before the attorney general in the same manner and to the same extent as before the circuit court. Any failure to obey such an order may be punishable by that court pursuant to its civil powers of contempt.
§16-29C-29. Agreements with governments of other jurisdictions and other entities.

The state, with the active concurrence of the governor, president of the Senate and speaker of the House, may negotiate and enter into purchasing alliances and regional strategies with governments of other jurisdictions and with other public and private entities for the purpose of reducing prescription drug prices for residents of the state. Any purchasing alliance or regional strategy which requires active participation by any governmental entity of this state, shall first be ratified by a majority of both branches of the Legislature.
§16-29C-30. Drug rebate program.
(a) Effective the first day of May, two thousand five, payment must be denied for drugs from manufacturers that do not enter into a rebate agreement with the department for prescription drugs included in the list of approved drugs under this program. Each agreement must provide that the pharmaceutical manufacturer make rebate payments for both the basic and supplemental components of the program to the department according to the following schedule.

(b) For the quarters beginning the first day of October, two thousand five, the rebate percentage is equal to the percentage recommended by the federal Health Care Financing Administration of the manufacturer?s wholesale price for the total number of dosage units of each form and strength of a prescription drug that the department reports as reimbursed to providers of prescription drugs, provided payments are not due until thirty days following the manufacturer?s receipt of utilization data supplied by the department, including the number of dosage units reimbursed to providers of prescription drugs during the period for which payments are due.

(c) Beginning the first day of October, two thousand seven, the department shall seek to achieve an aggregate rebate amount from all rebate agreements that is six percentage points higher than that required by subsection (b) of this section, provided rebates result in a net increase in the rebate revenue available to the prescription drug price reduction program. In the event the department is not able to achieve the rebate amount required by this subsection without compromising the best interest of recipients of the prescription drug price reduction program, it shall report to the joint committee of the Legislature having jurisdiction over health and human resource service matters and the joint committee of the Legislature having jurisdiction over appropriations and financial affairs in the first regular session of the Legislature commencing after it is determined that the requirements of this subsection are not attainable.

(d) Upon receipt of data from the department, the pharmaceutical manufacturer shall calculate the quarterly payment. If a discrepancy is discovered, the department may, at its expense, hire a mutually agreed-upon independent auditor to verify the pharmaceutical manufacturer's calculation. If a discrepancy is discovered, the department shall justify its data or refund any excess payment to the pharmaceutical manufacturer. If the dispute over the rebate amount is not resolved, a request for a hearing with supporting documentation must be submitted to the secretary of health and human resources in accordance with the provisions of article five, chapter twenty-nine-a of this code. Failure to resolve the dispute may be cause for terminating the drug rebate agreement and denying payment to the pharmaceutical manufacturer for any drugs.

(e) Any prescription drug of a manufacturer that does not enter into an agreement is not reimbursable unless the department determines the prescription drug is essential.

(f) All prescription drugs of a pharmaceutical manufacturer that enters into an agreement pursuant to this section that appear on the list of approved drugs under this program must be immediately available and the cost of the drugs must be reimbursed and is not subject to any restrictions or prior authorization requirements, except as provided in this section. If the secretary of the department of health and human resources establishes maximum retail prices for prescription drugs pursuant to the provisions of this article, the department shall propose legislative rules in accordance with the provisions of article three, chapter twenty-nine-a of this code for the prescription drug price reduction program requiring the use of a drug formulary and prior authorization for the dispensing of certain drugs to be listed on a formulary.
§16-29C-31. Participation requirement.
Beginning the first day of January, two thousand seven, all manufacturers and labelers of drugs that participate in the Medicaid program under this article shall participate in the drug rebate program required by the provisions of this article. For the purposes of this section, "labeler" means an entity or person that receives prescription drugs from a manufacturer or wholesaler and repackages those drugs for later retail sale.
§16-29C-32. Prior authorization in Medicaid program.
If the secretary of the department of health and human resources establishes maximum retail prices for prescription drugs pursuant to the requirements of this article, the department shall propose legislative rules in accordance with the provisions of article three, chapter twenty-nine-a of this code for the Medicaid program provided for under chapter nine of this code requiring additional prior authorization for the dispensing of drugs determined to be priced above the established maximum retail prices. The department shall, additionally, propose legislative rules in accordance with the provisions of article three, chapter twenty-nine-a of this code for the Medicaid program provided for under the provisions of chapter nine of this code, requiring additional prior authorization for the dispensing of drugs provided from manufacturers and labelers who do not enter into agreements with the department. For the purposes of this section, "labeler" means an entity or person.

NOTE: The purpose off this bill is to enact a new article on prescription drug access. The bill contains provisions which create the West Virginia Rx program to reduce prescription drug prices for residents of the state. The program utilizes manufacturer rebates and pharmacy discounts to reduce prescription drug prices. The state will serve as a pharmacy benefit manager in negotiating rebates and discounts on behalf of qualified residents. The program depends on manufacturers and labelers of prescription drugs to pay rebates to the state that are used to provide discounted prices to qualifying West Virginia residents when they purchase prescription drugs. It, further, establishes a fund to receive revenue due to the program, to make payments to retail pharmacies as required by the program and to pay for contracted services, administrative costs and other program costs.

Further, the bill authorizes the Department of Health and Human Resources to coordinate the West Virginia Rx program with other medical and pharmaceutical assistance programs.

The bill describes the proposed legislation as the "Prescription Drug Price Reduction Act." It establishes the Prescription Drug Advisory Commission, a 12-member commission that advises the secretary of health and human resources regarding access to prescription drugs and prescription drug prices. The commission advises the secretary of health and human resources on rule making regarding the procedures to be used in setting and reviewing maximum retail prices for prescription drugs. The commission is required to provide annual reports to the secretary of health and human resources, the Governor and the Legislature.

The secretary of health and human resources is required to undertake a process to determine the need for maximum retail prices for prescription drugs. If the process results in a requirement that maximum retail prices be established, those prices must take effect by a date certain. An appeal mechanism is provided and also a mechanism for addressing situations that may threaten or endanger the public health or welfare. A violation of the maximum retail prices is an unfair trade practice.

The bill also contains a prohibition on profiteering in prescription drugs by manufacturers, their affiliates and subsidiaries, distributors and labelers of prescription drugs. Profiteering may be punished as a civil violation and may result in an award of triple damages, attorney?s fees, punitive damages and costs. A violation of the article is a violation of the West Virginia Unfair Trade Practices Act.

It also authorizes the state to negotiate and enter into purchasing alliances and regional strategies with governments and public and private entities for the purpose of reducing prescription drug prices for residents of the state.

It, further, includes statements of findings, intent and purpose. It provides appropriations and allocations to fund the activities and obligations involved in the provisions of the new article.

If the secretary of health and human resources establishes maximum retail prices for prescription drugs the bill directs the secretary of health and human resources to establish a drug formulary and prior authorization for dispensing drugs in the elderly low-cost drug program. In the future, it requires manufacturers and labelers of drugs that participate in the Medicaid program to participate in the drug rebate program in the elderly low-cost drug program. If the secretary of health and human resources establishes maximum retail prices for prescription drugs, the bill directs the secretary of health and human resources to require prior authorization for the dispensing of drugs in the Medicaid program provided for under state law that would apply to drugs that are priced above the established maximum retail prices. It directs the department to require prior authorization for the dispensing of drugs in the Medicaid program that are provided from manufacturers and labelers who do not enter into rebate agreements with the state under the West Virginia Rx program.

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