Senate Calendar

tuesday, march 16, 2004

71st DAY OF ADJOURNED SESSION

TABLE OF CONTENTS

                                                                                                                Page No.

Consideration Postponed until Tuesday, March 16, 2004

S.R. 21    Power uprate at Vermont Yankee.................................................... 659

                        Sen. Cummings amendment..................................................... 661

Unfinished Business of Thursday, March 11, 2004

Third Reading

S. 164      Liability for genetic engineering......................................................... 661

Unfinished Business of Friday, March 12, 2004

Third Reading

S. 91        Application of granular fertilizers to nonagricultural turf...................... 662

                        Sen. Condos amendment......................................................... 662

New Business

Second Reading

Favorable

H. 183     Memorial Day................................................................................. 662

Notice Calendar

Favorable with Recommendation of Amendment

S. 288      Programs and policies on prescription drugs..................................... 662

                        Health and Welfare Committee Report..................................... 662

                        Finance Committee Report...................................................... 677

                        Appropriations Committee Report........................................... 690

                        Sen. Leddy amendment........................................................... 691

Ordered to Lie

S. 231      Disposition of rights of decedents..................................................... 692

ORDERS OF THE DAY

ACTION CALENDAR

Consideration Postponed until Tuesday, March 16, 2004

S.R. 21

Senate resolution urging state and federal regulatory authorities to proceed with great caution in considering authorization of the proposed extended power uprate at Vermont Yankee.

PENDING QUESTION:  Shall the Resolution be amended as recommended by the Committee on Finance?

The Committee recommends that the resolution be amended by striking out all after the title and inserting in lieu thereof the following:

Whereas, Vermont Yankee is a 540 megawatt nuclear generating station located in Vernon, Vermont, and

Whereas, Vermont Yankee began operation in 1972 and is now one of the oldest operating nuclear power stations in the nation, and

Whereas, Vermont Yankee was purchased by Entergy Nuclear in 2002, and

Whereas, Vermont Yankee operates as a merchant generating facility subject to market forces imposed by a competitive regional market in New England, and

Whereas, Entergy now proposes to perform an extended power uprate of the facility, increasing reactor power and electric output of Vermont Yankee by 20 percent, and

Whereas, Vermont Yankee is one of 103 operating nuclear power plants in the United States, and

Whereas, only 10 nuclear plants have performed an extended power uprate of 13 percent or more, ,and

Whereas, only four facilities have experience with an extended power uprate that is cumulative to 20 percent, and 

Whereas, only one nuclear plant, Clinton Nuclear Power Station in Illinois, which is only one-half the age of Vermont Yankee, has sought a 20 percent power uprate through a single application, and

Whereas, no nuclear plant as old as Vermont Yankee has ever sought such a power increase, and

Whereas, a reactor power uprate of 20 percent is the maximum permitted limit of extended power uprates, and

Whereas, Vermont Yankee does not meet current design criteria and could neither be licensed nor built today, and

Whereas, a 20 percent power uprate for a 32 year old facility is without precedent, and

Whereas, prior to increasing the plant’s power output, the approval of  regulatory bodies, including the federal Nuclear Regulatory Commission (NRC) and the Public Service Board (PSB), is required, and 

Whereas, a comprehensive analysis of an uprate proposal requires that state and federal regulatory authorities have access to a comprehensive and objective inspection report detailing all aspects of Vermont Yankee’s physical condition and operational status before making any regulatory decisions which can have an impact on the safety of Vermont Yankee employees and the residents of the surrounding communities, and

Whereas, the most comprehensive type of safety analysis in the past is where the NRC conducted an Independent Safety Assessment (ISA) as documented in an NRC report issued on October 7, 1996, and

Whereas, such a diagnostic evaluation would provide an in-depth physical examination and diagnostic evaluation of several selected safety-related plant systems, and

Whereas, NRC’s standard review for extended power uprates has usually  focused more on review of the uprate application as opposed to including a comprehensive physical examination and diagnosis such as was included in the ISA, and

Whereas, the safety of  the Vermont Yankee facility, its employees, and nearby residents is a matter of great concern toVermont Yankee, to the citizens of Vermont and the General Assembly, now therefore be it

Resolved by the Senate:

That this legislative body urges the NRC and state regulators to condition  approval of any uprate at the Vermont Yankee nuclear power facility when an ISA, or the equivalent, has been completed at Entergy Nuclear Vermont Yankee which independently:

1)  Assesses the conformance of the facility to its design and licensing bases, for operating at both 100 percent and 120 percent of its originally intended power production level;

 2)  Identifies all deviations, exemptions and/or waivers from (a) regulatory requirements applicable to Vermont Yankee and (b) regulatory requirements applicable to a new nuclear reactor (i.e. today’s safety regulations) and verifies that adequate safety margins are retained despite the cumulative effect of such deviations, exemptions, and/or waivers for both the present licensed power level and under the proposed extended power uprate;

3)  Assesses the facility’s operational safety performance giving risk perspectives where appropriate;

4)  Evaluates the effectiveness of licensee self-assessments, corrective actions, and improvement plans; and

5)  Determines the root cause(s) of safety-significant findings and draws conclusions on overall performance, and be it further

Resolved:  That the Secretary of the Senate be directed to send copies of this resolution to Nils J. Diaz, NRC Chair, to Michael Dworkin, PSB Chair, and to David O’Brien, Public Service Commissioner. 

(For text of Resolution, see Senate Journal of March 9, 2004, page 359)

AMENDMENT TO S.R. 21 TO BE OFFERED BY

SENATOR CUMMINGS

Senator Cummings moves that the resolution be amended as follows:

First:  In the first resolved clause, in the first sentence, by striking out the words “and state regulators”; and

Second: In the second resolved clause, by striking out the following: “to Michael Dworkin, PSB Chair,”.

UNFINISHED BUSINESS OF THURSDAY, MARCH 11, 2004

Third Reading

S. 164

An act relating to liability for genetic engineering.

UNFINISHED BUSINESS OF FRIDAY, MARCH 12, 2004

Third Reading

S. 91

An act relating to limiting the application of granular fertilizers to nonagricultural turf.

AMENDMENT TO S. 91 TO BE OFFERED BY SENATOR CONDOS BEFORE THIRD READING

Senator Condos moves to amend the bill in Sec. 2 by striking out the date “July 1, 2004” and inserting in lieu thereof the date January 1, 2005

NEW BUSINESS

Second Reading

Favorable

H. 183

An act relating to Memorial Day.

Reported favorably by Senator White for the Committee on Government Operations.

(Committee vote: 6-0-0)

(No House amendments)

NOTICE CALENDAR

Favorable with Recommendation of Amendment

S. 288

An act relating to state programs and policies on prescription drugs.

Reported favorably with recommendation of amendment by Senator Leddy for the Committee on Health and Welfare.

The Committee recommends that the bill be amended by striking out all after the enacting clause and inserting in lieu thereof the following:

* * * Retail Drug Price Disclosure * * *

Sec. 1.  33 V.S.A. § 2007 is added to read:

§ 2007.  RETAIL DRUG PRICE DISCLOSURE

With each prescription dispensed, the pharmacist shall disclose to the patient, in writing, the usual and customary retail price of the prescription and the cost of any payment toward the price required of the patient.

Sec. 2.  EFFECTIVE DATE

Sec. 1 of this act shall take effect July 1, 2004 and apply to a pharmacy on the date thereafter on which the pharmacy updates its computer software program with regard to prescription drug price and patient payment, but in no event later than January 1, 2006.

