PRINTER'S NO. 704
No. 643 Session of 2007
INTRODUCED BY WALKO, SURRA, DeLUCA, DERMODY, BELFANTI,
BENNINGTON, CALTAGIRONE, CAPPELLI, CARROLL, CASORIO, COSTA,
CURRY, DePASQUALE, EACHUS, FABRIZIO, FRANKEL, GALLOWAY,
GIBBONS, GOODMAN, GRUCELA, JAMES, JOSEPHS, KING, LEVDANSKY,
McCALL, McGEEHAN, MELIO, MUNDY, PALLONE, PETRARCA, PETRONE,
READSHAW, SIPTROTH, McILVAINE SMITH, STURLA, WHEATLEY,
J. WHITE, YOUNGBLOOD AND YUDICHAK, MARCH 6, 2007
REFERRED TO COMMITTEE ON HEALTH AND HUMAN SERVICES,
MARCH 6, 2007
AN ACT
1 Providing for enhanced pharmaceutical availability and
2 affordability; and establishing the Pharmaceutical Cost
3 Management Council.
4 The General Assembly finds and declares as follows:
5 (1) The rising cost of prescription drugs has imposed a
6 significant financial hardship on individuals who have
7 limited budgets, who are uninsured or who have prescription
8 coverage that is unable to control costs successfully due to
9 cost shifting and disparate pricing policies.
10 (2) The average cost per prescription for seniors rose
11 significantly between 1992 and 2000 and is expected to
12 continue increasing significantly through 2010.
13 (3) There is an increasing need for citizens of this
14 Commonwealth to have affordable access to prescription drugs.
15 (4) The General Assembly does not intend the imposition
1 of the program under this act to penalize or otherwise
2 jeopardize the benefits of veterans and other recipients of
3 Federal supply schedule drug prices.
4 (5) In an effort to promote healthy communities and to
5 protect the public health and welfare of Pennsylvania
6 residents, the General Assembly finds that it is its
7 responsibility to make every effort to provide affordable
8 prescription drugs for all residents of this Commonwealth.
9 The General Assembly of the Commonwealth of Pennsylvania
10 hereby enacts as follows:
11 Section 1. Short title.
12 This act shall be known and may be cited as the
13 Pharmaceutical Availability and Affordability Act.
14 Section 2. Definitions.
15 The following words and phrases when used in this act shall
16 have the meanings given to them in this section unless the
17 context clearly indicates otherwise:
18 "A-rated generic therapeutically equivalent drug." A drug
19 product that the Commissioner of Food and Drugs of the United
20 States Food and Drug Administration has approved as safe and
21 effective and has determined to be therapeutically equivalent,
22 as listed in "The Approved Drug Products with Therapeutic
23 Equivalence Evaluations" (Food and Drug Administration "Orange
24 Book"), with a specific "A" code designation only.
25 "Average wholesale price" or "AWP." The amount determined
26 from the latest publication of the Blue Book, published annually
27 by the Hearst corporation. The term may also be derived from the
28 drug pricing database synonymous with the latest publication of
29 the Blue Book and furnished in the National Drug Data File
30 (NDDF) by First Data Bank (FDB).
20070H0643B0704 - 2 -
1 "Council." The council created pursuant to section 3.
2 "Dispensing fee." The fee charged by a pharmacy to dispense
3 pharmaceuticals.
4 "Drug manufacturer" or "pharmaceutical manufacturer."
5 (1) Any entity which is engaged in any of the following:
6 (i) The production, preparation, propagation,
7 compounding, conversion or processing of prescription
8 drug product, either directly or indirectly by extraction
9 from substance of natural origin or independently by
10 means of chemical synthesis or by a combination of
11 extraction and chemical synthesis.
12 (ii) The packaging, repackaging, labeling,
13 relabeling or distribution of prescription drug products.
14 (2) The term does not include a wholesale distributor of
15 drugs or a retail pharmacy licensed in this Commonwealth.
16 "Federal supply schedule" or "FSS." The price available to
17 all Federal agencies for the purchase of pharmaceuticals
18 authorized in the Veterans Health Care Act of 1992 (Public Law
19 107-585, 106 Stat. 4943). FSS prices are intended to equal or
20 better the price manufacturers charge their most-favored non-
21 Federal customers under comparable terms and conditions.
22 "Labeler." An entity or person that receives prescription
23 drugs from a manufacturer or wholesaler and repackages those
24 drugs for later retail sale and that has a labeler code from the
25 Federal Food and Drug Administration pursuant to 21 CFR 207.20
26 (relating to who must register and submit a drug list).
27 "Person." Any natural person or persons or any corporation,
28 partnership, company, trust or association of persons.
