71st OREGON LEGISLATIVE ASSEMBLY--2001 Regular Session
NOTE: Matter within { + braces and plus signs + } in an
amended section is new. Matter within { - braces and minus
signs - } is existing law to be omitted. New sections are within
{ + braces and plus signs + } .
LC 1451
Senate Bill 877
Sponsored by Senator CORCORAN; Senators L BEYER, BROWN, CASTILLO,
COURTNEY, DUKES, GORDLY, SHIELDS, TROW, Representative
ROSENBAUM
SUMMARY
The following summary is not prepared by the sponsors of the
measure and is not a part of the body thereof subject to
consideration by the Legislative Assembly. It is an editor's
brief statement of the essential features of the measure as
introduced.
Creates Oregon Rx program in Department of Human Services.
Gives department authority to negotiate prices and purchase
prescription drugs using manufacturer rebates and discounted
prices. Allows department to establish maximum retail prices for
prescription drugs. Creates Prescription Drug Advisory
Commission.
Appropriates moneys from General Fund to Department of Human
Services for purposes of Act.
A BILL FOR AN ACT
Relating to prescription drugs; creating new provisions; amending
ORS 689.832; and appropriating money.
Be It Enacted by the People of the State of Oregon:
SECTION 1. { + (1) The Legislative Assembly finds and declares
that uninsured residents of Oregon pay excessive prices for
prescription drugs. In many cases, affordability is critical in
providing residents access to medically necessary health care,
including prescription drugs, and thereby threaten their health
and safety. All Oregon residents are threatened by the
possibility that when they need medically necessary prescription
drugs most, they may be unable to afford their doctor's
recommended treatment.
(2) Sections 2 to 15 of this 2001 Act are intended to make
prescription drugs more affordable for Oregon residents, thereby
increasing the overall health of our families, benefitting
employers, employees and the fiscal strength of our society,
promoting healthy communities and improving the public health and
welfare. + }
SECTION 2. { + As used in sections 2 to 15 of this 2001 Act:
(1) 'Average wholesale price' means the nationally published
average price of the prices charged by national drug wholesalers
for a given product.
(2) 'Department' means the Department of Human Services.
(3) 'Discounted price' means a price that is less than or equal
to the average wholesale price, minus 6 percent, plus the
dispensing fee provided under the Medicaid program by the
Department of Human Services.
(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 federal Food and Drug Administration under
21 C.F.R. 207.20.
(5) 'Participating retail pharmacy' means a retail pharmacy
located in this state, or another business licensed to dispense
prescription drugs in this state, that participates in the Oregon
Rx Program and that dispenses drugs covered by a rebate agreement
under the program to Rx program participants.
(6) 'Pharmacy benefit manager' means a person that obtains
prescription drugs at a negotiated rate under a contract.
(7) 'Rx program participant' means a resident of this state who
is eligible for the Oregon Rx Program and who has an Oregon Rx
Program enrollment card issued by the department. + }
SECTION 3. { + (1) The Oregon Rx Program is established in the
Department of Human Services to provide discounted prescription
drug prices to uninsured residents of this state. The program is
designed to use manufacturers' rebates and pharmacy discounts to
reduce prescription drug prices for individuals who do not have
prescription drug coverage under any health insurance plan or
under any public program. In implementing the Oregon Rx Program,
the state shall serve as a pharmacy benefit manager in obtaining
rebates and discounts on prescription drugs on behalf of Rx
program participants.
(2) A drug manufacturer or labeler that sells prescription
drugs in this state through any state funded or state operated
program must enter into a rebate agreement with the department
for prescription drugs provided to Rx program participants.
(3) The Director of Human Services shall negotiate the amount
of the rebate required from a manufacturer or labeler under this
section. The director shall take into consideration the rebate
calculated under the Medicaid rebate program, 42 U.S.C. 1396r-8,
the average wholesale price of prescription drugs and any other
information on prescription drug prices and price discounts.
(4) The director shall seek to obtain an initial rebate amount
equal to or greater than the rebate calculated under the Medicaid
rebate program, 42 U.S.C. 1396r-8.
(5) The rebate agreement shall require the manufacturer or
labeler to make rebate payments to the state each calendar
quarter or according to a schedule established by the
department. + }
SECTION 4. { + (1) The Department of Human Services shall
establish annually discounted prices for drugs covered by the
rebate agreements described in section 3 of this 2001 Act and
shall promote the use of efficacious and reduced cost drugs,
taking into consideration reduced prices for state and federally
limited drug programs, dispensing fees, administrative overhead
and incentive payments.
