HOUSE BILL No. 4115

 

January 24, 2007, Introduced by Reps. Donigan, Polidori, Gonzales, Spade, Miller, Vagnozzi, Meisner, Tobocman, Accavitti, Constan, Bieda and Leland and referred to the Committee on Health Policy.

 

     A bill to allow certain prescription drug manufacturers and

 

labelers to enter into rebate agreements with the department of

 

community health; to establish a discount prescription drug program

 

for certain individuals; to allow certain retail pharmacies to

 

offer certain discounts; to create certain funds; to prescribe

 

certain powers and duties of certain state agencies and

 

departments; and to provide for the promulgation of rules.

 

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

 

     Sec. 1. This act shall be known and may be cited as the

 

"Michigan prescription drug fair pricing act".

 

     Sec. 2. As used in this act:

 

     (a) "Department" means the department of community health.

 

     (b) "Director" means the director of the department of

 


community health or his or her designee.

 

     (c) "Fund" means the Rx dedicated fund established in section

 

7.

 

     (d) "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 CFR 207.20.

 

     (e) "Manufacturer" means a manufacturer of prescription drugs

 

and includes a subsidiary or affiliate of a manufacturer.

 

     (f) "Medicaid" or "state medicaid program" means the program

 

for medical assistance administered by the department under the

 

social welfare act, 1939 PA 280, MCL 400.1 to 400.119b.

 

     (g) "Participating retail pharmacy" means a pharmacy or other

 

business that dispenses prescription drugs at retail and is

 

licensed under article 15 of the public health code, 1978 PA 368,

 

MCL 333.16101 to 333.18838, that participates in the state medicaid

 

program or voluntarily agrees to dispense prescription drugs

 

covered by a rebate agreement under the Rx program created in

 

section 3.

 

     (h) "Rx program participant" means an individual who is

 

eligible to participate in the Rx program under section 4.

 

     (i) "Underinsured" means an individual who is covered by an

 

insurance policy that pays 80% or less of prescription drug costs.

 

     Sec. 3. (1) The Rx program is established within the

 

department to provide discounted prescription drug prices to

 

uninsured and underinsured residents of this state and to residents

 

of this state who are recipients of benefits under the state

 


medicaid program.

 

     (2) A manufacturer or labeler that sells prescription drugs in

 

this state that are ultimately dispensed to patients through any

 

state funded or state operated program may voluntarily elect to

 

enter into a rebate agreement with the department for the Rx

 

program. The rebate agreement shall require the manufacturer or

 

labeler to make rebate payments to the state each calendar quarter

 

according to a schedule established by the department under

 

subsection (3).

 

     (3) The director shall negotiate the amount of the rebate

 

required under a rebate agreement entered into pursuant to

 

subsection (2) from a manufacturer or labeler in accordance with

 

the following:

 

     (a) The director shall take into consideration the rebate

 

calculated under the medicaid rebate program pursuant to section

 

1927 of title XIX of the social security act, 42 USC 1396r-8, the

 

average wholesale price of prescription drugs, and any other

 

information on prescription drug prices and price discounts

 

considered relevant by the director.

 

     (b) The director shall attempt to obtain an initial rebate

 

amount equal to or greater than the rebate calculated under the

 

medicaid rebate program pursuant to section 1927 of title XIX of

 

the social security act, 42 USC 1396r-8.

 

     (c) The director shall attempt to obtain a rebate in an amount

 

equal to or greater than the amount of any discount, rebate, or

 

price reduction for prescription drugs provided to the federal

 

government by manufacturers and labelers.

 


     (d) The director shall begin collecting rebates under this

 

section on July 1, 2007.

 

     (4) The name of a manufacturer or labeler that does not enter

 

into a rebate agreement with the department under this section is

 

public information, and the department shall release the

 

information to the public. If the director and a drug manufacturer

 

or labeler fail to reach agreement on the terms of a rebate, the

 

director shall impose the prior authorization requirements allowed

 

under the state medicaid program, as permitted by law, for the

 

dispensing of prescription drugs provided by a manufacturer or

 

labeler described in this section. In determining which

 

prescription drugs are placed on the prior authorization list, the

 

director shall only allow prior authorization of a prescription

 

drug if safety, efficacy, and disease management considerations are

 

not compromised by substitution with an equivalent prescription

 

drug.

 

     (5) A participating retail pharmacy shall discount the price

 

of a prescription covered by the Rx program and sold to an Rx

 

program participant. In addition, the department and a

 

participating retail pharmacy shall meet all of the following

 

requirements:

 

     (a) The department shall establish discounted prices for drugs

 

covered by a rebate agreement entered into under this section and

 

shall promote the use of efficacious and reduced-cost prescription

 

drugs, taking into consideration reduced prices for state and

 

federally capped drug programs, differential dispensing fees,

 

administrative overhead, and incentive payments.

 


     (b) Beginning July 1, 2007, a participating retail pharmacy

 

shall offer a prescription drug to an Rx program participant at or

 

below the average wholesale price, minus 6%, plus the dispensing

 

fee provided under the state medicaid program. The initial price

 

level required under this subdivision shall be specified by the

 

director by rule. The average wholesale price, for purposes of this

 

subdivision, is the wholesale price charged on a specific

 

prescription drug that is assigned by the manufacturer and is

 

listed in a nationally recognized drug pricing file approved by the

 

director.

