H. B. 2263
(By Delegates Fleischauer, R. Thompson,
Evans and Hatfield)
[Introduced January 15, 2003; 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 five-u, 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-u, to read as
ARTICLE 5U. THE WEST VIRGINIA PRESCRIPTION DRUG FAIR PRICING ACT.
§16-5U-1. Short title.
This article shall be called the "West Virginia Prescription
Drug Fair Pricing Act."
§16-5U-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
(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
(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
(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.
As used in this article:
(1) "Department" means the department of health and human
(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.
§16-5U-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
(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
(2) Beginning on the first day of July, two thousand three, a
participating retail pharmacy shall offer prescription drugs at or
below the average wholesale price, minus six percent, 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 four,
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
(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
§16-5U-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
(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.
§16-5U-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 must justify the reason for the
discrepancy or make payment to the department for any additional
(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 must 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.
§16-5U-7. "Rx Dedicated Fund."
There is established in the state treasury a special revenue
fund designated the "Rx dedicated fund", which shall be
administered by the secretary. 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.
§16-5U-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.
§16-5U-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.
§16-5U-10. Rule making.
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
The department may seek any waivers of federal law, rule or
regulation necessary to implement the provisions of this article.
This bill creates the "West Virginia Prescription Drug
Fair Pricing Act". Under this act, a state "Rx Program" would be
established which provides a prescription card to state residents
who do not have prescription drug insurance coverage or are
underinsured; the secretary of the DHHR would be directed to
negotiate on behalf of the uninsured for substantial rebates from drug companies and discounts from retail pharmacies; and the
savings would be passed along to Rx program participants.
This article is new; therefore, strike-throughs and
underscoring have been omitted.