February 5, 2003, Introduced by Reps. Woodward, Woronchak, Wojno, Bieda, Vagnozzi, Gieleghem, Elkins, Gleason, Anderson, Dennis, Sak, Minore, Spade, Condino, Hunter, Tobocman, Smith, Law, Hopgood, Meisner, Lipsey, Gillard, Adamini, Brown, McConico, Whitmer, Clack, Cheeks, Phillips, Stallworth, Jamnick, Accavitti, Plakas, Reeves, O'Neil, Kolb and Hardman 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:
1 Sec. 1. This act shall be known and may be cited as the
2 "Michigan prescription drug fair pricing act".
3 Sec. 2. As used in this act:
4 (a) "Department" means the department of community health.
5 (b) "Director" means the director of the department of
6 community health or his or her designee.
7 (c) "Fund" means the Rx dedicated fund established in section
1 7.
2 (d) "Labeler" means an entity or person that receives
3 prescription drugs from a manufacturer or wholesaler and
4 repackages those drugs for later retail sale and that has a
5 labeler code from the federal food and drug administration under
6 21 C.F.R. 207.20.
7 (e) "Manufacturer" means a manufacturer of prescription drugs
8 and includes a subsidiary or affiliate of a manufacturer.
9 (f) "Medicaid" or "state medicaid program" means the program
10 for medical assistance administered by the department under the
11 social welfare act, 1939 PA 280, MCL 400.1 to 400.119b.
12 (g) "Participating retail pharmacy" means a pharmacy or other
13 business that dispenses prescription drugs at retail and is
14 licensed under article 15 of the public health code, 1978 PA 368,
15 MCL 333.16101 to 333.18838, that participates in the state
16 medicaid program or voluntarily agrees to dispense prescription
17 drugs covered by a rebate agreement under the Rx program created
18 in section 3.
19 (h) "Rx program participant" means an individual who is
20 eligible to participate in the Rx program under section 4.
21 (i) "Underinsured" means an individual who is covered by an
22 insurance policy that pays 80% or less of prescription drug
23 costs.
24 Sec. 3. (1) The Rx program is established within the
25 department to provide discounted prescription drug prices to
26 uninsured and underinsured residents of this state and to
27 residents of this state who are recipients of benefits under the
1 state medicaid program.
2 (2) A manufacturer or labeler that sells prescription drugs
3 in this state that are ultimately dispensed to patients through
4 any state funded or state operated program may voluntarily elect
5 to enter into a rebate agreement with the department for the Rx
6 program. The rebate agreement shall require the manufacturer or
7 labeler to make rebate payments to the state each calendar
8 quarter according to a schedule established by the department
9 under subsection (3).
10 (3) The director shall negotiate the amount of the rebate
11 required under a rebate agreement entered into pursuant to
12 subsection (2) from a manufacturer or labeler in accordance with
13 the following:
14 (a) The director shall take into consideration the rebate
15 calculated under the medicaid rebate program pursuant to section
16 1927 of title XIX of the social security act, 42 U.S.C. 1396r-8,
17 the average wholesale price of prescription drugs, and any other
18 information on prescription drug prices and price discounts
19 considered relevant by the director.
20 (b) The director shall attempt to obtain an initial rebate
21 amount equal to or greater than the rebate calculated under the
22 medicaid rebate program pursuant to section 1927 of title XIX of
23 the social security act, 42 U.S.C. 1396r-8.
24 (c) The director shall attempt to obtain a rebate in an
25 amount equal to or greater than the amount of any discount,
26 rebate, or price reduction for prescription drugs provided to the
27 federal government by manufacturers and labelers.
1 (d) The director shall begin collecting rebates under this
2 section on July 1, 2004.
3 (4) The name of a manufacturer or labeler that does not enter
4 into a rebate agreement with the department under this section is
5 public information, and the department shall release the
6 information to the public. If the director and a drug
7 manufacturer or labeler fail to reach agreement on the terms of a
8 rebate, the director shall impose the prior authorization
9 requirements allowed under the state medicaid program, as
10 permitted by law, for the dispensing of prescription drugs
11 provided by a manufacturer or labeler described in this section.
12 In determining which prescription drugs are placed on the prior
13 authorization list, the director shall only allow prior
14 authorization of a prescription drug if safety, efficacy, and
15 disease management considerations are not compromised by
16 substitution with an equivalent prescription drug.
17 (5) A participating retail pharmacy shall discount the price
18 of a prescription covered by the Rx program and sold to an Rx
19 program participant. In addition, the department and a
20 participating retail pharmacy shall meet all of the following
21 requirements:
22 (a) The department shall establish discounted prices for
23 drugs covered by a rebate agreement entered into under this
24 section and shall promote the use of efficacious and reduced-cost
25 prescription drugs, taking into consideration reduced prices for
26 state and federally capped drug programs, differential dispensing
27 fees, administrative overhead, and incentive payments.
1 (b) Beginning July 1, 2004, a participating retail pharmacy
2 shall offer a prescription drug to an Rx program participant at
3 or below the average wholesale price, minus 6%, plus the
4 dispensing fee provided under the state medicaid program. The
5 initial price level required under this subsection shall be
6 specified by the director by rule. The average wholesale price,
7 for purposes of this subsection, is the wholesale price charged
8 on a specific prescription drug that is assigned by the
9 manufacturer and is listed in a nationally recognized drug
10 pricing file approved by the director.
