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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 medically-appropriate 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 October 1, 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.

(c) The commissioner’s prescription drug consumer protection rules shall be designed to achieve the following purposes:

(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

(C) have any other adverse effect on the financial and medical interests of plan beneficiaries;

(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:

(1) Identifying and organizing pharmacies, clinics, physicians and other health care providers who can assist Vermonters in the prescribing and purchasing of prescription drugs at the lowest possible price.

(2) Assisting and organizing the communications, prescriptions, purchasing, transportation and other activities needed for Vermont residents to purchase prescription drugs at the lowest possible price.

(3) Any other proposal designed to permit Vermont residents to purchase prescription drugs at the lowest possible price.

(b) The request for proposals of the office of economic opportunity shall be approved by the secretary of human services, after review and recommendations from a committee convened by the director of the office of economic opportunity, including the director, the commissioner of health, the office of Vermont health access, one consumer representative appointed by the director, one elder consumer representative appointed by the director, and one or more members of the commission on health care values and priorities appointed by the director. The request for proposals shall include the following provisions:

(1) Grant proposals for fiscal year 2002 shall be submitted to the office of economic opportunity no later than July 15, 2001.

(2) Proposals shall be implemented by August 2001.

(3) Grant proposals shall ensure that any Vermont resident may be eligible for assistance under the grant programs without regard to membership or affiliation with the organization or other entity administering or implementing the grant proposal.

(c) The secretary of human services may award one or more grants, after review by and recommendations from the committee designated in subsection (b) of this section. In awarding grants, the secretary shall consider the need for geographic balance of programs, and the ability of all Vermonters, without regard to the geographic location of their residence, to access assistance under the grant programs authorized by this section. The office of economic opportunity shall administer implementation of the grants awarded by the secretary.

Sec. 10. APPROPRIATIONS; POSITIONS ADDED; TEMPORARY

EMERGENCY PHARMACEUTICAL ASSISTANCE PROGRAM

(a) The sum of $275,000.00 is appropriated from the general fund to the office of economic opportunity in fiscal year 2002 for the award of grants under Sec. 9 of this act.

(b) The sum of $25,000.00 is appropriated from the general fund to the office of economic opportunity in fiscal year 2002 for administrative costs associated with awarding grants under Sec. 9 of this act. The sum appropriated by this subsection shall carry forward and be used for such purposes in fiscal year 2002.

(c) There is created in the office of economic opportunity in fiscal year 2001, the following position: one (1) part-time administrative assistant.

Part D. Federally-Qualified Health Centers

Sec. 11. FEDERALLY-QUALIFIED HEALTH CENTERS

(a) It is the purpose of this section to assist Vermonters to purchase prescription drugs at the lowest possible cost, and to advance Vermont’s goal of affordable access to quality health care for all Vermonters through the expansion and development of federally-qualified health centers throughout the state. The general assembly finds that an appropriate expansion of federally-qualified health centers can:

(1) empower communities to create a system of universal access to primary health care that people need;

(2) create a partnership between Vermonters who use health care services and Vermonters who provide those services;

(3) reduce health care costs for patients through administration of an income-based sliding scale fee schedule for primary health care services;

(4) expand access to health care in medically-underserved areas, and reduce cost shifting to private health insurance plans through a service-based reimbursement schedule for primary health care providers that is determined by the reasonable cost of the services provided; and

(5) reduce health care costs for individuals, businesses and government through access to the Federal Supply Schedule’s substantially discounted prescription drug prices.

(b) Within 45 days of passage of this act, the governor is directed to request from the federal government medically-underserved area designations, and any other designation or approval needed to establish federally-qualified health centers or other entities permitted to access the Federal Supply Schedule for prescription drugs in all appropriate regions of the state of Vermont not so designated on the effective date of this act, and shall take all steps necessary to secure such designations and approvals.

(c) Within 30 days of passage of this act, the secretary of human services shall award a contract to implement the provisions of this section, and shall award to the contractor such funds as are appropriated by the general assembly to carry out the purpose of this section.

(d) The contract awarded by the secretary of human services to carry out the purposes of this section shall provide for the following:

(1) the development and implementation of a plan to create an appropriate number of federally-qualified health center administrative entities statewide, with such satellite facilities as the federally-qualified health center administrative entities may determine are necessary to meet the health care needs of the community;

(2) technical assistance, by contract or other means, to rural health centers and health care providers seeking federal approval as a federally-qualified health center;

(3) grants not to exceed $10,000.00 to rural health centers and health care providers, matched by the grant recipient at 50 percent of the grant amount, to support all or a portion of the expenses associated with conversion to a federally-qualified health center;

(4) grants not to exceed $10,000.00 to nonprofit community organizations, matched by the grant recipient at 50 percent of the grant amount, to support all or a portion of the expenses associated with the establishment of federally-qualified health center administrative entities; and

(5) the development and implementation of plans to ensure that each federally-qualified health center operating in this state provides access to prescription drugs to patients of the center at Federal Supply Schedule prices, through contracts with existing pharmacies in the community, or through a health center dispensary if a contract with a community pharmacy is not feasible.

