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REFERENCE TITLE: prescription drug cost containment |
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State of Arizona House of Representatives Fiftieth Legislature First Regular Session 2011
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HB 2272 |
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Introduced by Representative Ableser
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AN ACT
Amending title 36, Arizona Revised Statutes, by adding chapter 38; relating to prescription drug cost containment.
(TEXT OF BILL BEGINS ON NEXT PAGE)
Be it enacted by the Legislature of the State of Arizona:
Section 1. Title 36, Arizona Revised Statutes, is amended by adding chapter 38, to read:
CHAPTER 38
PRESCRIPTION DRUG COST CONTAINMENT
ARTICLE 1. GENERAL PROVISIONS
36-3801. Definitions
In this chapter, unless the context otherwise requires:
1. "Covered entity":
(a) Means:
(i) A nonprofit hospital or medical service organization, insurer, health coverage plan or health maintenance organization that is licensed pursuant to the insurance laws of this state.
(ii) A health program administered by the department of health services or this state in the capacity of health coverage provider.
(iii) An employer, labor union or other group of persons organized in this state that provides health coverage to covered individuals who are employed or who reside in this state.
(b) Does not include a health plan that provides coverage only for accidental injury, specified disease, hospital indemnity, medicare supplement, disability income, long-term care or other limited benefit health insurance policies and contracts.
2. "Covered individual" means a member, participant, enrollee, contract holder or policyholder or beneficiary of a covered entity who is provided health coverage by the covered entity. Covered individual includes a dependent or other person who is provided health coverage through a policy, contract or plan for a covered individual.
3. "Generic" means a drug that is chemically equivalent to a brand‑name drug with an expired patent.
4. "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 United States food and drug administration under 21 Code of Federal Regulations section 270.20 (1999).
5. "Pharmacy benefits management" means the procurement of prescription drugs at a negotiated rate for dispensation in this state to covered individuals, the administration or management of prescription drug benefits provided by a covered entity for the benefit of covered individuals 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 covered individuals.
(c) Clinical formulary development and management services.
(d) Rebate contracting and administration.
(e) Certain patient compliance, therapeutic intervention and generic substitution programs.
(f) Disease management programs.
6. "Pharmacy benefits manager" means an entity that performs pharmacy benefits management, including:
(a) An entity that acts for a pharmacy benefits manager in a contractual or employment relationship in the performance of pharmacy benefits management for a covered entity.
36-3802. Pharmacy benefits manager; required practices
A. A pharmacy benefits manager owes a fiduciary duty to a covered entity and must discharge that duty in accordance with state and federal laws.
B. A pharmacy benefits manager must perform its duties with care, skill, prudence and diligence and in accordance with the standards of conduct applicable to a fiduciary in an enterprise of a similar character and with similar aims.
C. A pharmacy benefits manager must notify the covered entity in writing of any activity, policy or practice of the pharmacy benefits manager that directly or indirectly presents any conflict of interest with the duties imposed by this section.
D. A pharmacy benefits manager must provide a covered entity with all financial and utilization information requested by the covered entity relating to the provision of benefits to covered individuals through that covered entity and all financial and utilization information relating to services to that covered entity. A pharmacy benefits manager that provides information pursuant to this subsection may designate that material as confidential. A covered entity may not disclose this information to any person without the consent of the pharmacy benefits manager, except that disclosure may be made in a court filing under the laws of this state governing deceptive trade practices or if authorized by those laws or ordered by a court of this state for good cause shown or made in a court filing under seal unless or until otherwise ordered by a court. This subsection does not limit the attorney general's use of civil investigative demand authority under the laws of this state governing deceptive trade practices to investigate violations of this section.
E. If dispensing a substitute prescription drug for a prescribed drug to a covered individual, a pharmacy benefits manager shall:
1. When making a substitution in which the substitute drug costs more than the prescribed drug, disclose to the covered entity the cost of both drugs and any benefit or payment directly or indirectly accruing to the pharmacy benefits manager as a result of the substitution.
2. Transfer in full to the covered entity any benefit or payment the pharmacy benefits manager receives in any form either as a result of a prescription drug substitution under paragraph 1 or as a result of the pharmacy benefits manager substituting a lower priced generic and therapeutically equivalent drug for a higher priced prescribed drug.
