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BILL AS INTRODUCED 2007-2008

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H.344

Introduced by   Representative Obuchowski of Rockingham

Referred to Committee on

Date:

Subject:  Health; prescription drugs; prices; 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 and to direct the retirement boards to divest the 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.  Chapter 91 of Title 18 is amended to read:

CHAPTER 91.  GENERIC DRUGS PRESCRIPTION DRUG

COST CONTAINMENT

Sec. 2.  18 V.S.A. chapter 91, sections 4601–4608 are designated as subchapter 1 which is added to read:

Subchapter 1.  Generic Drugs


Sec. 3.  18 V.S.A. chapter 91, subchapter 2 is added to read:

Subchapter 2.  Vermont Prescription Drug Fair Pricing Program

§ 4621.  PURPOSE

The general assembly finds that affordability is critical in providing access to prescription drugs for all Vermont residents.  The purpose of this subchapter is 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.

§ 4622.  Definitions

For the purposes of this subchapter:

(1)  “Family member” means a spouse, civil union partner, reciprocal beneficiary, parent, or child.

(2)  “Most favored purchase price” means the price offered with all rights and privileges accorded by the seller to the most favored purchaser in Vermont.

(3)  "Purchaser" means any person who engages primarily in selling drugs directly to consumers.

(4)  “Secretary” means the secretary of human services.

(5)  "Seller" means any person who trades in drugs for resale to purchasers in this state.

§ 4623.  Prescription Drug Price Fairness Review Board

(a)  The prescription drug price fairness review board is created to establish a pricing schedule for prescription drugs sold in Vermont. 

(b)  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 prescriber, and two members representing the interests of consumers with no financial interest in or family member affiliated with any health care provider, health care facility, health insurer, or pharmaceutical company. 

(c)  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.

§ 2624.  Board Powers

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 to 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 purchaser or seller of prescription drugs sold to consumers 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 purchaser or seller 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 purchaser or seller, to subpoena witnesses and documents, to administer oaths to witnesses, and to examine witnesses 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 secretary under section 2626 of this title 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.

§ 2625.  Drug Pricing Schedule

(a)  In order to achieve the public health purpose of this subchapter, the prescription drug price fairness review board may use the following procedure to establish maximum retail and manufacturer pricing schedules for prescription drugs sold in Vermont.

(b)  By July 1, 2008, the board shall adopt rules regarding how the board will:

(1)  establish the pricing schedules, considering at minimum the prices available to federal agencies under the federal supply schedule, the prices available through the Healthy Vermonters program, and the most favored purchase price;

(2)  establish the frequency and method of review of those prices and the method for amending the pricing schedules for new prescription drugs or drugs removed from the market;

(3)  calculate the average price under subsection (c) of this section; and

(4)  calculate the most favored purchase price offered in Vermont, taking into consideration volume purchases, rebates, free merchandise, samples, and similar trade concessions.

(c)  By January 5, 2009, the board shall determine whether the average price of prescription drugs provided to individuals under the Healthy Vermonters program is less than or equivalent to the most favored purchase price offered in Vermont.  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 if that list is made public as part of the process of establishing the pricing schedule.

(d)  If the average price of prescription drugs provided to individuals under the Healthy Vermonters program is less than or equivalent to the most favored purchase price offered in Vermont, the board shall implement the pricing schedules no later than July 1, 2009.

(e)  The board, after notice and opportunity for hearing, may grant a moderation or exemption from the pricing schedules established by the board under this section upon its own determination or upon the request of any affected person.  The person making the request for the moderation or exemption shall have the burden of proof by a preponderance of the evidence in demonstrating the need for it.  In considering the request for a moderation or exemption, the board may consider:

(1)  changed circumstances since the pricing schedules were established;

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

(3)  the availability of one or more drugs essential to the health of Vermonters or any other consideration related to the health and safety of Vermonters; and

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

(f)  The board may take actions that the board determines necessary if there is a severe limitation of or shortage of or lack of access to prescription drugs in the state that could threaten or endanger the public health or welfare.

(g)  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.

§ 2626.  Administration

(a)  The board shall:

(1)  implement the pricing schedules for any prescription drug, as determined by the board under section 2625;

(2)  distribute information concerning the pricing schedules established by the board under section 2625 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 board; 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.

(b)  In collaboration with the board, the secretary 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 purchaser or seller of prescription drugs sold in Vermont such information as is necessary for the secretary to carry out the duties under this subchapter, subject to the rules of the board relating to proprietary information under this subchapter.  Pursuant to the power granted under this subdivision:

(A)  Any purchaser or seller of prescription drugs sold in Vermont shall file with the secretary, on request, such data, statistics, schedules, or information as the secretary may require to enable the secretary to carry out his or her duties.

