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S.288

AN ACT RELATING TO STATE PROGRAMS AND POLICIES ON PRESCRIPTION DRUGS

It is hereby enacted by the General Assembly of the State of Vermont:

* * * 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 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 after consultation with the commissioner may file an action in superior court for a violation of this section or rules adopted under this section (wherein 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).  In any such action, the attorney general shall have the same authority to investigate and to obtain remedies as if the action were brought under the consumer fraud act, chapter 63 of Title 9.  Each violation of this section constitutes a separate civil violation for which the attorney general may obtain relief.

(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 in 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, the marketer 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 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 value of economic benefits disclosed by pharmaceutical manufacturing companies under section 2005 of Title 33, as reported annually by such companies 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 addition to any other remedy provided by law, the attorney general after consultation with the commissioner may file an action in superior court for a violation of this section or rules adopted under this section (wherein 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).  In any such action, the attorney general shall have the same authority to investigate and to obtain remedies as if the action were brought under the consumer fraud act, chapter 63 of Title 9.  Each violation of this section constitutes a separate civil violation for which the attorney general may obtain relief.

(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.

* * * 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 those over-the-counter drugs on the preferred drug list developed under section 1998 of this title.

* * * 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 subchapter, 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. 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.

(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 which 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.

 

 

 

Sec. 5.  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 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 in 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.

(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.

Sec. 6.  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.

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

Sec. 7.  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 January 1, 2005;

* * *

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

Sec. 8.  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 on appropriations, 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.

* * * Prescription Drug Fair Pricing Program * * *

Sec. 9.  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 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.

(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, establish by rule standards of conduct to protect consumers in connection with the prescription drug industry.

(f)  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 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.

Sec. 10.  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, assistance, 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.

* * * Mental Health Drugs * * *

Sec. 11.  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.

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

Coordination with State Programs * * *

Sec. 12.  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.

Sec. 13.  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. 14.  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 requirement of the preferred drug list program 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 met compliance standards established by the department in consultation with the drug utilization review board.  This exemption does not apply to drugs that require prior authorization for clinical reasons.


* * *  Reimportation  * * *

Sec. 15.  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. 16.  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. 17.  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. 18.  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 or

(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. 19.  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.



Published by:

The Vermont General Assembly
115 State Street
Montpelier, Vermont


www.leg.state.vt.us