* * * Over-the-Counter Drug Coverage * * *

Sec. 3.  33 V.S.A. § 1992a is added to read:

§ 1992a.  OVER-THE-COUNTER DRUG COVERAGE

All public pharmaceutical assistance programs shall provide coverage for over-the-counter drugs on the preferred drug list developed under section 1998 of this title.

* * * PBM Licensing * * *

Sec. 4.  18 V.S.A. chapter 221, subchapter 9 is added to read:

Subchapter 9.  Pharmacy Benefit Managers

§ 9471.  DEFINITIONS

As used in this subchapter:

(1)  “Beneficiary” means an individual who has been enrolled in a health insurance plan in which coverage of prescription drugs is administered by a pharmacy benefit manager.

(2)  “Commissioner” means the commissioner of banking, insurance, securities, and health care administration.

(3)  “Health insurance plan” means a health benefit plan offered, administered, or issued by a health insurer doing business in Vermont.

(4)  “Health insurer” is defined by subdivision 9402(7) of this title.  The term includes:

(A)  The state of Vermont and any agent or instrumentality of the state that offers, administers, or provides financial support to state government employees.

(B)  Medicaid, the Vermont health access plan, the VScript pharmaceutical assistance program, and any other public health care assistance program.

(C)  To the extent permitted by federal law, any self-insured health benefit plan that offers health care coverage to Vermont beneficiaries.

(5)  “Pharmacy benefit management plan” means an arrangement for the delivery of prescription services in which a pharmacy benefit manager undertakes to provide, arrange for, pay for, or reimburse any of the costs of prescription services for a beneficiary.

(6)  “Pharmacy benefits manager” means a business that administers the prescription drug or device portion of health insurance plans through a pharmacy benefit management plan on behalf of a health insurance plan.

§ 9472.  PHARMACY BENEFIT MANAGER; LICENSE REQUIRED

(a)  No person shall act as a pharmacy benefit manager or administer a pharmacy benefit management plan in this state without obtaining an annual license from the commissioner.

(b)  The commissioner may suspend or revoke any license issued to a pharmacy benefit manager under this subchapter or deny an application for a license if the commissioner finds that the pharmacy benefit manager or any officer, employee, or agent of the pharmacy benefit manager has failed to satisfy any of the following requirements.  A pharmacy benefit manager shall:

(1)  Fulfill its fiduciary obligations to health insurance plans and health insurance plan beneficiaries in accordance with the provisions of section 9473 of this title.

(2)  File an annual disclosure statement and secure prior approval of contracts in accordance with the provisions of section 9474 of this title.

(3)  Pay all fees, taxes, and charges required by law.

(4)  File a financial statement or statements and any reports, certificates, or other documents the commissioner considers necessary to secure a full and accurate knowledge of its affairs and financial condition.

(5)  Remain solvent, and its financial condition, method of operation, and manner of doing business shall remain such as to satisfy the commissioner that it can meet its obligations to health insurance plans and all beneficiaries.

(6)  Comply with all the requirements of law, the provisions of this subchapter, and the rules adopted pursuant to this subchapter.

(c)  A nonrefundable license application fee of $500.00 shall accompany each application for a license to transact business in this state.  The fee shall be collected by the commissioner and paid directly into the pharmacy benefit management regulation special fund established and administered under subchapter 5 of chapter 7 of Title 32 for the purpose of defraying expenses for the regulation, supervision, and examination of all entities subject to regulation under this subchapter.

(d)  The license required by this section shall be signed by the commissioner or a duly authorized agent of the commissioner and shall expire on the next June 30 after the date on which it becomes effective.

(e)  All pharmacy benefit managers offering or providing pharmacy benefit management plans shall obtain an annual renewal of their license from the commissioner.  The commissioner may refuse to renew the license of any pharmacy benefit manager or may renew the license, subject to any conditions or restrictions deemed by the commissioner to be needed to carry out the purposes of this subchapter, if the commissioner finds that the pharmacy benefit manager has violated any of the requirements for licensure established in subsection (b) of this section.  The commissioner shall not fail to renew the license of any pharmacy benefit manager without giving the pharmacy benefit manager notice and an opportunity to be heard in accordance with the provisions of 3 V.S.A. chapter 25 (Administrative Procedure Act).

(f)  The commissioner may adopt such rules as are necessary to carry out the purposes of this subchapter.

§ 9473.  FIDUCIARY OBLIGATIONS OF PHARMACY BENEFIT MANAGERS

A pharmacy benefit manager shall at all times discharge its obligations to health insurance plans and health insurance plan beneficiaries in compliance with the standards of conduct applicable to a “fiduciary” under the Employee Retirement Income Security Act of 1974.  In so doing, a pharmacy benefit manager shall:

(1)  Discharge its duties with respect to health insurance plans and health insurance plan beneficiaries solely in the interest of such plans and beneficiaries, and for the exclusive purpose of providing benefits to such plans and beneficiaries and defraying reasonable expenses of administering health insurance plan and health insurance plan beneficiary benefits. 

(2)  Discharge its duties with the care, skill, prudence, and diligence under the circumstances then prevailing that a prudent fiduciary acting in like capacity and familiar with such matters would use in the conduct of an enterprise of a like character and with like aims.

(3)  Discharge its duties in accordance with the contract governing the health insurance plan prescription drug coverage, insofar as such contract is consistent with the provisions of this law and of the Employee Retirement Income Security Act of 1974.

(4)  Provide any and all information requested by health insurance plans so as to ensure that such plans are able to ascertain all material activities being undertaken on their behalf or on behalf of health insurance plan beneficiaries.

(5)  Notify health insurance plans in writing of any proposed or ongoing activity that involves, directly or indirectly, any conflict of interest as contemplated by the standards applicable to a “fiduciary” under the Employee Retirement Income Security Act of 1974.

§ 9474.  ANNUAL STATEMENT; PRIOR APPROVAL OF CONTRACTS

(a)  Each pharmacy benefit manager providing pharmacy benefit management plans in this state shall file a statement with each health insurance plan and with the commissioner annually by March 1.  The statement shall be verified by at least two principal officers and shall cover the preceding calendar year.  The annual statement shall be on forms prescribed by the commissioner, and shall include:

(1)  A financial statement of the organization, including its balance sheet and income statement for the preceding year.

(2)  The number of persons enrolled during the year, the number of enrollees as of the end of the year, and the number of enrollments terminated during the year.

(3)  Any other information relating to the operations of the pharmacy benefit manager required by the commissioner pursuant to this subchapter.

(b)  A pharmacy benefit manager shall not enter into a contract with a health insurance plan unless the commissioner first determines, upon application by  the pharmacy benefit manager on a form and in a manner approved by the commissioner, that the pharmacy benefit manager has disclosed to the health insurance plan any of the following agreements and practices, and that the commissioner has determined that the contract and any such agreement and practice promotes the medical and financial interests of the health insurance plan and the beneficiaries of the health insurance plan.  The pharmacy benefit manager shall disclose:

(1)  Any agreement with a pharmaceutical manufacturer to favor the manufacturer’s products over a competitor’s products, or to place the manufacturer’s drug on the pharmacy benefit manager’s preferred list or formulary, or to switch the drug prescribed by the patient’s health care provider with a drug agreed to by the pharmacy benefit manager and the manufacturer.