(e) The agency of human services and its contractor shall report to the general assembly on January 1 of each year with its progress in implementing the provisions of this section, and with an accounting of its use of grant funds.

(f) Vermont’s Congressional Delegation is urged to take all actions necessary and desirable in securing designations, approvals and other actions by the federal government required to carry out the purposes of this section.

(g) The secretary of human services may exercise sole source contracting authority to carry out the provisions of this section.

Sec. 12. APPROPRIATIONS; FEDERALLY-QUALIFIED HEALTH

CENTERS

The sum of $277,000.00 is appropriated to the agency of human services from the general fund in fiscal year 2002 to support a contract to carry out the purposes of Sec. 11 of this act, such sum to be carried forward and appropriated to the agency in fiscal year 2003 for such purposes. The agency of human services and its contractor shall identify the funds necessary to carry out the purposes of Sec. 11 of this act in fiscal year 2004, and report such information to the general assembly on or before January 1, 2003.

Part E. VScript; Catastrophic Prescription Drug Expense Program; Pharmacy Discount Plan; Prescription Drug Cost Controls

Sec. 13. 33 V.S.A. § 1991(3) is amended to read:

(3) "Drug" means a drug that may not be dispensed unless prescribed by a health care provider as defined by section 9402(6) of this title acting within the scope of the provider’s license. A drug shall always be the lowest cost brand available to the pharmacist unless the health care provider writing the prescription specifies otherwise. The term includes insulin, an insulin syringe and an insulin needle. The term excludes:

(A) a drug determined less than effective under the federal Food, Drug and Cosmetics Act;

(B) except for purposes of the accruing of prescription drug expenses for recipients eligible under subdivision 1993(a)(2) of this title, and except for purposes of the VScript prescription drug insurance program under section 2000 of this title, a drug within therapeutic classifications primarily associated with the treatment of acute medical conditions; and

(C) a central nervous system agent other than:

(i) agents used for treatment of convulsive disorders;

(ii) nonsteroidal anti-inflammatory agents for arthritis; and

(iii) agents used primarily for control of psychotic conditions diagnosed under current classifications of the Diagnostic Statistical Manual.

Sec. 14. 33 V.S.A. § 1992(e) is amended to read:

(e) Any manufacturer of prescription drugs purchased by persons receiving assistance under this chapter, or any other publicly-supported pharmaceutical assistance program, including Medicaid and the VHAP Pharmacy Program, as determined by the commissioner, shall pay to the commissioner, as a condition of participation in the program, and as a condition of participating in such other publicly-supported pharmaceutical assistance program, including Medicaid and the VHAP pharmacy program, as determined by the commissioner, a rebate in an amount at least as favorable as the rebate paid to the commissioner in connection with the Medicaid program. Agreements with participating manufacturers may also include provisions for the coordination of benefits between pharmaceutical manufacturer patient assistance programs and the prescription drug benefits provided through programs administered by the department, financial support from pharmaceutical manufacturers for the catastrophic prescription drug expense program authorized by subsection 1994(e) of this title, and any other provisions determined by the commissioner to be necessary or desirable for the cost-effective operation of the prescription drug benefit programs administered by the department. The provisions of this subsection shall not apply if, and only to the extent, necessary to ensure the availability of a drug essential to the health of program beneficiaries as determined by the commissioner in his or her sole discretion.

Sec. 15. 33 V.S.A. § 1992(f) is added to read:

(f) After notice and an opportunity for hearing, the department may designate itself as a wholesale purchaser of prescription drugs for one or more prescription drugs sold in this state upon determining that such designation and wholesale purchases will promote the economic and medical interests of Vermont prescription drug consumers. The department shall be the sole distributor of such drugs for retail sale in this state.

Sec. 16. 33 V.S.A. § 1993 is amended to read:

§ 1993. ELIGIBILITY

(a)*[(1)]* A person shall be eligible for assistance under this chapter if*[:

(A)]* he or she is a resident of Vermont at the time of application for benefits *[and has been such, continuously, for the 12 months immediately preceding application; he]*, as defined by the commissioner by rule, and if:

*[

(B)]*(1) VScript: Medicaid-funded and state-funded eligibility. He or she is at least 65 years of age, or disabled and receives Social Security disability benefits (SSDI)*[,]* or is a Medicare beneficiary*[;]*, and

*[

(C)]* the person’s household income, when calculated in accordance with the rules adopted for the Vermont health access plan under Act No. 14 of the Acts and Resolves of the 1995 Session of the general assembly, as amended, is no greater than 225 percent of the federal poverty level*[.]*; or

(2) VScript prescription drug insurance program. The person is enrolled in the VScript prescription drug insurance program under section 2000 of this title, and is subject to a schedule of monthly premiums, annual deductible amounts, coinsurance, copayment and other cost-sharing payments established by the commissioner, based on a sliding scale of annual household income; or

(3) Catastrophic prescription drug expense program. The person’s household income, when calculated in accordance with the rules adopted for the Vermont health access plan under Act No. 14 of the Acts and Resolves of the 1995 Session of the general assembly, as amended, is less than or equal to 300 percent of the federal poverty level, and the recipient’s unreimbursed household expenditures for prescription drugs exceed the amount provided for in subsection 1994(e) of this title. The commissioner shall establish procedures for the coordination of Medicaid benefits with persons eligible for assistance under this subdivision.

