Introduced by Senator Flanagan of Chittenden District, Senator Leddy of Chittenden District, Senator Gander of Windham District, Senator Kittell of Franklin District, Senator Lyons of Chittenden District, Senator Mullin of Rutland District and Senator White of Windham District
Subject: Health; prescription drugs; cost control; prescription drug benefit managers; disclosure of pharmaceutical marketing costs; price disclosure and certification
Statement of purpose: This bill proposes to (1) encourage the use of a common preferred drug list; (2) implement a counter-detailing program to provide prescribers with factual information relating to pharmaceutical drugs and their prices; (3) require the licensing of PBMs; (4) provide the office of the attorney general with additional investigative power under the disclosure laws applicable to pharmaceutical marketers; (5) implement the Healthy Vermonters Plus pharmaceutical discount program; and (6) require disclosure and certification of pharmaceutical drug prices on a confidential basis to the office of Vermont health access.
AN ACT RELATING TO PRESCRIPTION DRUG PRICING AND REGULATION
It is hereby enacted by the General Assembly of the State of Vermont:
* * * Pharmacy Best Practices and Cost Control Program * * *
Sec. 1. 33 V.S.A. § 1998(a) is amended to read:
§ 1998. PHARMACY BEST PRACTICES AND COST CONTROL
commissioner of prevention, assistance, transition, and health access
director of the office of Vermont health access shall establish and maintain 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
A Use of a statewide 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. The director of the office of Vermont health access shall encourage
all health benefit plans in the state to participate in the preferred drug list
by inviting the representatives of each health benefit plan providing
prescription drug coverage to residents of this state to participate as
observers or nonvoting members in the drug utilization review board, and by
inviting such plans to use the preferred drug list in connection with the
plans’ prescription drug coverage. (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 human resources 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 human resources 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
The commissioner shall encourage all health benefit plans to implement the
preferred drug list as a uniform, statewide preferred drug list by inviting the
representatives of each health benefit plan providing prescription drug
coverage to residents of this state to participate as observers or nonvoting
members in the commissioner’s drug utilization review board, and by inviting
such plans to use the preferred drug list in connection with the plans’
prescription drug coverage;
Utilization review procedures, including a prior authorization review process
Any strategy designed to negotiate with pharmaceutical manufacturers on behalf
of individuals under the supervision of the department of corrections, the
division of mental health, or the department for children and families,
individuals receiving coverage for prescription drugs through Medicaid, the
Vermont Health Access Program (VHAP), Dr. Dynasaur, VHAP Pharmacy, VScript,
VScript-Expanded, Healthy Vermonters, Healthy Vermonters Plus, and workers’
compensation on behalf of the applicable state agency, and any other insurer,
employer, or group covered by a collective bargaining agreement, such as
teachers or state employees, who elects to participate, to lower the cost
of prescription drugs for program participants, including a supplemental rebate
With input from physicians, pharmacists, private insurers, hospitals, pharmacy
benefit managers, and the drug utilization review board, an evidence-based
research 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. To the extent possible, the program shall inform
prescribers about drug marketing that is intended to circumvent competition
from generic alternatives. 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
;. The program shall
be implemented no later than July 1, 2006.
Alternative pricing mechanisms, including consideration of using maximum
allowable cost pricing for generic and other prescription drugs
Alternative coverage terms, including consideration of providing coverage of
over-the-counter drugs where cost-effective in comparison to prescription
drugs, and authorizing coverage of dosages capable of permitting the consumer
to split each pill if cost-effective and medically appropriate for the consumer
A simple, uniform prescription form, designed to implement the preferred drug
list, and to enable prescribers and consumers to request an exception to the
preferred drug list choice with a minimum of cost and time to prescribers,
pharmacists and consumers
(8) Providing information on programs offered by pharmaceutical manufacturers that provide prescription drugs for free or reduced prices.
(9) Creating a plan to encourage Vermonters to use federally qualified health centers (FQHC) and FQHC look-alikes, focusing on participants in the Medicaid and Medicaid waiver pharmacy programs, state employees, individuals under the supervision of corrections, and individuals receiving workers’ compensation benefits if applicable, including contracting with one or more FQHCs or FQHC look-alikes to provide case management or record management services.
(10) Any other cost containment activity adopted, by
rule, by the
commissioner director of the office of Vermont
health access that is designed to
reduce the cost of providing prescription drugs while maintaining high quality
in prescription drug therapies.
* * * PBM Regulation * * *
Sec. 2. 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 enrolled in a health 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 plan.
(2) “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 also includes Medicaid, the Vermont health access plan, the VScript pharmaceutical assistance program, and any other public health care assistance program.
(3) “Health plan” means a health benefit plan offered, administered, or issued by a health insurer doing business in Vermont.
(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 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 plan.
§ 9472. PHARMACY BENEFIT MANAGERS; REQUIRED PRACTICES
(a) A pharmacy benefit manager that provides pharmacy benefit management for a health plan shall:
(1) 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.
(2) Provide all financial and utilization information requested by a health plan relating to the provision of benefits to beneficiaries through that health plan and all financial and utilization information relating to services to that health 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 plan under this subsection may not be disclosed by the health 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.
(3) Notify a health 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.
(4) Adhere to the following provisions with regard to the dispensation of a substitute prescription drug for a prescribed drug to a beneficiary:
(A) With regard to substitutions in which the substitute drug costs more than the prescribed drug, disclose to the health plan the cost of both drugs and any benefit or payment directly or indirectly accruing to the pharmacy benefit manager as a result of the substitution.