(2)  Any agreement with a pharmaceutical manufacturer to share manufacturer rebates and discounts with the pharmacy benefit manager, or to pay “soft money” or other economic benefits to the pharmacy benefit manager.

(3)  Any agreement or practice to bill Vermont health benefit plans for prescription drugs at a cost higher than the pharmacy benefit manager pays the pharmacy.

(4)  Any agreement to share revenue with a mail order or internet pharmacy company.

(5)  Any agreement to sell prescription drug data concerning Vermont beneficiaries, or data concerning the prescribing practices of the health care providers of Vermont beneficiaries.

(6)  Any corporate or other organizational or governing affiliation between the pharmacy benefit manager and a pharmaceutical manufacturer.

(7)  Any other agreement of the pharmacy benefit manager with a pharmaceutical manufacturer, or with wholesale and retail pharmacies, affecting the cost of pharmacy benefits provided to Vermont beneficiaries.

(c)  A contract filed under this section shall be deemed approved unless the commissioner disapproves such contract within 30 days after filing with the commissioner.  Disapproval shall be in writing, stating the reasons thereforeand a copy thereof delivered to the pharmacy benefit manager.

§ 9475.  ASSESSMENT

(a)  The expenses of administering this subchapter, including the cost incurred by the commissioner, shall be assessed annually by the commissioner against all pharmacy benefit managers operating in this state.  Before determining the assessment, the commissioner shall provide an estimate of all expenses for the regulation, supervision, and examination of all entities subject to regulation under this chapter.  The assessment shall be in proportion to the business done in this state.

(b)  All fees and assessments under this subchapter and paid to the commissioner shall be deposited in the pharmacy benefit management regulation special fund established and administered under subchapter 5 of chapter 7 of Title 32 for the purpose of defraying the expenses for the regulation, supervision, and examination of all entities subject to regulation under this subchapter.

(c)  The commissioner shall give each pharmacy benefit manager notice of the assessment, which shall be paid to the department annually on or before March 1.  Any pharmacy benefit manager that fails to pay the assessment on or before the date prescribed in this subsection shall be subject to a penalty imposed by the commissioner.  The penalty shall be ten percent of the assessment and interest for the period between the due date and the date of full payment.  If a payment is made in an amount later found to be in error, the commissioner shall:

(1)  If an additional amount is due, notify the company of the additional amount and the company shall pay the additional amount within 14 days of the date of the notice.

(2)  If an overpayment is made, order a refund.

(d)  If an assessment made under this subchapter is not paid to the commissioner by the prescribed date, the amount of the assessment, penalty, and interest may be recovered from the defaulting company on motion of the commissioner made in the name and for the use of the state in the appropriate superior court after ten days’ notice to the company.  The license of any defaulting pharmacy benefit manager to transact business in this state may be revoked or suspended by the commissioner until the manager has paid such assessment.

§ 9476.  ENFORCEMENT

In addition to any other remedy provided by law, a health insurance plan or a plan beneficiary aggrieved by a violation of this subchapter or a rule adopted under this subchapter may file an action in superior court for injunctive relief and an award of compensatory and punitive damages.  The superior court may award to the health insurance plan or plan beneficiary who prevails in an action under this section reasonable costs and attorney’s fees.

* * * Joint Purchasing within Vermont; OTC; Counterdetailing * * *

Sec. 5.  33 V.S.A. § 1998 is amended to read:

§ 1998.  PHARMACY BEST PRACTICES AND COST CONTROL PROGRAM ESTABLISHED

(a)  The commissioner of prevention, assistance, transition, and health access shall establish a pharmacy best practices and cost control program designed to reduce the cost of providing prescription drugs, while maintaining high quality in prescription drug therapies.  The program shall include:

(1)  A preferred list of covered prescription drugs that identifies preferred choices within therapeutic classes for particular diseases and conditions, including generic alternatives and over-the-counter drugs.

(A)  The commissioner, and the commissioner of banking, insurance, securities, and health care administration shall implement the preferred drug list as a uniform, statewide preferred drug list by encouraging all health benefit plans in this state to participate in the program.

(B)  The commissioner of personnel shall use the preferred drug list in the state employees health benefit plan only if participation in the program will provide economic and health benefits to the state employees health benefit plan and to beneficiaries of the plan, and only if agreed to through the bargaining process between the state of Vermont and the authorized representatives of the employees of the state of Vermont.  The provisions of this subdivision do not authorize the actuarial pooling of the state employees health benefit plan with any other health benefit plan, unless otherwise agreed to through the bargaining process between the state of Vermont and the authorized representatives of the employees of the state of Vermont.  No later than November 1, 2004, the commissioner of personnel shall report to the health access oversight committee and the senate and house committees on health and welfare on whether use of the preferred drug list in the state employees health benefit plan would, in his or her opinion, provide economic and health benefits to the state employees health benefit plan and to beneficiaries of the plan.

* * *

(4)  Education programs, including With input from physicians, pharmacists, private insurers, hospitals, pharmacy benefit managers, and the drug utilization review board, a counterdetailing education program, designed to provide information and education on the therapeutic and cost-effective utilization of prescription drugs to physicians, pharmacists and other health care professionals authorized to prescribe and dispense prescription drugs.  Details of the program, including the scope of the program and funding recommendations, shall be contained in a report submitted to the health access oversight committee and the senate and house committees on health and welfare no later than December 31, 2004;

* * *

* * * Expanding Use of 340B Programs * * *

Sec. 6.  33 V.S.A. § 2008 is added to read:

§ 2008.  FEDERAL DISCOUNT PROGRAMS; STUDY

The commissioner shall study and by January 1, 2005 report to the governor, the senate and house committees on health and welfare, and the health access oversight committee on the feasibility of providing discounted prescription drugs to Vermont’s most vulnerable patient populations through the use of Section 340B of the federal Public Health Service Act, 42 United States Code § 256b (1999).  The commissioner shall work with other state agencies, representatives of state employees, and representatives of health care providers and facilities in the state to provide the following information:

(1)  A description of all health care providers and facilities in the state potentially eligible for designation as “covered entities” under Section 340B, including without limitation all hospitals eligible as disproportionate share hospitals; recipients of grants from the United States Public Health Service; federally qualified health centers; federally qualified look-alikes; state‑operated AIDS drug assistance programs; Ryan White CARE Act Title I, Title II, and Title III programs; tuberculosis, black lung, family planning, and sexually transmitted disease clinics; hemophilia treatment centers; public housing primary care clinics; and clinics for homeless people.

(2)  A listing of potential applications of Section 340B and the potential benefits to public, private, and third-party payors for prescription drugs, including:

(A)  application to inmates and employees in youth correctional facilities, county jails, and state prisons;

(B)  maximizing the use of Section 340B within state-funded managed care plans;

(C)  the inclusion of Section 340B providers in state bulk purchasing initiatives; and

(D)  using sole source contracts with Section 340B providers to furnish high-cost chronic care drugs.

(3)  Discounts available through Section 340B contracts, including estimated cost savings to the state as a result of retail mark-up avoidance, negotiated subceiling prices, and coordination with the Medicaid program in order to minimize costs to the program and to other purchasers of prescription drugs.

(4)  The resources available to potential applicants for designation as covered entities for the application process, establishing a Section 340B program, restructuring the health care system, or other methods of lowering the cost of prescription drugs.  The resources must include state and federal agencies and private philanthropic grants to be used for the purposes of this section.