F. A pharmacy benefits manager that derives any payment or benefit for dispensing prescription drugs in this state based on volume of sales for certain prescription drugs or classes or brands of drugs in this state must pass that payment or benefit on in full to the covered entity.
G. A pharmacy benefits manager must disclose to the covered entity all financial terms and arrangements for remuneration of any kind that apply between the pharmacy benefits manager and any prescription drug manufacturer or labeler, including, without limitation, formulary management and drug‑switch programs, educational support, claims processing and pharmacy network fees that are charged from retail pharmacies and data sales fees. A pharmacy benefits manager that discloses information pursuant to this subsection may designate that material as confidential. A covered entity may not disclose this information to any person without the consent of the pharmacy benefits manager, except that disclosure may be made in a court filing under the laws of this state governing deceptive trade practices or if authorized by those laws or ordered by a court of this state for good cause shown or made in a court filing under seal unless or until otherwise ordered by a court. This subsection does not limit the attorney general's use of civil investigative demand authority under the laws of this state law governing deceptive trade practices to investigate violations of this section.
36-3803. Registration; fee
A pharmacy benefits manager that operates in this state must register with the department of health services as prescribed by the department. The department shall assess an annual registration fee as prescribed by the department by rule.
36-3804. Annual certification
A pharmacy benefits manager operating in this state must file an annual certification with the department of health services to show that the pharmacy benefits manager is in compliance with the requirements of this chapter and applicable rules adopted pursuant to this chapter.
36-3805. Market conduct review and audit; fee; report
At least once every three years the department of health services shall conduct a market conduct review and audit to determine each pharmacy benefit manager's compliance with this chapter and rules adopted pursuant to this chapter. The department may charge companies a fee for the review and audit as prescribed by the department by rule. The department shall submit a written report of its findings to the governor, the president of the senate and the speaker of the house of representatives and shall provide a copy of this report to the secretary of state.
36-3806. Compliance
All contracts for pharmacy benefits management entered into in this state or by a covered entity in this state shall comply with the requirements of this chapter.
36-3807. Enforcement; rules
A. A violation of this chapter is an unlawful practice pursuant to section 44‑1522.
B. The director of the department of health services shall adopt rules to enforce this chapter.
Sec. 2. Discounted drugs; study committee; report; delayed repeal
A. The discounted drugs study committee is established consisting of the following members:
1. The director of the department of health services, who shall serve as chairperson.
2. The director of the Arizona health care cost containment system administration or the director's designee.
3. The director of the state department of corrections or the director's designee.
4. Two members of the senate who represent different political parties. The president of the senate shall appoint these members.
5. Two members of the house of representatives who represent different political parties. The speaker of the house of representatives shall appoint these members.
6. A representative of a hospital that is located in an urban county in this state. The director of the department of health services shall appoint this member.
7. A representative of a hospital that is located in a rural county in this state. The director of the department of health services shall appoint this member.
8. A representative of a statewide nonprofit organization that advocates for low-income residents of this state. The director of the department of health services shall appoint this member.
B. The study committee shall:
1. Study the feasibility of providing discounted prescription drugs to this state's most vulnerable patient populations through the use of section 340B of the public health service act (42 United States Code section 256b).
2. Provide the following information:
(a) A description of all health care providers and facilities in this state potentially eligible for designation as covered entities under section 340B.
(b) A list of potential applications of section 340B and the potential benefits to public, private and third-party payors for prescription drugs, including without limitation:
(i) Application to inmates and employees in youth correctional facilities, county jails and state prisons.
(ii) Maximizing the use of section 340B in state-funded managed care plans.
(iii) Including section 340B providers in state bulk purchasing initiatives.
(iv) Using sole‑source contracts with section 340B providers to furnish high-cost chronic care drugs.
(c) An explanation of discounts that are available through section 340B contracts, including estimated cost savings to this state as a result of retail mark-up avoidance, negotiated sub-ceiling prices and coordination with the Arizona health care cost containment system administration to minimize costs to the program and to other purchasers of prescription drugs.
(d) Identification of federal, state and private resources that are available to potential applicants.
3. On or before November 15, 2011, submit to the governor, the president of the senate and the speaker of the house of representatives a written report of its findings and recommendations to lower the cost of prescription drugs. The committee shall provide a copy of this report to the secretary of state.
C. Committee members are not eligible for compensation or reimbursement of expenses.
D. This section is repealed from and after September 30, 2012.