29 "Pharmaceutical drug detailing" or "detailing." The function
30 performed by a sales representative who is employed by a
20070H0643B0704 - 3 -
1 pharmaceutical manufacturer for the purpose of any of the
2 following:
3 (1) Promotion of pharmaceutical drugs or related
4 products.
5 (2) Education about pharmaceutical drugs or related
6 products.
7 (3) Provision of samples of pharmaceutical drugs,
8 related products or related materials, gifts, food or meals.
9 "Savings." The difference between the price of a
10 prescription drug before the effective date of this section,
11 including any discounts, rebates or price containments and the
12 current price after the effective date of this section for the
13 Children's Health Insurance Program, Medicaid or any other
14 programs which are payors for prescription drugs.
15 "Sole source." A pharmaceutical that provides a unique and
16 powerful advantage available in the market to a broad group of
17 patients established under Federal law.
18 Section 3. Pharmaceutical Cost Management Council.
19 (a) Establishment.--There is created the Pharmaceutical Cost
20 Management Council which shall consist of the following members
21 or his or her designee:
22 (1) The Secretary of General Services.
23 (2) The Secretary of Aging.
24 (3) The Secretary of Public Welfare.
25 (4) The Secretary of Health.
26 (5) The chair of the Pennsylvania Employee Benefit Trust
27 Fund.
28 (6) The director of the Bureau of Workers' Compensation.
29 (7) The director of the Office of Health Care Reform.
30 (8) The following members from the general public, each
20070H0643B0704 - 4 -
1 appointed by the Governor:
2 (i) One public member shall be a licensed pharmacist
3 employed by a community retail pharmacy.
4 (ii) One public member shall be a representative of
5 a pharmaceutical manufacturer with substantial operations
6 located in this Commonwealth that has at least 1,000
7 employees.
8 (iii) One public member shall be a primary care
9 physician.
10 (iv) One public member shall represent those who
11 will receive benefit from the establishment of this
12 program.
13 (v) One public member shall have experience in the
14 financing, development or management of a health
15 insurance company which provides pharmaceutical coverage.
16 (b) Term.--Each public member shall serve for a term of four
17 years. Each public member shall serve until his or her successor
18 is appointed and has been qualified.
19 (c) Removal.--A member of the council may be removed by the
20 Governor for cause.
21 (d) Chairperson.--The Secretary of General Services shall
22 serve as chairperson of the council.
23 (e) Quorum.--The council shall meet at the times and places
24 specified by the chairperson or upon the request of a quorum of
25 the members of the council.
26 (f) Compensation.--Members of the council shall not be
27 compensated in their capacity as members but shall be reimbursed
28 for reasonable expenses incurred in the performance of their
29 duties.
30 Section 4. Powers and duties of council.
20070H0643B0704 - 5 -
1 The council has the power and duty to carry out all of the
2 following:
3 (1) Contract for the purpose of implementing the cost
4 containment provisions of this act.
5 (2) File suit.
6 (3) (i) Execute, as permitted by applicable Federal
7 law, prescription drug purchasing agreements with:
8 (A) All departments, agencies, authorities,
9 institutions, programs, agencies or programs of the
10 Federal Government, quasi-public corporations and
11 political subdivisions of this Commonwealth,
12 including the Children's Health Insurance Program,
13 the PACE or PACENET Program, the Department of
14 Corrections, the Workers' Compensation Fund, State
15 and local institutions such as nursing homes, public
16 health departments and all State programs.
17 (B) Governments of other states and
18 jurisdictions and their individual departments,
19 agencies, authorities, institutions, programs, quasi-
20 public corporations and political subdivisions.
21 (C) Regional or multistate purchasing alliances
22 or consortia formed for the purpose of pooling the
23 combined purchasing power of the individual members
24 in order to increase bargaining power.
25 (ii) Any contract or agreement executed under this
26 paragraph shall contain all necessary provisions to
27 comply with the provisions of Title XIX of the Social
28 Security Act (49 Stat. 620, 42 U.S.C. § 1496 et seq.),
29 dealing with pharmacy services offered to recipients
30 under the medical assistance plan of the Commonwealth.
20070H0643B0704 - 6 -
1 (4) Consider strategies by which the Commonwealth may
2 manage the increasing costs of prescription drugs and
3 increase access to prescription drugs for all of this
4 Commonwealth's citizens, including the authority to:
5 (i) Explore the enactment of fair prescription drug
6 pricing policies.
7 (ii) Explore discount prices or rebate programs for
8 seniors and persons without prescription drug coverage.
9 (iii) Explore programs offered by pharmaceutical
10 manufacturers that provide prescription drugs for free or
11 at reduced prices.