* * * Study on Savings * * *

Sec. 7.  REPORT ON PRESCRIPTION DRUG SAVINGS

The commissioner of prevention, assistance, transition, and health access shall conduct a study to demonstrate any savings achieved through the use of generic as an alternative to brand-name drugs in the state and, to the extent possible, private drug assistance plans.  The findings of the study shall be reported to the health access oversight committee and the senate and house committees on health and welfare by January 1, 2005.

* * * Auditing PBM Contracts * * *

Sec. 8.  AUDITING PBM CONTRACTS

The commissioner of prevention, assistance, transition, and health access and the commissioner of personnel, in consultation with the commissioner of banking, insurance, securities, and health care administration and the state auditor, shall develop a pharmacy benefits manager audit.  The purpose of the audit plan is to ensure that pharmacy claims and rebates are being paid accurately and appropriately.  Accordingly, the audit shall include a performance audit, contract compliance audit, rebate audit, and pharmacy claims analysis and audit.  The audit plan shall include a cost estimate for hiring an independent auditor, options for keeping the cost of the audit down, for example, by partnering with other health benefit plans within or outside the state, as well as recommendations regarding possible revenue sources to cover the cost of implementing the audit plan.  The audit plan shall be detailed in a report submitted to the health access oversight committee and the senate and house committees on health and welfare by September 1, 2004.

* * * Mental Health Drugs * * *

Sec. 9.  SUNSET REPEAL

The sunset provision, Sec. 5 of No. 127 of the Acts of the 2001 Adj. Sess. (2002) (repealing the law exempting certain mental health drugs from the prior authorization process), is hereby repealed.

* * * Medicare Drug Benefit:  Donut Hole, Impact on Vermont, and

Coordination with State Programs * * *

Sec. 10.  PRESCRIPTION DRUG COVERAGE FOR MEDICARE BENEFICIARIES

(a)  The department of prevention, assistance, transition, and health access shall amend Vermont prescription drug programs to conform with the provisions of the federal Medicare Prescription Drug, Improvement, and Modernization Act of 2003, P.L. 108-173, and, to the extent permissible under federal law, provide financial assistance to Medicare beneficiaries who otherwise would be required to pay 100 percent of the cost of drugs after the initial deductible.

(b)  The department of prevention, assistance, transition, and health access shall analyze the financial impact on the state of Vermont caused by implementation of the federal Medicare Prescription Drug, Improvement, and Modernization Act of 2003, P.L. 108-173, and report its findings annually to the health access oversight committee and the senate and house health and welfare committees beginning November 1, 2004.

Sec. 11.  PRESCRIPTION DRUG BENEFIT WORKING GROUP

The commissioner of aging and disabilities with representatives from the department of prevention, assistance, transition, and health access shall convene a working group of elderly and disabled consumers, advocates, and providers to:

(1)  develop and implement a plan which at a minimum shall include outreach, education, and assistance to minimize confusion and duplication of coverage expected to be caused by the introduction of the new, federally mandated Medicare discount cards to Vermont Medicare beneficiaries, especially those who also are eligible for Medicaid, VHAP-Rx, VScript, VScript Expanded, or Healthy Vermonters; and

(2)  plan for the implementation of Medicare Part D in the state beginning January 1, 2006.  Such planning shall include both monitoring and advocacy on federal policy as it relates to Vermont state pharmaceutical assistance programs with a goal of minimizing any reduction of assistance to these beneficiaries.  The plan shall analyze fully the potential gains and losses to Vermont and to its state pharmaceutical assistance beneficiaries resulting from Medicare Part D and the balance of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003, P.L. 108-173, and shall provide ongoing cost projections and identify sources of funding for holding these beneficiaries harmless from pharmacy benefit cuts once Medicare Part D is implemented.

* * * Prior Authorization Exemption * * *

Sec. 12.  33 V.S.A. § 1999(f) is amended to read:

(f)  The program’s prior authorization process shall require that the prescriber, not the pharmacy, request a prior authorization exception exemption to the requirements of this section.  The No later than December 31, 2004, the commissioner shall create a pilot program may designed to exempt a prescriber from the need to secure prior authorization for a specific drug category if the program determines that the prescriber has written a minimum number of scripts in that category, and the prescriber prescribes prescription drugs on the preferred drug list at or above the minimum threshold for that category, as determined by the commissioner after consultation with the drug utilization review board.

* * *  Reimportation  * * *

Sec. 13.  8 V.S.A. § 4089i is added to read:

§ 4089i.  PRESCRIPTION DRUG COVERAGE

A health insurance or other health benefit plan offered by a health insurer shall provide coverage for prescription drugs purchased outside this country on the same terms and conditions as prescription drugs purchased in this country.  The plan may require certification by the North American Pharmatherapeutic Consultants Association for the purpose of safeguarding the quality of prescription drugs purchased by plan beneficiaries.

Sec. 14.  33 V.S.A. § 2007 is added to read:

§ 2007.  CANADIAN PRESCRIPTION DRUG INFORMATION PROGRAM

(a)  The department of prevention, assistance, transition, and health access shall establish a program to describe how Vermont residents are able to purchase prescription drugs from Canada.  This program shall provide information about ordering prescription drugs through the mail or otherwise from a participating Canadian pharmacy.

(b)  The department shall establish a website and written information regarding the program.

Sec. 15.  APPLICABILITY; STATUTORY REVISION

The statutory revision commission is directed to recodify 8 V.S.A. §§ 4089i and 4089j (health care ombudsman) as 8 V.S.A. §§ 4089v and 4089w, respectively.

* * * Healthy Vermonters Expansion * * *

Sec. 16.  33 V.S.A. § 2003 is amended to read:

§ 2003.  PHARMACY DISCOUNT PLAN

(a)  On or before July 1, 2002, the The commissioner shall implement a pharmacy discount plan, to be known as the “Healthy Vermonters” program, for Vermonters without adequate coverage for prescription drugs.  The provisions of section 1992 of this title shall apply to the commissioner’s authority to administer the pharmacy discount plan established by this section.  The commissioner may establish an enrollment fee in such amount as is necessary to support the administrative costs of the plan.

(b)  The pharmacy discount plan authorized by this section shall include a program implemented as a Section 1115 Medicaid waiver, wherein the state makes a payment toward the cost of the drugs dispensed to individuals enrolled in this program of at least two percent of the cost of each prescription or refill, consistent with the appropriation for the program established by this section offer enrolled individuals an initial discounted cost for covered drugs and, upon approval by the Centers for Medicare and Medicaid Services of a Section 1115 Medicaid waiver program, a secondary discounted cost, which shall reflect a state payment toward the cost of each dispensed drug as well as any rebate amount negotiated by the commissioner.  Upon implementation of the waiver program, the commissioner may establish an enrollment fee in such amount as is necessary to support the administrative costs of the program.

(c)  The commissioner shall implement the pharmacy discount program authorized by this section without any financial contribution by the state otherwise required by subsection (b) of this section, and without federal waiver approval during such time as federal waiver approval has not been secured.

(d)  As used in this section:

(1)  “Eligible beneficiary” means any individual Vermont resident without adequate coverage:

(A)  who is at least 65 years of age, or is disabled and is eligible for Medicare or Social Security disability benefits, with household income equal to or less than 400 percent of the federal poverty level, as calculated under the rules of the Vermont health access plan, as amended, and any other individual Vermont resident with;

(B)  whose household income is equal to or less than 300 350 percent of the federal poverty level, as calculated under the rules of the Vermont health access plan, as amended; and

(C)  whose family incurs unreimbursed expenses for prescription drugs, including insurance premiums, that equal five percent or more of household income or whose total unreimbursed medical expenses, including insurance premiums, equal 15 percent or more of household income.