11 (c) Not later than October 1, 2004, a participating retail
12 pharmacy shall offer a prescription drug to an Rx program
13 participant at or below the initial price level specified in
14 subdivision (b) minus the amount of any rebate paid by the state
15 to the retail pharmacy. The discounted price level required by
16 this subsection shall be specified by the director by rule. In
17 determining the discounted price level, the director shall
18 consider an average of all rebates weighted by sales of
19 prescription drugs subject to rebates under this act over the
20 most recent 12-month period for which the information is
21 available and the cost of administering the Rx program, not to
22 exceed 1% of the total rebates received.
23 Sec. 4. A resident of this state is eligible to participate
24 in the Rx program if he or she does not have prescription drug
25 coverage under a public or private health care payment or
26 benefits plan, is underinsured, or is a recipient of benefits
27 under the state medicaid program. The department shall
1 promulgate rules to establish simplified procedures for
2 determining eligibility and issuing Rx program enrollment cards
3 to eligible residents. The department shall undertake outreach
4 efforts to build public awareness of the Rx program and maximize
5 enrollment by eligible residents. The department may promulgate
6 rules to adjust the requirements and terms of the Rx program to
7 accommodate any new federally funded prescription drug programs.
8 Sec. 5. (1) The Michigan board of pharmacy created in
9 section 17721 of the public health code, 1978 PA 368, MCL
10 333.17721, shall promulgate rules requiring disclosure by a
11 participating retail pharmacy to an Rx program participant of the
12 amount of savings provided as a result of the Rx program. In
13 promulgating the rules, the Michigan board of pharmacy shall
14 consider and protect information that is proprietary in nature.
15 (2) The department shall not impose a transaction charge on a
16 participating retail pharmacy that submits a claim or receives a
17 payment under the Rx program.
18 (3) A participating retail pharmacy shall submit a claim to
19 the department to verify the amount charged to an Rx program
20 participant.
21 (4) On a weekly or biweekly basis, the department shall
22 reimburse a participating retail pharmacy for all of the
23 discounted prices provided to Rx program participants and
24 dispensing fees set by the director.
25 (5) The department shall collect from each participating
26 retail pharmacy utilization data necessary to calculate the
27 amount of the rebate from the manufacturer or labeler. The
1 department shall protect the confidentiality of all information
2 subject to confidentiality protection under state or federal law,
3 rule, or regulation.
4 Sec. 6. A discrepancy in a rebate amount paid under a
5 rebate agreement entered into under section 3 shall be resolved
6 using the following process:
7 (a) If there is a discrepancy in the manufacturer's or
8 labeler's favor between the amount claimed by a participating
9 retail pharmacy and the amount rebated by the manufacturer or
10 labeler, the department, at the department's expense, may hire a
11 mutually agreed-upon independent auditor. If a discrepancy still
12 exists following the audit, the manufacturer or labeler shall
13 justify the reason for the discrepancy or make payment to the
14 department for any additional rebate amount due.
15 (b) If there is a discrepancy against the interest of the
16 manufacturer or labeler in the information provided by the
17 department to the manufacturer or labeler regarding the
18 negotiation under section 3 of the rebate to be paid by the
19 manufacturer or labeler, the manufacturer or labeler, at the
20 manufacturer's or labeler's expense, may hire a mutually
21 agreed-upon independent auditor to verify the accuracy of the
22 information supplied by the department. If a discrepancy still
23 exists following the audit, the department shall justify the
24 reason for the discrepancy or refund to the manufacturer or
25 labeler any excess paid to the department by the manufacturer or
26 labeler pursuant to a rebate agreement entered into under section
27 3.
1 (c) After completion of the procedures established in
2 subdivision (a) or (b), either the department or the manufacturer
3 or labeler may request a hearing. Supporting documentation must
4 accompany the request for a hearing. The hearing shall be
5 conducted as a contested case hearing under the administrative
6 procedures act of 1969, 1969 PA 306, MCL 24.201 to 24.328.
7 Sec. 7. (1) The Rx dedicated fund is established in the
8 state treasury to receive revenue from manufacturers and labelers
9 who pay rebates to the department under this act and any
10 appropriations or allocations designated for the fund.
11 (2) The department shall use the fund to reimburse
12 participating retail pharmacies for discounted prices provided to
13 Rx program participants and to reimburse the department for the
14 costs of administering the Rx program, including, but not limited
15 to, contracted services, computer costs, professional fees paid
16 to participating retail pharmacies, and other reasonable Rx
17 program costs.
18 (3) The state treasurer shall oversee the investment of the
19 fund, and interest earned on fund balances accrues to the fund.
20 (4) The unexpended balance remaining in the fund at the end
21 of the fiscal year remains in the fund and does not lapse to the
22 general fund.
23 Sec. 8. Beginning with the year after the year in which
24 this act takes effect, the department shall report the enrollment
25 and financial status of the Rx program to the legislature by the
26 second week in January each year.
27 Sec. 9. In implementing this act, the department may
1 coordinate with other governmental programs and may take actions
2 to enhance efficiency, reduce the cost of prescription drugs, and
3 maximize the benefits of this and other governmental programs,
4 including providing the benefits of the Rx program to the
5 beneficiaries of other programs.
6 Sec. 10. The department may promulgate rules to implement
7 this act under the administrative procedures act of 1969, 1969 PA
8 306, MCL 24.201 to 24.328.
9 Sec. 11. The department may seek any waivers of federal
10 law, rule, or regulation necessary to implement this act.
11 Sec. 12. If a portion of this act or the application of
12 this act to any person or circumstances is found by a court to be
13 invalid, the invalidity does not affect the remaining portions or
14 applications of the act that can be given effect without the
15 invalid portion or application, if the remaining portions of the
16 act are not determined by the court to be inoperable, and to this
17 end this act is declared to be severable.
18 Sec. 13. This act takes effect January 1, 2004.