*[

(2)]*(b) A person shall be eligible for assistance with prescription drug expenses covered under this chapter upon payment of the cost sharing amount required by section *[254]* 1994 of this title.

*[

(b)]*(c) A person whose prescription drug expenses are paid or reimbursable, either in whole or in part, by any plan of assistance or insurance, other than Title XVIII of the Social Security Act (Medicare), shall not be eligible for pharmaceutical assistance under *[this chapter]* subdivisions (a)(1) or (3) of this section. No assistance shall be provided under this chapter with respect to an individual drug purchase that may be covered in whole or in part by Title XVIII of the Social Security Act (Medicare).

(d)(1) Notwithstanding any other provision of law, no general fund amounts appropriated for Vermont’s pharmaceutical assistance programs under this chapter, and the pharmaceutical benefits program component of the Vermont health access plan under Act No. 14, Sec. 14(a)(6) of the Acts and Resolves of the 1995 Session of the general assembly, as amended, may be spent if federal funds in such amounts are made available and are spent on benefits for the beneficiaries of such programs.

(2) To the greatest extent feasible, in the event of the enactment after the effective date of this section of any federal program, or expansion of an existing federal program which is designed to provide pharmaceutical assistance to individuals receiving assistance under this chapter, or under the pharmaceutical benefits program component of the Vermont health access plan under Act No. 14, Sec. 14(a)(6) of the Acts and Resolves of the 1995 Session of the general assembly, as amended, general funds which would otherwise be spent for such state programs shall be used to supplement general funds appropriated for such state programs.

(3) The commissioner shall work with Vermont’s congressional delegation to help ensure that Vermont’s share of any new federal monies appropriated for beneficiaries of state pharmaceutical assistance programs can be used to address the unmet pharmaceutical needs of such beneficiaries, and will not replace existing funding for such programs.

Sec. 17. 33 V.S.A. § 1994(a) is amended to read:

(a) Benefits under this chapter shall be subject to payment of a co-payment or coinsurance amount by the recipient in accordance with the provisions of this section:

(1) Medicaid-funded VScript. In the case of recipients eligible for assistance under subdivision 1993(a)(1) of this title with income of less than *[176]* or equal to 175 percent of the federal poverty level, such co-payment shall be the same co-payment requirements that exist under the pharmaceutical benefits component of the Vermont health access plan under Act No. 14, Sec. 14(a)(6) of the Acts and Resolves of the 1995 Session of the general assembly, as amended.

(2) State-funded VScript. In the case of recipients eligible for assistance under subdivision 1993(a)(1) of this title whose household income is *[176]* greater then 175 percent of the federal poverty level *[or more and no greater than]* and less than or equal to 225 percent of the federal poverty level the coinsurance payment shall be 50 percent of the cost of the drug.

(3) VScript administered prescription drug insurance program. For recipients enrolled in the VScript administered prescription drug insurance program under section 2000 of this title, benefits shall be subject to the payment of such co-payment, coinsurance, premium, deductible or other cost-sharing amounts as are established by the commissioner.

(4) Catastrophic prescription drug expense program. In the case of recipients eligible for assistance under subdivision 1993(a)(3) of this title:

(A) VScript-eligible recipients. For recipients subject to the provisions of subdivision (2) of this section, the coinsurance payment shall be 50 percent of the cost of the drug until such time during each coverage period as the recipient’s unreimbursed household expenditures for drugs covered under this chapter exceed the amount provided for in subsection (e) of this section, after which time any such coinsurance shall be the same coinsurance requirements that exist under the pharmaceutical benefits component of the Vermont health access plan under Act No. 14, Sec. 14(a)(6) of the Acts and Resolves of the 1995 Session of the general assembly, as amended; and

(B) Recipients ineligible for VScript. For recipients not subject to the provisions of subdivision (2) of this section, the coinsurance payment shall be 100 percent of the cost of the drug, or the coinsurance payment required by the recipient’s private or public prescription drug benefit plan until such time during each coverage period as the recipient’s unreimbursed household expenditures for drugs covered under this chapter exceed the amount provided for in subsection (e) of this section, after which time any such coinsurance shall be 50 percent of the cost of the drug, or 50 percent of any applicable coinsurance payment required by the recipient’s private or public prescription drug benefit plan.