(2)  “Initial discounted cost” means the price of the drug based on the Medicaid fee schedule.

(3)  “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).

(4)  “Participating retail pharmacy” means a retail pharmacy located in this state or another business licensed to dispense prescription drugs in this state that participates in the program according to rules established by the department and provides discounted prices to eligible beneficiaries of the program.

(5)  “Rebate amount” means the rebate negotiated by the commissioner and required from a drug manufacturer or labeler under this section.  In determining the appropriate rebate, the commissioner shall:

(A)  take into consideration the rebate calculated under the Medicaid Rebate Program under section 1396r-8 of Title 42 of the United States Code, the average wholesale price of prescription drugs, and any other information on prescription drug prices and price discounts;

(B)  use his or her best efforts to obtain an initial rebate amount equal to or greater than the rebate calculated under the Medicaid program under section 1396r-8 of Title 42 of the United States Code;

(C)  use his or her best efforts to obtain an amount equal to or greater than the amount of any discount, rebate, or price reduction for prescription drugs provided to the federal government.

(6)  “Secondary discounted cost” means the price of the drug based on the Medicaid fee schedule, less payment by the state of at least two percent of the Medicaid rate, less any rebate amount negotiated by the commissioner and paid for out of the healthy Vermonters dedicated fund established under subsection 2003(j).

(7)  “Vermonter without Without adequate coverage” includes eligible beneficiaries with no coverage for prescription drugs or for certain types of prescription drugs, and eligible beneficiaries whose annual maximum coverage limit under their health benefit plan has been reached.

(e)  Drugs covered by the Healthy Vermonters program shall include all drugs covered under the Medicaid program.

(f)  Participating retail pharmacies shall offer beneficiaries the initial discounted price beginning July 1, 2004.  Beginning October 1, 2005, a participating retail pharmacy shall offer beneficiaries the secondary discounted price, if available.

(g)  The Vermont board of pharmacy shall adopt rules requiring disclosure by participating retail pharmacies to eligible beneficiaries of the amount of savings provided as a result of the program.  The rules must consider and protect information that is proprietary in nature.  The department may not impose transaction charges under this program on pharmacies that submit claims or receive payments under the program.  Pharmacies shall submit claims to the department to verify the amount charged to eligible beneficiaries under the program.  On a weekly or biweekly basis, the department must reimburse pharmacies for the difference between the initial discounted price and the secondary discounted price provided to eligible beneficiaries.

(h)  The names of drug manufacturers and labelers who do and do not enter into rebate agreements under this program are public information.  The department shall release this information to health care providers and the public on a regular basis and shall publicize participation by manufacturers and labelers.  The department shall impose prior authorization requirements in the Medicaid program, as permitted by law, to the extent the department determines it is appropriate to do so in order to encourage manufacturer and labeler participation in the program and so long as the additional prior authorization requirements remain consistent with the goals of the Medicaid program and the requirements of Title XIX of the federal Social Security Act.

(i)  The commissioner shall establish, by rule, a process to resolve discrepancies in rebate amounts claimed by manufacturers, labelers, pharmacies, and the department.

(j)  The healthy Vermonters dedicated fund is established to receive revenue from manufacturers and labelers who pay rebates as provided in subdivision (d)(5) of this section and any appropriations or allocations designated for the fund.  The purposes of the fund are to reimburse retail pharmacies for discounted prices provided to individuals enrolled in the healthy Vermonters program; and to reimburse the department for contracted services including pharmacy claims processing fees, administrative and associated computer costs, and other reasonable program costs.  The fund is a nonlapsing dedicated fund.  Interest on fund balances accrues to the fund.  Surplus funds in the fund must be used for the benefit of the program.

(k)  Annually, the department shall report the enrollment and financial status of the program to the health access oversight committee by September 1, and to the general assembly by January 1.

(l)  The department shall undertake outreach efforts to build public awareness of the program and maximize enrollment.  Outreach efforts shall include steps to educate retail pharmacists on the purposes of the healthy Vermonters dedicated fund, in particular as it relates to pharmacy reimbursements for discounted prices provided to program enrollees.  The department may adjust the requirements and terms of the program to accommodate any new federally funded prescription drug programs. 

(m)  The department may contract with a third party or third parties to administer any or all components of the program, including outreach, eligibility, claims, administration, and rebate recovery and redistribution.

(n)  The department shall administer the program and other medical and pharmaceutical assistance programs under this title in a manner advantageous to the programs and enrollees.  In implementing this section, the department may coordinate the other programs and this program and may take actions to enhance efficiency, reduce the cost of prescription drugs, and maximize benefits to the programs and enrollees, including providing the benefits of this program to enrollees in other programs.

(o)  The department may adopt rules to implement the provisions of this section.

(p)  The department may seek any waivers of federal law, rule, or regulation necessary to implement the provisions of this section.

Sec. 17.  EFFECTIVE DATE

This act shall take effect July 1, 2004, except that subsection 2003(h) of Title 33, requiring public disclosure of manufacturers and labelers entering into rebate agreements and certain prior authorization requirements under Medicaid, shall take effect when the waiver program authorized under subsection 2003(b) takes effect.

(Committee vote: 6-0-0)

Reported favorably with recommendation of amendment by Senator Cummings for the Committee on Finance.

The Committee recommends that the bill be amended as recommended by the Committee on Health and Welfare with the following amendments thereto:

First:  By striking out Secs. 1 and 2 in their entirety and inserting in lieu thereof new Secs. 1 and 2 to read as follows:

* * * Prescription Drug Price Disclosure * * *

Sec. 1.  18 V.S.A. § 9410a is added to read:

§ 9410a.  PRESCRIPTION DRUG PRICE DISCLOSURE

(a)  The commissioner’s health care information system established and maintained under section 9410 of this title shall include a mechanism to make available to consumers such prescription drug price information as the commissioner determines is necessary or desirable, consistent with the provisions of this section, to empower an individual to make economically sound and appropriate prescription drug purchasing decisions.

(b)  The commissioner shall require pharmacy benefit managers or health insurers to disclose prescription drug prices to consumers and health care providers.  The commissioner shall require such disclosure through internet publication, a toll-free number, or any other cost-effective method.  Disclosure shall include the cost to the consumer if purchased before the consumer’s deductible amount is reached, and any applicable coinsurance or co-payments.  Disclosure may include the price per pill, the price per course of therapy, the relationship between the average wholesale price (AWP) of a specific drug and other drugs within the same therapeutic class, and any other relevant information.  The commissioner shall require a retail pharmacy to disclose the retail price of prescription drugs to consumers not covered by an insured or self-insured health benefit plan, upon the request of the consumer.

(c)  The commissioner may adopt such rules as are necessary or desirable to carry out the purposes of this section and, as appropriate, ensure the confidentiality of proprietary information.  The commissioner shall file such rules with the legislative committee on administrative rules within one year of the effective date of this section.  In adopting such rules, the commissioner shall consider the consumer’s need for the prescription drug price disclosure information, the cost of the collection and publication of the information, and any other relevant consideration.