(B)  The secretary shall have the power to examine books and accounts of any purchaser or seller of prescription drugs sold in Vermont, to subpoena witnesses and documents, to administer oaths to witnesses, and to examine witness on all matters over which the secretary has jurisdiction.

§ 2027.  Appeal

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.

§ 2028.  Reports

The board and the secretary 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 pricing schedules for prescription drugs sold in Vermont.

(2)  The 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 secretary.

Sec. 4.  INITIAL APPOINTMENTS; RULES

(a)  Initial appointments to the prescription drug price fairness review board shall be made no later than July 1, 2007.

(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, 2008.

Sec. 5.  18 V.S.A. chapter 91, subchapter 3 is added to read:

Subchapter 3. Consumer Provisions 

§ 2631.  Co-payment pricing

A person licensed or registered under chapter 36 of Title 26 shall charge a consumer the lesser of the co-payment required by the insurer or the usual retail cost of the prescription drug.

Sec. 6.  8 V.S.A. § 4100f is added to read:

§ 4100f.  Prescription Drug Co-Payments

A health insurance or other health benefit plan offered by a health insurer licensed under this chapter or a prescription drug plan offering coverage under Medicare Part C or D shall require the insured to pay only the lesser of the

co-payment required by the insurer and the usual retail cost of the prescription drug.

Sec. 7.  9 V.S.A. § 2453 is amended to read:

§ 2453.  Practices prohibited; antitrust and consumer

              fraud

(a)  Unfair methods of competition in commerce, and unfair or deceptive acts or practices in commerce, are hereby declared unlawful.

(b)(1)  It is the intent of the legislature that in construing subsection (a) of this section, the courts of this state will be guided by the construction of similar terms contained in Section 5(a)(1) of the Federal Trade Commission Act as from time to time amended by the Federal Trade Commission and the courts of the United States.

(2)  A violation of subchapter 2 of chapter 91 of Title 18 shall be considered a violation under this section.

(3)  It shall be an unfair practice under this section for a health insurance or other  health benefit plan offered by a health insurer to sell, solicit, or negotiate the purchase of health insurance in this state by:

(A)  Cold lead advertising, defined as making use directly or indirectly of any method of marketing which fails to disclose in a conspicuous manner that a purpose of the method of marketing is solicitation of insurance and that contact will be made by an insurance agent or insurance company. 

(B)  Using an appointment that was made to discuss Medicare products or to solicit the sale of Medicare products to solicit sales of any other insurance products unless the consumer specifically agreed in advance of the appointment to discuss other types of insurance products during the same appointment.  As used in this subsection, the term “Medicare products” includes Medicare Part A, Medicare Part B, Medicare Part C, Medicare Part D, and Medicare supplement plans. 

* * *


* * * Importation of Prescription Drugs * * *

Sec. 8.  3 V.S.A. § 631a is added to read:

§ 631a.  IMPORTATION OF PRESCRIPTION DRUGS FOR STATE

             AND MUNICIPAL EMPLOYEES

(a)  The commissioner of human resources shall negotiate for the purchase of prescription drugs from Canadian, European Union, Australian, or New Zealand sources so that beneficiaries of the state employees’ health benefit plan, as defined in section 631 of this title, who have a valid prescription may procure drugs at reduced prices.  If the commissioner determines that further savings for beneficiaries 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, 2007 shall negotiate for the purchase of prescription drugs from Canadian, European Union, Australian, or New Zealand sources so that beneficiaries of a health benefit plan covering employees, including retirees, of a municipality or school who have a valid prescription may procure drugs at reduced prices.  If the municipality or school board determines that further savings are available to beneficiaries by entering into I-SaveRx or a similar program, the municipality or school board may elect to 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 section 904 of Title 3, section 1981 of Title 16, or section 1725 of Title 21.

Sec. 9.  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, the European Union, Australia, or New Zealand, and used in Canada the other country 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. 10.  3 V.S.A. § 472(a) is amended to read:

(a)  The members of the Vermont pension investment committee established in chapter 17 of this title shall be the trustees of the funds created by this subchapter, chapter 55 of Title 16, and chapter 125 of Title 24, 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 committee 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. 11.  16 V.S.A. § 1943(a) is amended to read:

(a)  The members of the Vermont pension investment committee established in chapter 17 of Title 3 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 committee 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. 12.  24 V.S.A. § 5063(a) is amended to read:

(a)  The members of the Vermont pension investment committee established in chapter 17 of Title 3 shall be the trustees of the funds created by this chapter, 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 committee 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. 13.  RETIREMENT BOARDS; PHARMACEUTICAL COMPANY

  HOLDINGS DIVESTITURE

On or before September 1, 2007, 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.