Sec. 18. 33 V.S.A. § 1994(e) is added to read:

(e) Catastrophic prescription drug expense program; household drug expense threshold.

(1) For individuals eligible for assistance under subdivision 1993(a)(3) of this title, the initial period for accruing expenditures for covered drugs shall begin on January 1, 2001 and end on December 31, 2001, provided that only expenditures for covered drugs incurred after July 1, 2001 shall be eligible for assistance under this subsection, and provided further that only expenditures incurred in any coverage period after the date of the individual’s application and enrollment shall be eligible for assistance under this subsection. During such six-month period and during each subsequent coverage period beginning on January 1 and ending on December 31 of each year, no cost sharing shall be required for the remainder of such period in excess of the cost-sharing requirements provided for in subdivision 1994(a)(4) of this title by any eligible recipient whose unreimbursed household expenditures for drugs covered under this chapter, when aggregated with the unreimbursed household expenditures for covered drugs of the other members of the household, exceed ten percent of the individual’s household income.

(2) For the purpose of determining the percent limit for unreimbursed household expenditures for drugs, the commissioner may establish, by rule, income groups. The program shall pay the remainder of such recipient’s unreimbursed household expenditures for covered drugs upon application and information provided by the recipient sufficient to satisfy the requirements of this subsection at any time during the coverage period.

(3) The department shall monitor enrollment on a monthly basis in the catastrophic benefits element of the program provided for under this subsection. In the event that appropriations in any fiscal year are not sufficient to support the payment of benefits for all otherwise eligible individuals under this subsection, the department shall limit enrollments, amend the eligibility criteria to increase the applicable percentage of the recipient’s household income that must be spent on prescription drugs before benefits are paid by the program, prorate benefits provided for under this subsection, or take any other administrative actions necessary to ensure that expenditures do not exceed appropriations for such benefits in any fiscal year.

Sec. 19. 33 V.S.A. § 1999 is added to read:

§ 1999. PHARMACY DISCOUNT PLAN

(a) Medicaid Rebate Plan. The commissioner of prevention, assistance, transition, and health access is authorized to seek from the federal government any Medicaid waiver amendment or additional Medicaid waivers necessary and desirable to establish the pharmacy discount plan within an expanded VHAP pharmacy program of the Vermont health access plan, for the purpose of including all Vermont residents in a program that secures for enrolled beneficiaries the benefits of Medicaid discounts and rebates, or any other discount, rebate, pharmacy benefit management, or utilization strategy. The waiver amendment or additional waiver requested by the commissioner shall include the following groups and programs in the pharmacy discount plan:

(1) The pharmacy discount plan shall permit enrollment of all elderly and Medicare-eligible disabled Vermonters with household income above 175 percent of federal poverty level with no Medicare supplemental insurance policy that covers prescription drugs, and other Vermonters with household incomes up to 300 percent of the federal poverty level who do not have an insurance program that includes a prescription drug benefit. The pharmacy discount plan shall include the beneficiaries of the pharmaceutical assistance program under chapter 19 of this title (VScript) for the purpose of securing a discount proportionate to the beneficiary’s coinsurance payment for maintenance treatment prescription drugs.

(2)(A) Any individual Vermont resident, and any Vermont purchaser of group health insurance coverage may choose to participate in the pharmacy discount plan, without regard to the income of the resident or plan beneficiary, including individuals currently receiving coverage for other health care benefits through any other health insurance plan, in accordance with rules adopted by the commissioner.

(B) The commissioner of prevention, assistance, transition, and health access, after notice and an opportunity for hearing, may require a health insurance plan to permit plan beneficiaries to use the pharmacy discount plan authorized by this section for prescription drug purchases, unless the health insurance plan demonstrates to the satisfaction of the commissioner that an alternative purchasing program for prescription drugs will provide greater economic or other benefits to plan beneficiaries.

(C) 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) The pharmacy discount plan shall include beneficiaries of the catastrophic prescription drug expense program established in section 1994 of this title, and beneficiaries of the VScript prescription drug insurance program established in section 2000 of this title.

(4) The pharmacy discount plan shall be designed so as not to affect the budget neutrality provisions of the Vermont health access plan waiver, in order to demonstrate the cost and feasibility of a Medicare pharmacy benefit.

(b) VScript Rebate Plan.

(1) In the event that all of the elements of the pharmacy discount plan authorized by subsection (a) of this section are not approved by the federal government by January 1, 2002, the commissioner of prevention, assistance, transition, and health access shall establish by rule on or before July 1, 2002 a state-funded and administered pharmacy discount plan permitting all Vermont residents to be included as potential beneficiaries in an unsubsidized program that secures for enrolled beneficiaries the benefits of Medicaid and VScript discounts and rebates, or any other discount, rebate, pharmacy benefit management or utilization strategy.

(2)(A) Any individual Vermonter or Vermont purchaser of group health insurance coverage may choose to participate in the plan, including individuals currently receiving coverage for other health care benefits through any other health insurance plan, in accordance with rules adopt by the commissioner.

