H. B. 4637


(By Delegates C. White, Compton, Webster,

Fleischauer, Dempsey, Hrutkay and Caputo)


[Introduced February 22, 2002; referred to the

Committee on Health and Human Resources 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-u, relating to establishing the fair market drug pricing act.

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-u, to read as follows:
ARTICLE 5U. FAIR MARKET DRUG PRICING ACT.
 §16-5U-1. Short title.
This article may be cited as the "Fair Market Drug Pricing Act."
 §16-5U-2. Findings and purpose.
(a) Findings. -- The Legislature finds that:

(1) The state of West Virginia pays substantially more than the fair market price for many prescription drugs used in the medicaid program. Considering the large volume of drugs purchased, the state will receive better drug prices by entering into voluntary negotiations with drug companies for supplemental rebates above and beyond the federally-designated rebates.
(2) California and Florida currently have programs to negotiate supplemental rebates. As a result, those states receive better medicaid drug prices than West Virginia.
(3) In this time of economic difficulty, West Virginia needs to maximize its financial resources in order to provide as much health coverage as possible for low-income residents. Now more than ever, West Virginia needs to lower the prices it pays for prescription drugs.
(4) At the same time, approximately one in four West Virginia residents are uninsured or underinsured for prescription drug coverage, and do not qualify for medicaid. These uninsured or underinsured residents pay excessive prices for prescription drugs. In many cases, these excessive drug prices have the effect of denying residents access to medically necessary care, thereby threatening their health and safety.
(5) Among these uninsured and underinsured residents, many require repeated doctor or medical clinic appointments, having gotten sicker because they cannot afford to take the drugs prescribed for them. Many 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 the prescription drugs that could have supported them outside of an institution. In each of these circumstances, uninsured and underinsured residents too often become medicaid recipients because of their inability to afford prescription drugs. Therefore, helping secure lower drug prices for the uninsured and underinsured directly benefits and supports medicaid.
(6) 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, underinsured or are medicaid beneficiaries. The state already provides drugs and acts as a prescription benefits manager for a variety of programs, and should expand that role to negotiate voluntary drug rebates, using these funds to maintain and expand medicaid services while offering lower drug prices to the uninsured who do not qualify for medicaid.
(b) Purpose. -- Recognizing that the state already acts as a prescription benefits 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 the state medicaid program and to state residents. This program will improve public health and welfare, promote the economic strength of our society, and both directly and indirectly benefit the state medicaid program.
§16-5U-3. Definitions.
As used in this article:
(1) "Secretary" means the Secretary of the Department of Health and Human Resources, or the Secretary's designee(s).
(2) "Department" means the Department of Health and Human Resources.
(3) "Manufacturer" means a manufacturer of prescription drugs as defined in 42 U.S.C. Section 1396r-8(k)(5), including a subsidiary or affiliate of a manufacturer.
(4) "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 Food and Drug Administration under 21 Code of Federal Regulations, 207.20 (1999).
(5) "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 prescription card program.
(6) "Wholesaler" means a business licensed under article eight, chapter sixty-a of this code to distribute prescription drugs in this state.
 §16-5U-4. Negotiated drug discounts and rebates.
 (a) Drug discount and rebate agreements. -- The secretary shall negotiate discount prices or rebates for prescription drugs from drug manufacturers and labelers. A drug manufacturer or labeler that sells prescription drugs in this state may voluntarily elect to negotiate: (1) Supplemental rebates for the medicaid program over and above those required under 42 U.S.C. Section 1396r-8; (2) discount prices or rebates for the prescription card program; and (3) discount prices or rebates for any other state program that pays for or acquires prescription drugs.
(b) Rebate amounts. -- In negotiating rebate terms, the secretary shall take into consideration: The rebate calculated under the medicaid rebate program pursuant to 42 U.S.C. Section 1396r-8, the price provided to eligible entities under 42 U.S.C. Section 256b, and any other available information on prescription drug prices, discounts and rebates.
(c) Failure to agree. --
(1) The secretary shall prompt a review of whether to place a manufacturer's or labeler's products on the prior authorization list for the state medicaid program and take similar actions involving prior authorization or formularies for any other state-funded or operated prescription drug program, if:
(i) The secretary and a drug manufacturer or labeler fail to reach agreement on the terms of a supplemental medicaid rebate or a discount or rebate for the prescription card program; and
(ii) The discounts or rebates offered by the manufacturer or labeler are not as favorable to the state as the prices provided to eligible entities under 42 U.S.C. Section 256b.
(2) Any prior authorization must meet the requirements of 42 U.S.C. Section 1396r-8(d)(5) and be done in accordance with any applicable provisions of this code. The secretary shall promulgate rules creating clear procedures for the implementation of this section.
§16-5U-5. Administration.
(a) Discrepancies in rebate amounts. -- Disputes or discrepancies in rebate amounts must be resolved using the process established in this subsection.
(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 provide a refund to the manufacturer or labeler.
(3) Following the procedures established in paragraph (a) or (b), either the department or the manufacturer or labeler may request a hearing. Supporting documentation must accompany the request for a hearing.
(b) Annual summary report. -- The department shall report the enrollment and financial status of the prescription card program and report savings from supplemental medicaid rebates to the Legislature by the first day of February of each year.
(c) Coordination with other programs. -- Where the secretary finds that it is beneficial to both the prescription card program and another state program, including the state medicaid program, to combine drug pricing negotiations to maximize drug rebates, the secretary shall do so.
(d) Rule making. -- The department shall adopt rules to implement the provisions of this section.
(e) Waivers. -- The department may seek any waivers of federal law, rule or regulation necessary to implement the provisions of this section.
 §16-5U-6. Severability.
If any provisions of this article or the application thereof to any person or circumstances is held invalid, the invalidity shall not affect other provisions or applications of the article which can be given effect without the invalid provision or its application and to this end the provisions of this article are declared severable.
§16-5U-7. Effective date.
This article shall take effect on the first day of July, two thousand two and discounts to participants in the prescription card program shall begin the first day of January, two thousand three.




NOTE: The purpose of this bill is to establish the Fair Market Drug Pricing Act.

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