 

     (c) Not later than October 1, 2007, a participating retail

 

pharmacy shall offer a prescription drug to an Rx program

 

participant at or below the initial price level specified in

 

subdivision (b) minus the amount of any rebate paid by the state to

 

the retail pharmacy. The discounted price level required by this

 

subdivision shall be specified by the director by rule. In

 

determining the discounted price level, the director shall consider

 

an average of all rebates weighted by sales of prescription drugs

 

subject to rebates under this act over the most recent 12-month

 

period for which the information is available and the cost of

 

administering the Rx program, not to exceed 1% of the total rebates

 

received.

 

     Sec. 4. A resident of this state is eligible to participate in

 

the Rx program if he or she does not have prescription drug

 

coverage under a public or private health care payment or benefits

 

plan, is underinsured, or is a recipient of benefits under the

 

state medicaid program. The department shall promulgate rules to

 


establish simplified procedures for determining eligibility and

 

issuing Rx program enrollment cards to eligible residents. The

 

department shall undertake outreach efforts to build public

 

awareness of the Rx program and maximize enrollment by eligible

 

residents. The department may promulgate rules to adjust the

 

requirements and terms of the Rx program to accommodate any new

 

federally funded prescription drug programs.

 

     Sec. 5. (1) The Michigan board of pharmacy created in section

 

17721 of the public health code, 1978 PA 368, MCL 333.17721, shall

 

promulgate rules requiring disclosure by a participating retail

 

pharmacy to an Rx program participant of the amount of savings

 

provided as a result of the Rx program. In promulgating the rules,

 

the Michigan board of pharmacy shall consider and protect

 

information that is proprietary in nature.

 

     (2) The department shall not impose a transaction charge on a

 

participating retail pharmacy that submits a claim or receives a

 

payment under the Rx program.

 

     (3) A participating retail pharmacy shall submit a claim to

 

the department to verify the amount charged to an Rx program

 

participant.

 

     (4) On a weekly or biweekly basis, the department shall

 

reimburse a participating retail pharmacy for all of the discounted

 

prices provided to Rx program participants and dispensing fees set

 

by the director.

 

     (5) The department shall collect from each participating

 

retail pharmacy utilization data necessary to calculate the amount

 

of the rebate from the manufacturer or labeler. The department

 


shall protect the confidentiality of all information subject to

 

confidentiality protection under state and federal law, rule, and

 

regulation.

 

     Sec. 6. A discrepancy in a rebate amount paid under a rebate

 

agreement entered into under section 3 shall be resolved using the

 

following process:

 

     (a) If there is a discrepancy in the manufacturer's or

 

labeler's favor between the amount claimed by a participating

 

retail pharmacy and the amount rebated by the manufacturer or

 

labeler, the department, at the department's expense, may hire a

 

mutually agreed-upon independent auditor. If a discrepancy still

 

exists following the audit, the manufacturer or labeler shall

 

justify the reason for the discrepancy or make payment to the

 

department for any additional rebate amount due.

 

     (b) If there is a discrepancy against the interest of the

 

manufacturer or labeler in the information provided by the

 

department to the manufacturer or labeler regarding the negotiation

 

under section 3 of the rebate to be paid by the manufacturer or

 

labeler, the manufacturer or labeler, at the manufacturer's or

 

labeler's expense, may hire a mutually agreed-upon independent

 

auditor to verify the accuracy of the information supplied by the

 

department. If a discrepancy still exists following the audit, the

 

department shall justify the reason for the discrepancy or refund

 

to the manufacturer or labeler any excess paid to the department by

 

the manufacturer or labeler pursuant to a rebate agreement entered

 

into under section 3.

 

     (c) After completion of the procedures established in

 


subdivision (a) or (b), either the department or the manufacturer

 

or labeler may request a hearing. Supporting documentation must

 

accompany the request for a hearing. The hearing shall be conducted

 

as a contested case hearing under the administrative procedures act

 

of 1969, 1969 PA 306, MCL 24.201 to 24.328.

 

     Sec. 7. (1) The Rx dedicated fund is established in the state

 

treasury to receive revenue from manufacturers and labelers who pay

 

rebates to the department under this act and any appropriations or

 

allocations designated for the fund.

 

     (2) The department shall use the fund to reimburse

 

participating retail pharmacies for discounted prices provided to

 

Rx program participants and to reimburse the department for the

 

costs of administering the Rx program, including, but not limited

 

to, contracted services, computer costs, professional fees paid to

 

participating retail pharmacies, and other reasonable Rx program

 

costs.

 

     (3) The state treasurer shall oversee the investment of the

 

fund, and interest earned on fund balances accrues to the fund.

 

     (4) The unexpended balance remaining in the fund at the end of

 

the fiscal year remains in the fund and does not lapse to the

 

general fund.

 

     Sec. 8. Beginning with the year after the year in which this

 

act takes effect, the department shall report the enrollment and

 

financial status of the Rx program to the legislature by the second

 

week in January each year.

 

     Sec. 9. In implementing this act, the department may

 

coordinate with other governmental programs and may take actions to

 


enhance efficiency, reduce the cost of prescription drugs, and

 

maximize the benefits of this and other governmental programs,

 

including providing the benefits of the Rx program to the

 

beneficiaries of other programs.

 

     Sec. 10. The department and board shall promulgate rules to

 

implement this act under the administrative procedures act of 1969,

 

1969 PA 306, MCL 24.201 to 24.328.

 

     Sec. 11. The department may seek any waivers of federal law,

 

rule, or regulation necessary to implement this act.

 

     Sec. 12. If a portion of this act or the application of this

 

act to any person or circumstances is found by a court to be

 

invalid, the invalidity does not affect the remaining portions or

 

applications of the act that can be given effect without the

 

invalid portion or application, if the remaining portions of the

 

act are not determined by the court to be inoperable, and to this

 

end this act is declared to be severable.