(B) The commissioner of prevention, assistance, transition, and health access, after notice and an opportunity for hearing, may require a health insurance plan to permit plan beneficiaries to use the pharmacy discount plan authorized by this section for prescription drug purchases, unless the health insurance plan demonstrates to the satisfaction of the commissioner that an alternative purchasing program for prescription drugs will provide greater economic or other benefits to plan beneficiaries.

(C) 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) The pharmacy discount plan shall include beneficiaries of the catastrophic prescription drug expense program established in section 1994 of this title, and beneficiaries of the VScript prescription drug insurance program established in section 2000 of this title. The pharmacy discount plan shall include the beneficiaries of the pharmaceutical assistance program under chapter 19 of this title (VScript) for the purpose of securing a discount proportionate to the beneficiary’s coinsurance payment for maintenance treatment prescription drugs.

(c) The commissioner may adopt such rules as are necessary to carry out the pharmacy discount plan programs authorized by this section.

Sec. 20. 33 V.S.A. § 2000 is added to read:

§ 2000. VSCRIPT PRESCRIPTION DRUG INSURANCE PROGRAM

(a) In the event that the federal government does not approve a waiver amendment permitting the pharmacy discount plan to operate in the manner contemplated by section 1999 of this title, the commissioner of prevention, assistance, transition, and health access shall establish a VScript prescription drug insurance program on August 1, 2002.

(b) Eligible individuals under the VScript prescription drug insurance program shall be Vermont residents who are at least 65 years of age, or who are disabled and eligible to receive Medicare or Social Security disability benefits. Benefits covered by the program shall be defined by subdivision 1991(3) of this title. The program shall require the recipient to pay a premium established by the commissioner, and a 50-percent coinsurance amount. The premium shall be calculated from a sliding scale formula based on the recipient’s income, in an amount and for such periods as the commissioner shall establish. Premium amounts shall be established so that total premium revenue is sufficient to pay for the cost of benefits for such recipients, including such reserves as the commissioner determines are needed to account for adverse selection, administrative costs, and other unanticipated costs. The program may adjust premiums annually to account for any change in the cost of benefits. The commissioner shall establish an enrollment period for applications for coverage under this subdivision.

Sec. 21. 33 V.S.A. § 2001 is added to read:

§ 2001. VERMONT PRESCRIPTION DRUG COST CONTROLS

The commissioner may establish, by rule, one or more of the following prescription drug cost control, utilization, and price reduction mechanisms, for the purpose of increasing the affordability of medically-necessary prescription drugs for Vermonters:

(1) The commissioner may negotiate discounts and receive manufacturer rebates for the benefit of the beneficiaries of any public prescription drug health benefit plan.

(2) The commissioner may negotiate and contract with prescription drug manufacturers, wholesale suppliers, or any other entity, separately or in concert with any public or private health benefit plan or prescription drug purchasing entity within or outside this state for the establishment of prescription drug price schedules, discounts, rebates and any other cost control mechanism, for the benefit of the beneficiaries of any public prescription drug benefit plan.

(3)(A) The commissioner may contract with a third party, separately or in concert with any public or private health benefit plan or prescription drug purchasing entity within or outside this state, to administer a pharmacy benefit management program for purposes including the following:

(i) education for health care providers, pharmacists and patients designed to improve the quality and cost-effectiveness of prescription drug therapies;

(ii) the establishment of a formulary to purchase medically-necessary prescription drugs at the lowest possible cost; and

(iii) utilization review of prescription drug purchases.

(B) The pharmacy benefit management program may be established for the benefit of the beneficiaries of any public prescription drug health benefit plan, and any other public or private health benefit plan within or outside of this state.

(C) The standards and procedures developed for the system of therapeutic and cost-effective utilization of prescription drugs established by the commissioner under section 1998 of this title shall be used to carry out the purposes of this subdivision (3).

(4) The commissioner may establish a mail order or internet purchasing program for use at the voluntary option of beneficiaries of any public prescription drug health benefit plan, for the purpose of empowering beneficiaries to lower the cost of their medically necessary prescription drugs. The commissioner shall establish quality standards for mail order and internet vendors permitted to participate in the program established by this subdivision.

(b) As used in this section, "public prescription drug health benefit plan" includes the Medicaid program, the Vermont health access plan – pharmacy program (Act No. 14 of 1995), a VScript program (33 V.S.A. chapter 19), the state employees’ health benefit plan, and any other prescription drug health benefit plan offered or administered by the state of Vermont or any agency or instrumentality of the state.

Sec. 22. PROGRAM IMPLEMENTATION; APPROPRIATIONS;

CONTRACTING AUTHORITY; EXPEDITED RULES;

REPORT ON PHARMACEUTICAL MANUFACTURER

CONTRIBUTIONS; PROGRAM ADMINISTRATION REPORT;

CONSUMER GUIDE; POSITION AUTHORIZED

(a) The commissioner of prevention, assistance, transition, and health access shall implement the provisions of the catastrophic prescription drug expenses program on or before August 1, 2001.