(2) A participating retail pharmacy shall sell prescription
drugs covered by the Oregon Rx Program and sold to Rx program
participants at the discounted price set by the department. + }
SECTION 5. { + (1) A person is eligible to participate in the
Oregon Rx Program if the person is a resident of this state and
does not have prescription drug coverage under any health
insurance plan or under any public program.
(2) The Department of Human Services shall establish procedures
for determining eligibility and issuing Oregon Rx Program
enrollment cards to eligible residents.
(3) The department shall conduct outreach efforts to build
public awareness of the Oregon Rx Program and maximize enrollment
by eligible residents.
(4) The department may adjust the requirements and terms of the
Oregon Rx Program to accommodate any new federally funded
prescription drug programs. + }
SECTION 6. { + (1) The State Board of Pharmacy shall adopt
rules requiring disclosure by participating retail pharmacies to
Rx program participants of the amount of savings provided as a
result of the Oregon Rx Program. The rules must consider and
protect proprietary information.
(2) A participating retail pharmacy shall submit claims to the
Department of Human Services to verify the amount charged to Rx
program participants. On a biweekly basis, the department must
reimburse a participating retail pharmacy for discounted prices
provided to Rx program participants and professional fees set by
the Director of Human Services. The initial professional fee
shall be $3 per prescription. The director may not impose
transaction charges on participating retail pharmacies that
submit claims or receive payments under the Oregon Rx Program.
(3) Participating retail pharmacies shall provide the
department with the 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 or federal
law. + }
SECTION 7. { + The Department of Human Services shall release
the names of manufacturers and labelers that do not enter into
rebate agreements. The department shall impose prior
authorization requirements in the state medical assistance
program operated under ORS chapter 414 for the dispensing of
prescription drugs provided by manufacturers and labelers who do
not participate in the Oregon Rx Program. + }
SECTION 8. { + (1) Discrepancies in rebate amounts must be
resolved using the process established in this section.
(2) 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 of Human Services, 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 amount due.
(3) 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
manufacturer's or labeler's rebate, 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 to the department.
(4) If a discrepancy still exists following an audit conducted
under the provisions of subsection (2) or (3) of this section,
the department shall justify the reason for the discrepancy or
refund to the manufacturer any excess payment made by the
manufacturer to labeler.
(5) Following the procedures established in this section,
either the department or the manufacturer or labeler may request
a hearing. Supporting documentation must accompany the request
for a hearing. + }
SECTION 9. { + The Oregon Rx Program Dedicated Fund is
established in the General Fund to receive revenue from
manufacturers and labelers who pay rebates and any appropriations
or allocations designated for the fund. The moneys in the Oregon
Rx Program Dedicated Fund shall be used to reimburse retail
pharmacies for discounted prices provided to Rx program
participants and to reimburse the Department of Human Services
for the costs of administering the Oregon Rx Program, including
contracted services, computer costs, professional fees paid to
retail pharmacies and other reasonable program costs. Interest on
the fund accrues to the fund. + }
SECTION 10. { + The Department of Human Services shall report
the enrollment and financial status of the Oregon Rx Program to
the Legislative Assembly by January 31 of each odd-numbered
year. + }
SECTION 11. { + The Department of Human Services shall adopt
all rules necessary for the implementation of sections 2 to 15 of
this 2001 Act. + }
SECTION 12. { + The Department of Human Services shall seek a
waiver from the federal Health Care Financing Administration to
implement sections 2 to 8 of this 2001 Act. + }
SECTION 13. { + (1) In order to achieve the public health
purposes described in section 1 of this 2001 Act, the Director of
Human Services may establish maximum retail prices for
prescription drugs sold in this state.
(2) By July 1, 2004, and every two years thereafter, the
Director of Human Services shall determine whether the prices for
prescription drugs provided to Rx program participants are
reasonably comparable to the lowest cost paid for the same drugs
delivered or dispensed. In making this determination, the
director shall:
(a) Review prescription drug use in the medical assistance
program using data from the most recent six-month period for
which data is available.
(b) Determine the 100 drugs for which the most units were
provided and the 100 drugs for which the total cost was the
highest.