(d)  The department’s reasonable expenses in adopting and administering the prescription drug price disclosure mechanism established by this section may be charged to pharmacy benefit managers doing business in Vermont in the manner provided for in section 18 of Title 8.  Such expenses shall be allocated in proportion to the lives of Vermonters covered by each pharmacy benefit manager as reported annually to the commissioner in a manner and form prescribed by the commissioner.

(e)(1)  The commissioner may enforce the provisions of this section as to pharmacy benefit managers in the same manner as health insurers pursuant to subsection 9412 of this title.  The powers of the commissioner under this section shall be in addition to any other powers of the commissioner under this title or Title 8.

(2)  In addition to any other remedy provided by law, the attorney general may file an action in superior court for a violation of this section or rules adopted under this section, provided that the commissioner’s determinations concerning the interpretation and administration of the provisions of this section and any rules adopted under this section carry the presumption of validity accorded under the law.  The action of the attorney general is subject to the provisions of this section and the consumer fraud provisions of chapter 63 of Title 9.  Each violation of this section constitutes an unfair practice under section 2453 of Title 9 and is a civil violation for which the attorney general may obtain the relief allowed under chapter 63 of Title 9.

(f)  As used in this section:

(1)  “Average wholesale price” or “AWP” means the wholesale price charged on a specific commodity that is assigned by the drug manufacturer and listed in a nationally recognized drug pricing file.

(2)  “Health insurer” is defined by subdivision 9402(9) of this title.  As used in this section, the term includes Medicaid, the Vermont health access plan, the VScript pharmaceutical assistance program, and any other public health care assistance program.

(3)  “Pharmacy benefit manager” is defined by subdivision 9471(5) of this title.

Sec. 2.  18 V.S.A. § 9410b is added to read:

§ 9410b.  PHARMACEUTICAL MARKETER DISCLOSURE

(a)  The commissioner’s health care information system established and maintained under section 9410 of this title shall include a requirement that when a pharmaceutical marketer engages in any form of prescription drug marketing directly to a physician or other person authorized to prescribe prescription drugs, he or she shall disclose to the physician or other prescriber the average wholesale price (AWP) of the drugs being marketed, in accordance with rules adopted by the commissioner.  Disclosure to the prescriber shall be in such a format as to be easily distributed to and understood by patients.  Disclosure shall include the AWP per pill, when relevant, and may include the relationship between the AWP of the specific drug being marketed and other drugs within the same therapeutic class, the price per course of therapy, and any other relevant information.

(b)  The commissioner may adopt such rules as are necessary or desirable to carry out the purposes of this section.  In adopting such rules, the commissioner shall consider the prescriber’s and the consumer’s need for information, the cost of the collection and disclosure of the information, and any other relevant consideration.

(c)  The department’s reasonable expenses in adopting and administering the provisions of this section may be charged to pharmaceutical manufacturing companies doing business in Vermont in the manner provided for in section 18 of Title 8.  Such expenses shall be allocated in proportion to the lives of Vermonters covered by each pharmacy benefit manager as reported annually to the commissioner in a manner and form prescribed by the commissioner.

(d)(1)  The commissioner may enforce the provisions of this section as to pharmaceutical marketers and pharmaceutical manufacturing companies in the same manner as health insurers pursuant to subsection 9412 of this title.

(2)  In additional to any other remedy provided by law, the attorney general may file an action in superior court for a violation of this section or rules adopted under this section, provided that the commissioner’ s determinations concerning the interpretation and administration of the provisions of this section and any rules adopted under this section shall carry the presumption of validity accorded under the law.  The action of the attorney general is subject to the provisions of this section and the consumer fraud provisions of chapter 63 of Title 9.  Each violation of this section constitutes an unfair practice under section 2453 of Title 9 and is a civil violation for which the attorney general may obtain the relief allowed under chapter 63 of Title 9.

(e)  As used in this section:

(1)  “Average wholesale price” or “AWP” is defined in subdivision 9410a(f)(1) of this title.

(2)  “Pharmaceutical manufacturing company” is defined by subdivision 2005(c)(2) of Title 33.

(3)  “Pharmaceutical marketer” is defined by subdivision 2005(c)(1) of Title 33.

Second:  By striking out Sec. 4 in its entirety and inserting in lieu thereof a new Sec. 4 to read as follows:

* * * PBM Regulation * * *

Sec. 4.  18 V.S.A. chapter 221, subchapter 9 is added to read:

Subchapter 9.  Pharmacy Benefit Managers

§ 9471.  DEFINITIONS

As used in this subchapter:

(1)  “Beneficiary” means an individual who has been enrolled in a health insurance plan in which coverage of prescription drugs is administered by a pharmacy benefit manager, and includes his or her dependent or other person provided health coverage through that health insurance plan.

(2)  “Health insurance plan” means a health benefit plan offered, administered, or issued by a health insurer doing business in Vermont.

(3)  “Health insurer” is defined by subdivision 9402(9) of this title.  As used in this section, the term includes the state of Vermont and any agent or instrumentality of the state that offers, administers, or provides financial support to state government.  It does not include Medicaid, the Vermont health access plan, the VScript pharmaceutical assistance program, and any other public health care assistance program.

(4)  “Pharmacy benefit management” means an arrangement for the procurement of prescription drugs at a negotiated rate for dispensation within this state to beneficiaries, the administration or management of prescription drug benefits provided by a health insurance plan for the benefit of beneficiaries, or any of the following services provided with regard to the administration of pharmacy benefits:

(A)  mail service pharmacy;

(B)  claims processing, retail network management, and payment of claims to pharmacies for prescription drugs dispensed to beneficiaries;

(C)  clinical formulary development and management services;

(D)  rebate contracting and administration;

(E)  certain patient compliance, therapeutic intervention, and generic substitution programs; and

(F)  disease management programs.

(5)  “Pharmacy benefit manager” means an entity that performs pharmacy benefit management.  The term includes a person or entity acting for a pharmacy benefit manager in a contractual or employment relationship in the performance of pharmacy benefit management for a health insurance plan.

§ 9472.  PHARMACY BENEFIT MANAGERS; REQUIREMENTS

(a)  A pharmacy benefit manager registered under section 9420 of this title that provides pharmacy benefit management for a health insurance plan shall:

(1)  Discharge its duties with respect to a health insurance plan primarily in the interest of the plan and for the primary purpose of providing benefits to the plan and defraying reasonable expenses of administering health insurance plan benefits.

(2)  Discharge its duties with the care, skill, prudence, and diligence under the circumstances then prevailing that a prudent pharmacy benefit manager acting in like capacity and familiar with such matters would use in the conduct of an enterprise of a like character and with like aims.

(3)  Provide any and all utilization information requested by a health insurance plan relating to the provision of benefits to beneficiaries through that health insurance plan and utilization information relating to services to that health insurance plan.  A pharmacy benefit manager providing information under this subsection may designate that material as confidential.  Information designated as confidential by a pharmacy benefit manager and provided to a health insurance plan under this subsection may not be disclosed by the health insurance plan to any person without the consent of the pharmacy benefit manager, except that disclosure may be made in a court filing under the consumer fraud provisions of chapter 63 of Title 9 or when authorized by that chapter or ordered by a court for good cause shown.

(4)  Notify a health insurance plan in writing of any proposed or ongoing activity, policy, or practice of the pharmacy benefit manager that presents, directly or indirectly, any conflict of interest with the requirements of this section.