(b) The amounts of $5,000,000.00 is appropriated from the health access trust fund in fiscal year 2002 to the department of prevention, assistance, transition, and health access to support catastrophic prescription drug expense program benefits and administrative costs.

(c) The commissioner may exercise sole source contracting authority in order to implement the catastrophic prescription drug expenses program, and the VScript Rebate Plan authorized in Sec. 19(b) of this act in a timely manner.

(d) Notwithstanding the provisions to the contrary of 3 V.S.A. chapter 25, the commissioner of prevention, assistance, transition, and health access is authorized to adopt rules under the expeditious rule-making procedures provided in this subsection in order that changes reflected in Secs. 13 through 18, and Sec. 19(b) of this act may be implemented in a timely manner. Such rules may be adopted by filing them in final proposed form with the secretary of state and the legislative committee on administrative rules under 3 V.S.A. § 841, after the agency of human services’ publication, in the three daily Vermont newspapers of highest average circulation, of a notice that lists all rules to be adopted by this process and provides for a seven-day public comment period. The legislative committee on administrative rules shall review and may approve or object to the final proposed rules under the provisions of 3 V.S.A. § 842, except that its action shall be completed within 15 days or by June 22, 2001, whichever is sooner. Rules so adopted may be effective as soon as five days after adoption, and have the full force and effect of rules adopted pursuant to 3 V.S.A. chapter 25, and may supersede or amend existing rules. Any such rules filed by the secretary of human services with the secretary of state and the legislative committee on administrative rules shall be deemed to be in full compliance with 3 V.S.A. § 843 and shall be accepted by the secretary of state if filed with a certification by the secretary of human services that the rule is required to meet the purposes of this section.

(e) The commissioner of prevention, assistance, transition, and health access shall report to the health access oversight committee each month until January 1, 2002 with the results of the commissioner’s negotiations and agreements with participating manufacturers pursuant to Sec. 14 of this act, including agreements for financial support from pharmaceutical manufacturers for the catastrophic prescription drug expense program authorized by subsection 1994(e) of Title 33. The commissioner also shall report to the health access oversight committee each month for 24 months following the commissioner’s exercise of any of the prescription drug price and cost control powers granted pursuant to section 1999 of Title 33.

(f) On or before January 1, 2002, the commissioner of prevention, assistance, transition, and health access shall review all state and federal programs intended to facilitate access or provide assistance to purchasers of prescription drugs, including all programs created or amended by this act, and report to the general assembly on recommendations to combine, merge or consolidate such programs to improve their administration and their effectiveness in providing benefits to the people of the state.

(g) The commissioner of prevention, assistance, transition, and health access shall prepare by January 1, 2002, and annually thereafter, a consumer’s guide to public and private prescription drug assistance programs, and shall solicit funds from pharmaceutical manufacturers to support the preparation and distribution of such guides.

(h) The following position is authorized in the department of prevention, assistance, transition, and health access in fiscal year 2001: (1) eligibility specialist.

Part E. Pharmaceutical Manufacturer Patient Assistance Programs

Sec. 23. PHARMACEUTICAL MANUFACTURER PATIENT

ASSISTANCE PROGRAMS

(a) The general assembly finds that pharmaceutical manufacturer patient assistance programs have the potential to benefit a larger number of low income, uninsured and underinsured Vermonters; however, the current way that such programs are administered has resulted in low participation by health care providers and their patients, and few Vermonters benefiting from these programs.

(b) The commissioner of prevention, assistance, transition, and health access shall request proposals from community health centers or other nonprofit organizations to administer a statewide program to improve coordination and implementation of pharmaceutical manufacturer patient assistance programs, provided that the commissioner has successfully secured funds from pharmaceutical companies sufficient to support the costs of the program, including the costs of a staff person to administer the program, and including a plan to inform the public concerning patient assistance programs.

(c) The goal of proposals authorized by this section shall be to develop systems to facilitate access to pharmaceutical manufacturer patient assistance programs. The grant recipient shall assist the commissioner in negotiating with pharmaceutical companies to develop a simplified system to assist low income Vermonters in accessing such programs. Components of the simplified system may include a simplified, single application process, a voucher system for dispensing drugs through local pharmacies, and coordination with and supplementation of the Vermont health access plan pharmacy assistance program. After a simplified system has been developed, the grant recipient shall administer a statewide program to assist health care providers in establishing a program for their patients, to provide consultation to participating health care providers regarding changes to the program, to provide patients with information regarding their eligibility for pharmaceutical manufacturer patient assistance programs, and to work with representatives of pharmaceutical manufacturers to improve the program.

(d) The grant recipient and the commissioner shall report to the general assembly on the results of the program established by this section on or before January 1, 2002, including information concerning the number of Vermonters benefited by patient assistance programs, the value of benefits provided through such programs, and any other relevant information.