(c) Determine the cost of each drug for Rx program participants
on a certain date and calculate the average cost for each drug.
(d) Determine the lowest cost of each drug paid by any
purchaser on the date used in paragraph (c) of this subsection
delivered or dispensed in the state, taking into consideration
the federal supply schedule and prices paid by pharmaceutical
benefit managers and by large purchasers and excluding drugs
purchased through the Oregon Rx Program. The average cost for
each drug must be calculated. + }
SECTION 14. { + (1) The Director of Human Services shall
establish maximum retail prices for any or all prescription drugs
sold in this state if the average cost of one or more
prescription drugs under the Oregon Rx Program as determined in
section 13 of this 2001 Act is not reasonably comparable to the
average lowest cost of the same drug or drugs as determined in
section 13 of this 2001 Act.
(2) In making a determination under this section, the director
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 this state and if the
list is made public as part of the process of establishing
maximum retail prices. + }
SECTION 15. { + A participating retail pharmacy may appeal the
maximum retail price of a prescription drug established under
section 14 of this 2001 Act in accordance with the procedures in
ORS chapter 183. + }
SECTION 16. ORS 689.832 is amended to read:
689.832. (1) In addition to any other liability or penalty
provided by law, the State Board of Pharmacy may impose a civil
penalty of not to exceed $1,000 for each violation on any person
who violates the provisions of this chapter { + , + }
{ - or - } ORS chapter 475 { + or section 14 of this 2001
Act + } or any rule of the board.
(2) All penalties recovered under this section shall be paid
into the State Treasury and credited to the Board of Pharmacy
Account in the Health Division Account.
(3) Any civil penalty under this section shall be imposed in
the manner provided in ORS 183.090.
(4) Notwithstanding ORS 183.090, the person to whom the notice
is addressed shall have 10 days from the date of service of the
notice in which to make written application for a hearing before
the board.
SECTION 17. { + (1) There is created the Prescription Drug
Advisory Commission, consisting of 10 members. The membership of
the commission shall be as follows:
(a) The President of the Senate shall appoint three public
members, one of whom shall represent the interests of senior
citizens;
(b) The Speaker of the House of Representatives shall appoint
three public members, one of whom shall represent the interests
of senior citizens; and
(c) The Governor shall appoint:
(A) Two members from the health care community, each of whom is
licensed to practice in this state and who has the authority to
prescribe prescription drugs; and
(B) Two licensed pharmacists, each of whom has five years of
experience as a licensed pharmacist and is engaged in the
practice of retail pharmacy.
(2) The term of office of each member is three years. If there
is a vacancy, the appointing authority shall make an appointment
to become immediately effective for the unexpired term.
(3) The commission shall select one of its members as
chairperson.
(4) The commission shall meet at least four times a year.
Additional meetings shall be called by the chair.
(5) A majority of the commission constitutes a quorum for the
transaction of business. + }
SECTION 18. { + Notwithstanding the term of office of a
commission member specified in section 17 of this 2001 Act, of
the 10 members initially appointed to the Prescription Drug
Advisory Commission:
(1) One public member appointed by the President of the Senate
shall serve for a term of two years;
(2) One public member appointed by the Speaker of the House of
Representatives shall serve for a term of two years;
(3) One member of the health care community appointed by the
Governor shall serve for a term of two years; and
(4) One member who is a pharmacist appointed by the Governor
shall serve for a term of two years. + }
SECTION 19. { + (1) The duties of the + } { + Prescription
Drug Advisory Commission include but are not limited to:
(a) Reviewing access to prescription drugs for residents of
this state, including pricing and affordability information;
(b) Advising the Director of Human Services on access to
prescription drugs and prescription drug prices, including
insurance and third-party payments;
(c) Advising the director on the need for setting maximum
retail prices for prescription drugs, and procedures for setting
and adopting maximum retail prices; and
(d) Reporting to the Governor and to each Legislative Assembly
on recommendations for action regarding access to and the pricing
of prescription drugs.
(2) The Department of Human Services shall provide the
commission with staffing and support services. + }
SECTION 20. { + There is appropriated to the Department of
Human Services, for the biennium beginning July 1, 2001, out of
the General Fund, the amount of $___ for the purpose of carrying
out sections 2 to 8, 17 and 19 of this 2001 Act. + }
SECTION 21. { + Section 14 of this 2001 Act becomes operative
on July 1, 2004. + }
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