(5)  With regard to the dispensation of a substitute prescription drug for a prescribed drug to a beneficiary the following provisions apply:

(A)  The pharmacy benefit manager may substitute a lower-priced generic and therapeutically equivalent drug for a higher-priced prescribed drug.

(B)  With regard to substitutions in which the substitute drug costs more than the prescribed drug, the substitution must be in accordance with Rule 10, the quality assurance standards and consumer protections for managed care plans adopted by the department of banking, insurance, securities, and health care administration.

(6)  A pharmacy benefit manager shall disclose to the health insurance plan all financial terms and arrangements for remuneration of any kind that apply between the pharmacy benefit manager and any prescription drug manufacturer, including formulary management and drug-switch programs, educational support, claims processing, pharmacy network fees charged from retail pharmacies and data sales fees, and any other information required to be disclosed under section 9420 of this title.

(b)  Compliance with the requirements of this section is required in all contracts for pharmacy benefit management entered into in this state or by a health insurance plan in this state after July 1, 2004.

§ 9473.  ENFORCEMENT

(a)  In addition to any other remedy provided by law, a health insurance plan aggrieved by a violation of this subchapter or a rule adopted under this subchapter may file an action in superior court for injunctive relief and an award of compensatory and punitive damages.  The superior court may award to the health insurance plan who prevails in an action under this section reasonable costs and attorney’s fees.

(b)  An action by the attorney general under this section is subject to the provisions of this subsection and the consumer fraud provisions of chapter 63 of Title 9.  Each violation of this subchapter constitutes an unfair practice under section 2453 of Title 9 and is a civil violation for which the attorney general may obtain, in addition to other remedies, injunctive relief and a fine in an amount not to exceed $10,000.00 per violation, plus the costs of suit, including necessary and reasonable investigative costs, reasonable expert fees, and reasonable attorney’s fees.

Third:  By adding a new section to be numbered Sec. 4a to read as follows:

Sec. 4a.  18 V.S.A. § 9420 is added to read:

§ 9420.  PHARMACY BENEFIT MANAGEMENT; REGISTRATION; AUDIT

(a)  A pharmacy benefit manager shall not do business in this state without first registering with the commissioner on a form and in a manner prescribed by the commissioner.

(b)  In accordance with rules adopted by the commissioner, pharmacy benefit managers operating in the state of Vermont and proposing to contract for the provision of pharmacy benefit management services shall offer health insurance plans a quotation for an administrative-services-only contract with full pass through of negotiated prices, rebates, and other such financial benefits which would identify to the health insurance plan external sources of revenue and profit, in addition to quotations for any other alternative pricing arrangement.  Quotations for an administrative-services-only contract shall include a reasonable fee payable by the health insurance plan which represents a competitive pharmacy benefit profit.

(c)  In order to enable periodic verification of pricing arrangements, pharmacy benefit managers shall allow access, in accordance with rules adopted by the commissioner, by the health insurance plan to financial and contractual information necessary to conduct a complete and independent audit designed to verify the following:

(1)  if applicable under an administrative-services-only contract under subsection (a) of this section, full pass through of negotiated drug prices and fees associated with all drugs dispensed to beneficiaries of the health insurance plan in both retail and mail order settings or resulting from any of the pharmacy benefit management functions defined in this section;

(2)  if applicable under an administrative-services-only contract under subsection (a) of this section, full pass through of all financial remuneration associated with all drugs dispensed to beneficiaries of the health insurance plan in both retail and mail order settings or resulting from any of the pharmacy benefit management functions defined in this section; and

(3)  any other verifications relating to the pricing arrangements and activities of the pharmacy benefit manager required by the commissioner.

(d)  The department’s reasonable expenses in adopting rules and administering the provisions of this section may be charged to pharmacy benefit managers in the manner provided for in section 18 of Title 8.  Such expenses shall be allocated in proportion to the lives of Vermonters covered by each pharmacy benefit manager as reported annually to the commissioner in a manner and form prescribed by the commissioner.

(e)  The commissioner may adopt such rules as are necessary or desirable in carrying out the purposes of this section and shall specify that the disclosure requirements of this section apply only to contracts for pharmacy benefit management entered into after July 1, 2004.  The rules also shall ensure that proprietary information is kept confidential and not disclosed by health insurance plans.

(f)  As used in this section:

(1)  “Health insurance plan” is defined in subdivision 9471(2) of this title.

(2)  “Health insurer” is defined by subdivision 9402(9) of this title.  As used in this section, the term includes the state of Vermont and any agency or instrumentality of the state that offers or administers a health benefit plan for public employees as well as Medicaid, the Vermont health access plan, the VScript pharmaceutical assistance program, and any other public health care assistance program.

(3)  “Pharmacy benefit management” is defined in subdivision 9471(4) of this title.

(4)  “Pharmacy benefit manager” is defined in subdivision 9471(5) of this title.

Fourth:  By adding a new section to be numbered Sec. 4b to read as follows:

Sec. 4b.  18 V.S.A. § 9421 is added to read:

§ 9421.  RETAIL PHARMACIES; FILLING OF PRESCRIPTIONS

A health insurer, as defined in subdivision 9471(3) of this title, and pharmacy benefit manager, as defined in subdivision 9471(5) of this title, doing business in Vermont shall permit a retail pharmacist licensed under chapter 36 of Title 26 to fill prescriptions in the same manner as they are filled by mail order pharmacies with respect to the quantity of drugs or days’ supply of drugs dispensed under each prescription.

Fifth:  By striking out Sec. 8 in its entirety and inserting in lieu thereof a new Sec. 8 to read as follows following:

* * * Prescription Drug Fair Pricing Program * * *

Sec. 8.  33 V.S.A. § 2007 is added to read:

§ 2007.  VERMONT PRESCRIPTION DRUG FAIR PRICING PROGRAM

(a)  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)  The prescription drug price fairness review board is created to establish maximum prices for prescription drugs sold in Vermont.  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, health care facility, health insurer, or 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.  Members shall receive compensation and reimbursement of expenses pursuant to section 1010 of Title 32.

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

(A)  By July 1, 2006, the board shall adopt rules establishing the procedures for:  the adoption and periodic review of maximum prices, the establishment of maximum prices for new prescription drugs and the review of maximum prices of selected drugs, and the phase-out or termination of maximum prices. 

(B)  By January 5, 2007, the board shall determine whether the cost of prescription drugs provided to qualified residents under the Healthy Vermonters program is reasonably comparable to the lowest cost paid for the same drugs for delivery or dispensation in the state.  In making this determination, the following provisions shall apply:

(i)  The board shall review prescription drug use in the Healthy Vermonters 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 the Healthy Vermonters program 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 the Healthy Vermonters program.  The average cost for each such drug shall be calculated.

(v)  If the average cost for one or more prescription drugs under the Healthy Vermonters program, 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). 

(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)  By July 1, 2007, the board shall put into effect the maximum prescription drug prices established under this subdivision that affect prescription drug transactions that take place in this state.  By that date the board shall also put into effect maximum prescription drug prices established under this section that affect prescription drug transactions that take place outside of this state unless the board finds that to do so is not permitted by federal law. 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, however, 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. The retail price component set by the board may include an increase in the dispensing fee received by the pharmacist in amount determined by the board to offset any loss of revenue to the pharmacist as a result of maximum retail prices.