Part F. Vermont Prescription Drug Fair Pricing Program

Sec. 24. 33 V.S.A. § 1997 is added to read:

§ 1997. VERMONT PRESCRIPTION DRUG FAIR PRICING PROGRAM

(a) Legislative findings and purpose. The general assembly finds that affordability is critical in providing access to prescription drugs for all Vermont residents. This section is intended as a positive measure to make prescription drugs more affordable for all Vermont residents, thereby increasing the overall health of our families, benefiting employers and employees and the fiscal strength of our society, promoting healthy communities and protecting the public health and welfare.

(b) Prescription drug price fairness review board.

(1) The prescription drug price fairness review board is created to establish maximum prices for prescription drugs sold in Vermont.

(2) The board shall consist of five members appointed by the governor with the advice and consent of the senate: a pharmacist; a physician; a nonphysician health care provider with prescription drug experience; and two members representing the interests of consumers with no financial interest in, or family relationship with any health care provider, any health care facility, any health insurer, or any pharmaceutical company. Members shall be appointed to three-year terms, except that initial appointments shall be staggered with two members serving three years, two members serving two years, and one member serving one year. Members of the board may be removed only for cause.

(3) Members shall receive compensation and reimbursement of expenses pursuant to section 1010 of Title 32.

(c) Prescription drug pricing procedures.

(1) The following provisions shall apply to determinations by the prescription drug price fairness review board regarding maximum prices for prescription drugs, and to the procedures for establishing those prices:

(A) By January 1, 2003, the board shall adopt rules establishing the procedures for the adoption and periodic review of maximum prices, the procedures for establishing maximum prices for new prescription drugs and for reviewing maximum prices of selected drugs, and the procedures for phasing out or terminating maximum prices.

(B) By July 1, 2003, the board shall determine whether the cost of prescription drugs provided to qualified residents under state-funded VScript programs are 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 shall apply:

(i) The board shall review prescription drug use in the Medicaid program using data from the most recent six-month period for which data is available.

(ii) Using the data reviewed in subdivision (i) of this subdivision (B), the board shall determine the 100 drugs for which the most units were provided and the 100 drugs for which the total cost was the highest.

(iii) For each prescription drug listed in subdivision (ii) of this subdivision (B), the board shall determine the cost for each drug for beneficiaries of state-funded VScript programs provided those drugs on a certain date. The average cost for each such drug shall be calculated.

(iv) For each prescription drug listed in subdivision (ii) of this subdivision (B), the board shall determine the lowest cost for each drug paid by any purchaser on the date that is used for subdivision (iii) of this subdivision (B) 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 state-funded VScript programs. The average cost for each such drug shall be calculated.

(v) If the average cost for one or more prescription drugs under state-funded VScript programs as determined in subdivision (iii) of this subdivision (B) is not reasonably comparable to the average lowest cost for the same drug or drugs as determined in subdivision (iv) of this subdivision (B), the board shall establish maximum prices for any or all prescription drugs sold in the state, in accordance with the provisions of subdivision (C) of this subdivision (1). Maximum prescription drug prices established under this subdivision shall take effect July 1, 2003.

(vi) In making a determination under this section the board 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 that list is made public as part of the process of establishing maximum retail prices.

(C) The maximum price for any prescription drug sold in Vermont as determined by the board under this subdivision (1) shall consist of the following components:

(i) A maximum manufacturer price component for such drug, after consideration of the prices charged for prescription drugs in Canada, the prices listed on the Federal Supply Schedule, and any other information relevant to the purposes of this section.

(ii) A retail price component for such drug, after consideration of the maximum manufacturer’s price for such drug determined by the board under this subdivision (C), plus any reasonable, customary cost of doing business and profit markup by the wholesaler, plus any reasonable, customary cost of doing business and profit markup by the retailer, as determined by the retailer; provided that such retail price does not constitute an unfair and deceptive act or practice in commerce as determined by the attorney general upon review of a complaint.

(2) The board, after notice and opportunity for hearing, may grant an exemption from the price for a prescription drug established by the board under subdivision (1) of this subsection, for all such drugs sold in this state, upon its own determination, or upon the request of any affected person. The person making the request for exemption shall have the burden of proof by a preponderance of the evidence in demonstrating the need for an exemption. In considering the request for exemption, the board may consider:

(A) changed circumstances since the price was established;

(B) reasonable costs of production, distribution, marketing and research;

(C) the availability of one or more drugs essential to the health of Vermonters, or any other reason related to the health and safety of Vermonters; and

(D) any other information relevant to the purpose of this section.

(3) The board may take actions that the board 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.

(4) The board may act in cooperation with agencies in other states to maximize the effectiveness of its prescription drug price regulation activities under this section.