12 (iv) Explore requirements and criteria, including
13 the level of detail, for prescription drug manufacturers
14 to disclose to the council expenditures for advertising,
15 marketing and promotion, based on aggregate national
16 data.
17 (v) Explore the establishment of counter-detailing
18 programs aimed at educating health care practitioners
19 authorized to prescribe prescription drugs about the
20 relative costs and benefits of various prescription
21 drugs, with an emphasis on generic substitution for brand
22 name drugs when available and appropriate, prescribing
23 older, less costly drugs instead of newer, more expensive
24 drugs, when appropriate, and prescribing lower dosages of
25 prescription drugs, when available and appropriate.
26 (vi) Explore disease management programs aimed at
27 enhancing the effectiveness of treating certain diseases
28 identified as prevalent among the population with
29 prescription drugs.
30 (vii) Explore prescription drug purchasing
20070H0643B0704 - 7 -
1 agreements with large private sector purchasers of
2 prescription drugs, including those private entities in
3 pharmacy benefit management contracts. Nothing in this
4 subparagraph shall require a private entity to
5 participate in a purchasing agreement.
6 (viii) Explore the feasibility of using or
7 referencing the Federal supply schedule or referencing to
8 the price, as adjusted for currency valuations, set by
9 the Canada patented medicine prices review board, or any
10 other appropriate referenced price to establish
11 prescription drug pricing for brand name drugs.
12 (ix) To review and determine the dispensing fees for
13 pharmacies.
14 (x) Explore, if possible, joint negotiations for
15 drug purchasing and a shared prescription drug pricing
16 schedule and shared preferred drug list for use by the
17 public employee insurance agency, the Medicaid program,
18 other State payors and private insurers.
19 (xi) Explore coordination between the Medicaid
20 program, the public employee insurance agency and, to the
21 extent possible, in-State hospitals and private insurers
22 toward the development of a uniform preferred
23 prescription drug list which is clinically appropriate
24 and which leverages retail prices.
25 (xii) Explore policies which promote the use of
26 generic drugs, where appropriate.
27 (xiii) Explore a policy that precludes a drug
28 manufacturer from reducing the amounts of drug rebates or
29 otherwise penalizes an insurer, health plan or other
30 entity which pays for prescription drugs based upon the
20070H0643B0704 - 8 -
1 fact that the entity uses step therapy or other clinical
2 programs before a drug is covered or otherwise authorized
3 for payment.
4 (xiv) Explore arrangements with entities in the
5 private sector, including self-funded benefit plans and
6 nonprofit corporations, toward combined purchasing of
7 health care services, health care management services,
8 pharmacy benefits management services or pharmaceutical
9 products on the condition that no private entity be
10 compelled to participate in the prescription drug
11 purchasing pool.
12 (5) Contract with appropriate legal, actuarial and other
13 service providers required to accomplish any function within
14 the powers of the council.
15 (6) Develop other strategies, aimed at managing
16 escalating prescription drug prices and increasing affordable
17 access to prescription drugs for all Commonwealth citizens.
18 (7) Explore the licensing and regulation of
19 pharmaceutical detailers, including the requirement of
20 continuing professional education, the imposition of fees for
21 licensing and continuing education, the establishment of a
22 special revenue account for deposit of the fees and the
23 imposition of penalties for noncompliance with licensing and
24 continuing education requirements, and rules to establish
25 procedures to implement the provisions of this act.
26 (8) The council shall report to the State Government
27 Committee of the Senate and the State Government Committee of
28 the House of Representatives on or before September 1, 2007,
29 and December 31, 2007, and annually thereafter and provide
30 recommendations on needed legislative action and other
20070H0643B0704 - 9 -
1 functions established by this act or requested by the State
2 Government Committee of the Senate or the State Government
3 Committee of the House of Representatives.
4 (9) The council shall develop an evaluation methodology
5 to certify and audit savings in the discount savings program
6 by determining the impact on growth and profit of the
7 pharmaceutical manufacturers to ensure that prices have not
8 been inflated to offset the discount card value.
9 (10) The council shall determine that the implementation
10 of the programs under this act will not jeopardize, reduce or
11 penalize the benefits of veterans or other recipients of FSS
12 drug prices, considering their respective copay structures
13 and the pricing mechanisms of their respective programs.
14 Section 5. Canadian drugs.
15 (a) Investigation.--The council is authorized to investigate
16 the feasibility of purchasing prescription drugs from sources in
17 Canada, which may include the feasibility of the Commonwealth or
18 one of its political subdivisions serving as a wholesale
19 distributor of prescription drugs in this Commonwealth.