(B) Transfer in full to the health plan any benefit or payment received in any form by the pharmacy benefit manager either as a result of a prescription drug substitution under subdivision (A) of this subdivision (4) or as a result of the pharmacy benefit manager’s substituting a lower-priced generic and therapeutically equivalent drug for a higher-priced prescribed drug.
(5) If the pharmacy benefit manager derives any payment or benefit for the dispensation of prescription drugs within the state based on volume of sales for certain prescription drugs or classes or brands of drugs within the state, pass that payment or benefit on in full to the health plan, unless the contract between the pharmacy benefit manager and the health plan provides otherwise.
(6) Disclose to the health 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. 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 plan under this subsection may not be disclosed by the health 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 by a health plan in this state.
§ 9473. ENFORCEMENT
(a) In addition to any remedy available to the commissioner under this title and any other remedy provided by law, a violation of this subchapter shall be considered a violation of the Vermont Consumer Fraud Act in subchapter 1 of chapter 63 of Title 1. All rights, authority, and remedies available to the attorney general and private parties to enforce the Vermont Consumer Fraud Act shall be available to enforce the provisions of this subchapter.
(b) In connection with any action for violation of the Vermont Consumer Fraud Act, the commissioner’s determinations concerning the interpretation and administration of the provisions of this subchapter and any rules adopted hereunder shall carry a presumption of validity. The attorney general and the commissioner shall consult with each other prior to the commencement of any investigation or enforcement action with respect to any pharmacy benefit manager. The commissioner may enforce a violation of this subchapter by a pharmacy benefit manager under section 9412 of this title. Notwithstanding the foregoing, the commissioner and the attorney general may bring a joint enforcement action against any person or entity for a violation of this subchapter.
Sec. 3. APPLICATION
Sec. 2 of this act applies to contracts executed or renewed on or after September 1, 2006. For purposes of this section, a contract executed pursuant to a memorandum of agreement executed prior to September 1, 2006 is deemed to have been executed prior to September 1, 2006 even if the contract was executed after that date.
* * * Pharmaceutical Marketer Disclosures * * *
Sec. 4. 33 V.S.A. § 2005(a)(4) is amended and (d) is added to read:
(4) The following shall be exempt from disclosure:
* * *
(D) scholarship or other support for medical students, residents, and fellows to attend a significant educational, scientific, or policy-making conference of a national, regional, or specialty medical or other professional association if the recipient of the scholarship or other support is selected by the association; and
unrestricted grants for continuing medical education programs; and (F) prescription drug rebates and discounts.
* * *
(d) Disclosures of unrestricted grants for continuing medical education programs shall be limited to the value, nature, and purpose of the grant and the name of the grantee. It shall not include disclosure of the individual participants in such a program.
* * * Pharmacy Discount Plans * * *
Sec. 5. 33 V.S.A. § 2003 is amended to read:
§ 2003. PHARMACY DISCOUNT PLANS
* * *
The Healthy Vermonters program shall offer beneficiaries an initial discounted
cost for covered drugs.
Upon approval by the Centers for Medicare and
Medicaid Services of a Section 1115 Medicaid waiver program, and upon
subsequent legislative approval, the The Healthy Vermonters program
and the Healthy Vermonters Plus program shall offer beneficiaries 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.
* * *
department shall agency may seek a waiver from the
Centers for Medicare and Medicaid Services (CMS) requesting authorization any
waivers of federal law, rule, or regulation necessary to implement the
provisions of this section , including application of manufacturer and
labeler rebates to the pharmacy discount plans. The secondary discounted cost
shall not be available to beneficiaries of the pharmacy discount plans until
the department receives written notification from CMS that the waiver requested
under this section has been approved and until the general assembly
subsequently approves all aspects of the pharmacy discount plans, including
funding for positions and related operating costs associated with eligibility
* * * Price Disclosure and Certification * * *
Sec. 6. 33 V.S.A. § 2010 is added to read:
§ 2010. ACTUAL PRICE DISCLOSURE AND CERTIFICATION
(a) A manufacturer of prescription drugs dispensed in this state under a health program directed or administered by the state shall, on a quarterly basis, report by National Drug Code the following pharmaceutical pricing criteria to the director of the office of Vermont health access for each of its drugs:
(1) the average manufacturer price as defined in 42 U.S.C. § 1396r‑8(k); and
(2) the best price as defined in 42 U.S.C. § 1396r‑8(c)(1)(C).
(b) The pricing information required under this section is for drugs defined under the Medicaid drug rebate program and must be submitted to the director following its submission to the federal government in accordance with 42 U.S.C. § 1396r‑8(b)(3).
(c) When a manufacturer of prescription drugs dispensed in this state reports the average manufacturer price or best price, the president or chief executive officer of the manufacturer shall certify to the office, on a form provided by the director of the office of Vermont health access, that the reported prices are the same as those reported to the federal government as required by 42 U.S.C. § 1396r‑8(b)(3) for the applicable rebate period.
(d) Notwithstanding any provision of law to the contrary, information submitted to the office under this section is confidential and is not a public record as defined in subsection 317(b) of Title 1. Disclosure may be made by the office to an entity providing services to the office under this section; however, that disclosure does not change the confidential status of the information. The information may be used by the entity only for the purpose specified by the office in its contract with the entity. Data compiled in aggregate form by the office for the purposes of reporting required by this section are public records as defined in subsection 317(b) of Title 1, provided they do not reveal trade information protected by state or federal law.
(e) The attorney general shall enforce the provisions of this section under the Vermont Consumer Fraud Act in subchapter 1 of chapter 63 of Title 1. The attorney general has the same authority to make rules, conduct civil investigations, and bring civil actions with respect to acts and practices governed by this section as is provided under the Vermont Consumer Fraud Act.
The Vermont General Assembly
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