(d) Powers of the board. In carrying out its duties, the board shall have all the powers necessary to carry out the purposes of this section, including:

(1) to appoint an executive director and other necessary assistants and prescribe their duties, subject to appropriations by the general assembly, and to exercise such other powers as are necessary to carry out the purposes of this section;

(2) to adopt administrative rules, including the adoption of emergency rules to implement the provisions of this section in a timely manner; and

(3) to collect from any manufacturer, wholesaler, or retailer of prescription drugs sold in Vermont, and any pharmacy benefit manager for a health benefit plan with prescription drug coverage for Vermont beneficiaries such information as is necessary for the board to carry out its duties under this section. Pursuant to the power granted under this subdivision:

(A) Any manufacturer, wholesaler, or retailer of prescription drugs sold in Vermont, and any pharmacy benefit manager for a health benefit plan with prescription drug coverage for Vermont beneficiaries shall file with the board, on request, such data, statistics, schedules or information as the board may require to enable it to carry out its duties.

(B) The board shall have the power to examine books and accounts of any manufacturer, wholesaler, or retailer of prescription drugs sold in Vermont, and of any pharmacy benefit manager for a health benefit plan with prescription drug coverage for Vermont beneficiaries, to subpoena witnesses and documents, to administer oaths to witnesses and to examine them on all matters of which the board has jurisdiction.

(C) For the purpose of supporting fair and effective competition and price transparency in the market for prescription drugs, the board, in consultation with the attorney general’s office, shall adopt rules for the designation of information collected by the board under this subdivision (3), and by the commissioner under subdivision (e)(4) of this section as public information, or as proprietary information that shall not be disclosed to any person other than to the board, or to the attorney general for law enforcement purposes.

(e) Program administration.

(1) The commissioner of prevention, assistance, transition, and health access shall administer implementation of the price regulation of any prescription drug, as determined by the board under subsection (c) of this section.

(2) The commissioner shall distribute information concerning the prices established by the board under subsection (c) of this section to all retail pharmacies in Vermont, and shall post such prices on the department’s internet web site.

(3) Twice each year, the commissioner shall conduct and release a survey of representative retail prices for the most commonly used prescription drugs in Vermont, as determined by the commissioner.

(4) Powers of the commissioner. In addition to other powers granted by law, the commissioner shall have all the powers necessary to carry out the purposes of this section, including:

(A) To adopt emergency rules to implement programs in a timely manner.

(B) To collect from any manufacturer, wholesaler, or retailer of prescription drugs sold in Vermont such information as is necessary for the commissioner to carry out his or her duties under this section, subject to the rules of the board relating to proprietary information under subdivision (d)(3) of this section. Pursuant to the power granted under this subdivision:

(i) Any manufacturer, wholesaler, or retailer of prescription drugs sold in Vermont shall file with the commissioner, on request, such data, statistics, schedules or information as the commissioner may require to carry out his or her duties.

(ii) 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.

(f) Enforcement. The following shall constitute, and be subject to the rights, remedies and other judicial procedures established for an unfair and deceptive act or practice in commerce under section 2453 of Title 9:

(1) A violation of a provision of this section, or a rule adopted pursuant to this section.

(2) The sale in this state of a prescription drug by any person in excess of the maximum price determined by the board under subsection (c) of this section.

(g) Report to the general assembly. The board and the commissioner shall report to the general assembly on or before January 1 of each year on prescription drug prices in Vermont. Such report shall include:

(1) the board’s maximum prescription drug prices for prescription drugs sold in Vermont;

(2) the commissioner’s surveys of retail prices for the most commonly used prescription drugs in Vermont;

(3) a financial analysis of the effect of the Vermont prescription drug fair pricing program on prescription drug costs for Vermonters, including financial savings to public and private health insurance programs and to individual Vermonters and Vermont employers; and

(4) any other findings and recommendations offered by the board and the commissioner.

(h) Appeal of the decisions of the board and commissioner. An aggrieved party may appeal, on the administrative record, any adverse final decision of the board or commissioner under this section to the superior court pursuant to Rule 74 of the Vermont Rules of Civil Procedure.

Sec. 25. POSITIONS ADDED

The following positions are authorized in the prescription drug price fairness review board in fiscal year 2002: one (1) executive director and one (1) administrative assistant.

Sec. 26. INITIAL APPOINTMENTS; RULES

(a) Initial appointments to the prescription drug price fairness review board shall be made no later than July 1, 2001.

(b) The prescription drug price fairness review board and the commissioner of prevention, assistance, transition, and health access shall file with the legislative committee on administrative rules the rules necessary to implement the provisions of Sec. 24 of this act on or before January 1, 2003.

Part G. Recodification and Effective Date

Sec. 27. RECODIFICATION

8 V.S.A. §§ 4089i (health care ombudsman; definitions) and 4089j (health care ombudsman; office) are recodified as 8 V.S.A. §§ 4089v and 4089w, respectively.

Sec. 28. EFFECTIVE DATE

This act shall take effect on passage.