20 (b) Waivers.--Upon determination by the council that the
21 purchase under subsection (a) is feasible and in the best
22 interests of the citizens of this Commonwealth, the council is
23 authorized to pursue waivers from the Federal Government,
24 including from the United States Food and Drug Administration,
25 as necessary for the Commonwealth to accomplish prescription
26 drug purchasing from sources in Canada. If a waiver is not
27 granted, the council is authorized to take necessary legal
28 action.
29 (c) Methodology.--
30 (1) Upon a favorable finding by the appropriate Federal
20070H0643B0704 - 10 -
1 agencies or courts under subsection (a), the Secretary of
2 General Services shall transmit notice of the finding to the
3 Legislative Reference Bureau and the Legislative Reference
4 Bureau shall publish the notice in the Pennsylvania Bulletin.
5 (2) Upon publication of the notice in paragraph (1), the
6 council may establish and implement a methodology to provide
7 wholesale drugs to licensed pharmacies located within this
8 Commonwealth.
9 Section 6. Management ability continued.
10 Nothing contained in this act shall be construed to limit the
11 ability of the Commonwealth to enter into contracts or
12 arrangements or to otherwise manage its pharmacy programs until
13 the time when the programs created or authorized pursuant to
14 this act are implemented.
15 Section 7. Advertising costs.
16 (a) Reporting.--Advertising costs for prescription drugs,
17 based on aggregate national data, must be reported to the
18 council by all manufacturers and labelers of prescription drugs
19 dispensed in this Commonwealth that employ, direct or utilize
20 marketing representatives. The reporting shall assist the
21 Commonwealth in its role as a purchaser for prescription drugs
22 and an administrator of prescription drug programs enabling the
23 Commonwealth to determine the scope of prescription drug
24 advertising costs and their effect on the cost, utilization and
25 delivery of health care services and furthering the role of the
26 Commonwealth as guardian of the public interest.
27 (b) Requirements.--The council shall establish, by rule, the
28 reporting requirements for information by labelers and
29 manufacturers which shall include all national aggregate
30 expenses associated with advertising and direct promotion of
20070H0643B0704 - 11 -
1 prescription drugs through radio, television, magazines,
2 newspapers, direct mail and telephone communications as they
3 pertain to residents of this Commonwealth.
4 (c) Exemptions.--The following shall be exempt from
5 disclosure requirements under this section:
6 (1) All free samples of prescription drugs intended to
7 be distributed to patients.
8 (2) All payments of reasonable compensation and
9 reimbursement of expenses in connection with a bona fide
10 clinical trial. As used in this subsection, "clinical trial"
11 means an approved clinical trial conducted in connection with
12 a research study designed to answer specific questions about
13 vaccines, new therapies or new ways of using known
14 treatments.
15 (3) All scholarship or other support for medical
16 students, residents and fellows to attend significant
17 educational, scientific or policymaking conferences of
18 national, regional or specialty medical or other professional
19 association if the recipient of the scholarship or other
20 support is selected by the association.
21 (d) Manner of reporting.--The council is further authorized
22 to establish timelines, the documentation, form and manner of
23 reporting required as the council determines necessary to
24 effectuate the purpose of this act. The council shall report to
25 the State Government Committee of the Senate and the State
26 Government Committee of the House of Representatives, in an
27 aggregate form, the information provided in the required
28 reporting.
29 (e) Confidentiality.--Notwithstanding any other provision of
30 law, information submitted to the council pursuant to this
20070H0643B0704 - 12 -
1 section is confidential and not a public record and not
2 available for release pursuant to the act of June 21, 1957
3 (P.L.390, No.212), referred to as the Right-to-Know Law. Data
4 complied in aggregate form by the council for the purposes of
5 reporting required by this section is a public record as defined
6 in the Right-to-Know Law, as long as it does not reveal trade
7 information that is protected by Federal or State law.
8 Section 8. State role.
9 For purposes of implementing this act, the Commonwealth shall
10 have authority to negotiate pharmaceutical prices to be paid by
11 program participants. These negotiated prices shall be available
12 to all programs.
13 Section 9. Potential use of savings.
14 Savings identified by all program participants shall be
15 quantified and certified to the council and included in the
16 annual report of the council to the General Assembly. Savings,
17 or any part thereof, created by the implementation of this
18 program shall be designated and directed by the General Assembly
19 towards the maintenance of existing State health programs and
20 the expansion of insurance programs for the uninsured and
21 underinsured.
22 Section 40. Rulemaking.
23 The council may promulgate rules to carry out the purposes of
24 this act.
25 Section 41. Expiration.
26 The council shall expire July 1, 2011.
27 Section 42. Effective date.
28 This act shall take effect immediately.
L13L35MSP/20070H0643B0704 - 13 -