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

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

(3)  the power to collect from any manufacturer, wholesaler, or retailer of prescription drugs sold in Vermont 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 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, 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)(5)(B) 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)  With respect to program administration, the commissioner shall:

(1)  administer implementation of the price regulation of any prescription drug, as determined by the board under subsection (c) of this section;

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

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

(4)  in consultation with the attorney general’s office, shall establish, by rule, standards of conduct to protect consumers in connection with the prescription drug industry.

(f)  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 the power to:

(1)  Adopt emergency rules to implement programs in a timely manner; and

(2)  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:

(A)  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 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 over which the commissioner has jurisdiction.

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

(h)  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)  Any other findings and recommendations offered by the board and the commissioner.

(i)  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.

Sixth:  By adding a new section to be numbered Sec. 8a to read as follows:

Sec. 8a.  INITIAL APPOINTMENTS; RULES

(a)  Initial appointments to the prescription drug price fairness review board shall be made no later than July 1, 2004.

(b)  The prescription drug price fairness review board and the commissioner of prevention, access, transition, and health access shall file with the legislative committee on administrative rules the rules necessary to implement the provisions of Sec. 9 of this act on or before January 1, 2005.

(Committee vote: 5-2-0

Reported favorably with recommendation of amendment by Senator Sears for the Committee on Appropriations.

The Committee recommends that the bill be amended as recommended by the Committee on Health and Welfare and as further amended as recommended by the Committee on Finance, with the following amendments thereto:

First:  In Sec. 4, 18 V.S.A. § 9471(3), by striking out the word “section” and inserting in lieu thereof subchapter

Second:  In Sec. 4a, 18 V.S.A. § 9420(f)(2), by striking out subdivision (2) in its entirety and inserting in lieu thereof a new subdivision (2) to read as follows:

(2)  “Health insurer” is defined by subdivision 9402(9) of this title.  As used in this section, the term includes the state of Vermont and any agent or instrumentality of the state that offers, administers, or provides financial support to state government.  The term also includes Medicaid, the Vermont health access plan, the VScript pharmaceutical assistance program, and any other public health care assistance program, unless the state has an administrative-services-only contract.

Third:  In Sec. 6, 33 V.S.A. § 2008, in the first sentence, after the words “health and welfare” by inserting the words and on appropriations

Fourth:  By striking out Sec. 7 in its entirety

Fifth:  In Sec. 8, 33 V.S.A. § 2007(c)(1)(C)(ii), by striking out the last sentence in its entirety and inserting in lieu thereof the following:  The retail price component set by the board may be supplemented with a dispensing fee in an amount determined by the board to offset any loss of revenue to the pharmacist as a result of maximum retail prices.  The dispensing fee shall be included in the amount paid by the purchaser or eligible for reimbursement by a health insurance plan.

Sixth:  By striking out Sec. 10 in its entirety and inserting in lieu thereof the following:

Sec. 10.  PRESCRIPTION DRUG COVERAGE FOR MEDICARE BENEFICIARIES

The department of prevention, assistance, transition, and health access shall analyze the financial impact on the state of Vermont and on Vermont Medicare beneficiaries caused by implementation of the federal Medicare Prescription Drug, Improvement, and Modernization Act of 2003, P.L. 108-173, and report its findings annually to the health access oversight committee and the senate and house committees on health and welfare beginning October 1, 2004.

and by renumbering the sections to be numerically correct

(Committee vote: 4-3-0)

AMENDMENT TO S. 288 TO BE OFFERED BY SENATOR LEDDY ON BEHALF OF THE COMMITTEE ON HEALTH AND WELFARE

Senator Leddy, on behalf of the Committee on Health and Welfare, moves to amend the recommendation of amendment of the Committee on Health and Welfare as follows:

First:  In Sec. 3, 33 V.S.A. § 1992a, after the phrase “shall provide coverage for” by inserting the word those

Second:  In Sec. 5, 33 V.S.A. § 1998(a)(4), by striking out the date “December 31, 2004” and inserting in lieu thereof January 1, 2005

Third:  By striking out Sec. 9 in its entirety and inserting in lieu thereof the following:

Sec. 9.  MENTAL HEALTH DRUGS; SUNSET EXTENSION

Subdivision (2) of Sec. 5 of No. 127 of the Acts of the 2001 Adj. Sess (2002) is amended to read:

(2)  Sec. 1, 33 V.S.A. § 1999(d) (prior authorization and drugs used to treat mental illness) shall be repealed on July 1, 2004 2006.  The commissioner of prevention, assistance, transition, and health access shall report to the health access oversight committee concerning the drug utilization review board’s analysis of prescribing patterns, literature, and testimony regarding clinical efficacy and outcomes, expenditure trends, and any proposed revisions to the preferred drug list as it pertains to drugs used to treat mental illness.

Fourth:  By striking out Sec. 10 in its entirety and inserting in lieu thereof the following:

Sec. 10.  PRESCRIPTION DRUG COVERAGE FOR MEDICARE BENEFICIARIES

The department of prevention, assistance, transition, and health access shall analyze the financial impact on the state of Vermont and on Vermont Medicare beneficiaries caused by implementation of the federal Medicare Prescription Drug, Improvement, and Modernization Act of 2003, P.L. 108-173, and report its findings annually to the health access oversight committee and the senate and house health and welfare committees beginning November 1, 2004.

ORDERED TO LIE

S. 231

An act relating to the final disposition rights of decedents.

PENDING ACTION:  Second reading of the bill.

CONFIRMATIONS

     The following appointment will be considered by the Senate, as a group, under suspension of the Rules, as moved by the President pro tempore, for confirmation together and without debate, by consent thereby given by the Senate.  However, upon request of any senator, any appointment may be singled out and acted upon separately by the Senate, with consideration given to the report of the Committee to which the appointment was referred, and with full debate; and further, all appointments for the positions of Secretaries of Agencies, Commissioners of Departments, Judges, Magistrates, and members of the Public Service Board shall be fully and separately acted upon.

James Postma of Burlington – Member of the Valuation Appeals Board – By Senator Ayer for the Committee on Finance.  (2/17)

JOINT ASSEMBLY

Thursday, March 18, 2004 – 10:30 A.M. – House Chamber – Retention of Superior Court Judges Helen Toor and David Howard.

CALENDAR NOTICE FOR PUBLIC HEARING ON V.I.T.

Senate Appropriations Committee

Public Hearing on FY 2005 Budget – Vermont Interactive Television

Monday, March 29, 2004, 5:00 pm to 7:00 pm

The Senate Appropriations Committee will hold a public hearing on Vermont Interactive Television.  The purpose of the hearing is to give Vermont citizens throughout the State an opportunity to express their views about the State’s fiscal year 2005 budget.  Thirteen (13) V.I.T. site locations will be used for the hearing:  Bennington, Castleton, Colchester, Johnson, Lyndonville, Middlebury, Newport, Randolph Center, Rutland, St. Albans, Springfield, Waterbury and White River Junction.  An up-to-date location listing, including directions and telephone numbers can be accessed via the VIT web site:  www.vitlink.org

REPORTS ON FILE

Pursuant to the provisions of 2 V.S.A. §20(c), one (1) copy of the following reports is on file in the office of the Secretary of the Senate:

   104.     Lifeline Telephone Program Annual Report including information regarding the Vermont Telecommunications Relay Service and the Link Up Vermont Program.  (Dept. of Public Service).  (March 2004).

   105.     Developmental Services Annual Report.  (Agency of Human Services, Dept. of Developmental and Mental Health Services).