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H.29

Introduced by   Representative Obuchowski of Rockingham

Referred to Committee on

Date:

Subject:  Health; prescription drugs; retirement funds

Statement of purpose:  This bill proposes to establish the Vermont prescription drug fair pricing program to regulate the price of prescription drugs sold in Vermont; to require the state of Vermont, municipalities, and school boards to purchase drugs covered by a health benefit plan from Canadian sources; and to direct the retirement boards to divest the respective retirement funds of the state employees’, teachers’, and municipal employees’ retirement systems of all interests in pharmaceutical companies.

AN ACT RELATING TO FAIRNESS IN PRESCRIPTION DRUG PRICING

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

* * * Vermont Prescription Drug Fair Pricing Program * * *

Sec. 1.  33 V.S.A. § 2004 is added to read:

§ 2004.  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, 2007, 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, 2008, 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 retail cost for each drug for beneficiaries of the Healthy Vermonters program provided those drugs on a certain date.  The average retail cost for each such drug shall be calculated.  The board also shall determine the average manufacturer price for each such drug, taking into account any rebates.

(iv)  For each prescription drug listed in subdivision (ii) of this subdivision (B), the board shall determine the lowest retail 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 lowest retail cost and, to the extent possible, the average manufacturer price, 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 lowest retail cost and average manufacturer price for the same drug or drugs as determined in subdivision (iv) of this subdivision (B), the board shall establish maximum retail and manufacturer 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, 2008, 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 over 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 (f)(2) 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)  The commissioner shall have, in addition to other powers granted by law, 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, to the superior court, on the administrative record, any adverse final decision of the board or commissioner under this section pursuant to Rule 74 of the Vermont Rules of Civil Procedure.

Sec. 2.  INITIAL APPOINTMENTS; RULES

(a)  Initial appointments to the prescription drug price fairness review board shall be made no later than July 1, 2005.

(b)  The prescription drug price fairness review board and the director of the office of Vermont health access shall file with the legislative committee on administrative rules the rules necessary to implement the provisions of Sec. 1 of this act on or before January 1, 2006.

* * * Reimportation of Prescription Drug Program * * *

Sec. 3.  33 V.S.A. § 2007a is added to read:

§ 2007a.  REIMPORTATION OF PRESCRIPTION DRUGS FOR STATE

                AND MUNICIPAL EMPLOYEES

(a)  The commissioner of human resources shall negotiate for the purchase of prescription drugs from Canadian, Irish, and United Kingdom sources so that beneficiaries of a health benefit plan, as defined in subdivision 1997(4) of this subchapter, covering employees, including retirees, who have a valid prescription may procure drugs at reduced prices.  If the commissioner determines that further savings for employees are available by entering into

I-SaveRx or a similar program, the commissioner may elect to join with the member states of I-SaveRx in lieu of direct negotiations with sources from other countries.

(b)  Any municipality or school board providing prescription drug benefits on January 1, 2004 shall negotiate for the purchase of prescription drugs from Canadian, Irish, and United Kingdom sources so that beneficiaries of a health benefit plan, as defined in subdivision 1997(4) of this subchapter, covering employees, including retirees, who have a valid prescription may procure drugs at reduced prices.  If the municipality or school board determines that further savings are available to employees by entering into I-SaveRx or a similar program, the municipality or school board may elect join with the member states of I-SaveRx in lieu of direct negotiations with sources from other countries.

(c)  This section does not limit collective bargaining on employee benefits pursuant to 3 V.S.A. § 904, 16 V.S.A. § 1981, or 21 V.S.A. § 1725.

Sec. 4.  8 V.S.A. § 4089i is amended 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 in Canada, Ireland or the United Kingdom and used in Canada, Ireland, or the United Kingdom or reimported legally, or purchased through the I-SaveRx program, on the same benefit terms and conditions as prescription drugs purchased in this country.  For drugs purchased by mail or through the internet, the plan may require accreditation by the Internet and Mailorder Pharmacy Accreditation Commission (IMPAC/tm) or similar organization.

* * * Divestment of Retirement Funds * * *

Sec. 5.  3 V.S.A. § 472(a) is amended to read:

(a)  The members of the retirement board shall be the trustees of the funds created by this subchapter, and with respect to them may invest and reinvest the funds, and hold, purchase, sell, assign, transfer, and dispose of the securities and investments in which the funds have been invested and reinvested.  Investments shall be made in accordance with the standard of care established by the prudent investor rule under chapter 147 of Title 9.  The board shall not invest any of the funds in any company which has as a principal business the manufacturing, marketing, or sale of pharmaceutical products.

Sec. 6.  16 V.S.A. § 1943(a) is amended to read:

(a)  The members of the retirement board shall be the trustees of the funds created by this subchapter, and with respect to them may invest and reinvest the funds, and hold, purchase, sell, assign, transfer, and dispose of the securities and investments in which the funds have been invested and reinvested.  Investments shall be made in accordance with the standard of care established by the prudent investor rule under chapter 147 of Title 9.  The board shall not invest any of the funds in any company which has as a principal business the manufacturing, marketing, or sale of pharmaceutical products.

Sec. 7.  24 V.S.A. § 5063(a) is amended to read:

(a)  The members of the retirement board shall be the trustees of the funds created by this subchapter, and with respect to them may invest and reinvest the funds, and hold, purchase, sell, assign, transfer, and dispose of the securities and investments in which the funds have been invested and reinvested.  Investments shall be made with judgment and care, under circumstances then prevailing, which persons of prudence, discretion, and intelligence exercise in the management of their own affairs, not for speculation, but for investment, considering the probable safety of capital as well as the probable income to be derived.  The board shall not invest any of the funds in any company which has as a principal business the manufacturing, marketing, or sale of pharmaceutical products.

Sec. 8.  RETIREMENT BOARDS; PHARMACEUTICAL COMPANY

HOLDINGS DIVESTITURE

On or before September 1, 2005, the retirement boards of the Vermont state retirement system, the state teachers’ retirement system of Vermont, and the municipal employees’ retirement system of Vermont shall divest the respective retirement funds of all interests in any company which has as a principal business the manufacturing, marketing, or sale of pharmaceutical products.  Each board shall reinvest these funds as it otherwise deems appropriate.



Published by:

The Vermont General Assembly
115 State Street
Montpelier, Vermont


www.leg.state.vt.us