* * * Healthy Vermonters Plus * * *

Sec. 14.  33 V.S.A. § 2003 is amended to read:

§ 2003.  PHARMACY DISCOUNT PLANS

(a)  The director of the office of Vermont health access shall implement pharmacy discount plans, to be known as the "Healthy Vermonters" program and the "Healthy Vermonters Plus" program, for Vermonters without adequate coverage for prescription drugs.  The provisions of section 1992 of this title subchapter 8 of this chapter shall apply to the director's authority to administer the pharmacy discount plans established by this section.

(b)  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.

* * *

(n)  The department shall seek a waiver from the Centers for Medicare and Medicaid Services (CMS) requesting authorization 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 determinations.

* * * Restrictions on Advertising * * *

Sec. 15.  18 V.S.A. chapter 82 is amended to read:

Chapter 82.  Labeling and Advertising of Foods, Drugs, Cosmetics, and Hazardous Substances

§ 4051.  DEFINITIONS

For the purposes of this chapter:

* * *

(25)  “Pharmaceutical manufacturer” shall have the same meaning as in subdivision 2005(c)(5) of Title 33.  

(26)  “Regulated advertisement” means the presentation to the general public of a commercial message regarding a prescription drug or biological product by a pharmaceutical manufacturer that is:

(A)  Broadcast on television or radio from a station that is physically located in Vermont;

(B)  Broadcast over the internet from a location in Vermont; or

(C)  Printed in magazines or newspapers that are printed, distributed, or sold in Vermont.


§ 4052.  MANUFACTURE, SALE, DELIVERY; PROHIBITIONS

The following acts and the causing thereof within the state of Vermont are hereby prohibited:

* * *

(12)  Action by a pharmaceutical manufacturer that causes to be presented in the state an advertisement of a drug through broadcast media, unless that advertisement is disseminated only to members of the medical, dental, or veterinary professions or appears only in the scientific periodicals of these professions or is disseminated only for the purpose of public health education by persons not commercially interested, directly or indirectly, in the sale of the drugs or devices.

(13)  No person shall sell, offer for sale, distribute, or transport for sale within this state in a package or container intended for general home and household use any misbranded package of a hazardous substance.

* * *

§ 4054.  PENALTIES

(a)  A person who violates any of the provisions of section 4052 of this title shall be imprisoned for not more than one year or fined not more than $1,000.00 or both; but if the violation is committed after a conviction of the person under this section has become final, the person shall be imprisoned for not more than one year, or fined not more than $2,500.00, or both.

(b)  A person shall not be subject to the penalties of subsection (a) of this section for having violated section subsection 4052(a) or (c) of this title if he the person establishes a guaranty or undertaking signed by, and containing the name and address of the person residing in the state of Vermont from whom he or she received in good faith the article, to the effect that the article is not adulterated or misbranded within the meaning of this chapter, designating this chapter.

(c)  No publisher, radio broadcast licensee, or agency or medium for the dissemination of an advertisement, except the manufacturer or pharmaceutical manufacturer, packer, distributor, or seller of the article to which a false advertisement relates, shall be liable under this section by reason of the dissemination by him or her of such false advertisement, unless he or she has refused, on the request of the board to furnish the board the name and post office address of the manufacturer or pharmaceutical manufacturer, packer, distributor, seller, or advertising agency, residing in the state of Vermont, who causes him or her to disseminate such advertisement.

* * *

§ 4068.  ADVERTISING REGULATIONS

(a)  An advertisement of a food, drug, device, or cosmetic shall be deemed to be false if it is false or misleading in any particular;.

(b)  For the purpose of this chapter, the advertisement of a drug or device representing it to have any effect in albuminuria, appendicitis, arterio-sclerosis, blood poison, bone disease, Bright's disease, cancer, carbuncles, cholecystitis, diabetes, diphtheria, dropsy, erysipelas, gallstones, heart and vascular diseases, high blood pressure, mastoiditis, measles, meningitis, mumps, nephritis, otitis media, paralysis, pneumonia, poliomyelitis (infantile paralysis), prostate gland disorders, pyelitis, scarlet fever, sexual impotence, sinus infection, smallpox, tuberculosis, tumors, typhoid, uremia, venereal disease, shall also be deemed to be false, except that no advertisement, not in violation of subsection (a) of this section, shall be deemed to be false under this subsection if it is disseminated only to members of the medical, dental, or veterinary professions, or appears only in the scientific periodicals of these professions, or is disseminated only for the purpose of public health education by persons not commercially interested, directly or indirectly, in the sale of the drugs or devices; provided, that whenever the board determines that an advance in medical science has made any type of self-medication safe as to any of the diseases named above, the board shall by regulation authorize the advertisement of drugs having curative or therapeutic effect for the disease, subject to such conditions and restrictions as the board may deem necessary in the interests of public health: provided, that this subsection shall not be construed as indicating that self-medication for diseases other than those named herein is safe or efficacious.



Published by:

The Vermont General Assembly
115 State Street
Montpelier, Vermont


www.leg.state.vt.us