1.1                          A bill for an act 
  1.2             relating to health; requiring the attorney general to 
  1.3             investigate unfair drug price discrimination; giving 
  1.4             the commissioner of administration authority to 
  1.5             negotiate contract prices for prescription drugs; 
  1.6             requiring the commissioner of administration to 
  1.7             establish and administer a nongovernmental 
  1.8             pharmaceutical contracting alliance; modifying 
  1.9             prescription dispensing requirements; requiring a 
  1.10            pharmacy to post a sign on generic substitution; 
  1.11            appropriating money; amending Minnesota Statutes 1996, 
  1.12            sections 8.31, subdivision 1; and 151.21, subdivisions 
  1.13            2, 3, and by adding a subdivision; proposing coding 
  1.14            for new law in Minnesota Statutes, chapter 16B. 
  1.15  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.16     Section 1.  Minnesota Statutes 1996, section 8.31, 
  1.17  subdivision 1, is amended to read: 
  1.18     Subdivision 1.  [INVESTIGATE OFFENSES AGAINST THE 
  1.19  PROVISIONS OF CERTAIN DESIGNATED SECTIONS; ASSIST IN 
  1.20  ENFORCEMENT.] The attorney general shall investigate violations 
  1.21  of the law of this state respecting unfair, discriminatory, and 
  1.22  other unlawful practices in business, commerce, or trade, and 
  1.23  specifically, but not exclusively, unfair price discrimination 
  1.24  (section 151.061), the nonprofit corporation act (sections 
  1.25  317A.001 to 317A.909), the act against unfair discrimination and 
  1.26  competition (sections 325D.01 to 325D.07), the unlawful trade 
  1.27  practices act (sections 325D.09 to 325D.16), the antitrust act 
  1.28  (sections 325D.49 to 325D.66), section 325F.67 and other laws 
  1.29  against false or fraudulent advertising, the antidiscrimination 
  1.30  acts contained in section 325D.67, the act against 
  2.1   monopolization of food products (section 325D.68), the act 
  2.2   regulating telephone advertising services (section 325E.39), the 
  2.3   prevention of consumer fraud act (sections 325F.68 to 325F.70), 
  2.4   and chapter 53A regulating currency exchanges and assist in the 
  2.5   enforcement of those laws as in this section provided. 
  2.6      Sec. 2.  [16B.93] [DEFINITIONS.] 
  2.7      Subdivision 1.  [APPLICABILITY.] For purposes of sections 
  2.8   16B.93 to 16B.96, the terms in this section have the meanings 
  2.9   given them. 
  2.10     Subd. 2.  [CONTRACTOR.] "Contractor" means an individual, 
  2.11  business entity, or other private organization that is awarded a 
  2.12  contract by the commissioner to negotiate and administer the 
  2.13  price contracts for prescription drugs under section 16B.94, 
  2.14  subdivision 2. 
  2.15     Subd. 3.  [NONGOVERNMENTAL PHARMACEUTICAL CONTRACTING 
  2.16  ALLIANCE OR NONGOVERNMENTAL ALLIANCE.] "Nongovernmental 
  2.17  pharmaceutical contracting alliance" or "nongovernmental 
  2.18  alliance" means the alliance established and administered by the 
  2.19  commissioner under the authority granted in section 16B.94. 
  2.20     Subd. 4.  [MANUFACTURER.] "Manufacturer" means a 
  2.21  manufacturer as defined under section 151.44, paragraph (c). 
  2.22     Subd. 5.  [PRESCRIPTION DRUG.] "Prescription drug" means a 
  2.23  drug as defined in section 151.44, paragraph (d). 
  2.24     Subd. 6.  [PURCHASER.] "Purchaser" means a pharmacy as 
  2.25  defined in section 151.01, subdivision 2, including pharmacies 
  2.26  operated by health maintenance organizations and hospitals. 
  2.27     Subd. 7.  [SELLER.] "Seller" means a person, other than a 
  2.28  manufacturer, who sells or distributes drugs to purchasers or 
  2.29  other sellers within the state. 
  2.30     Sec. 3.  [16B.94] [NONGOVERNMENTAL PHARMACEUTICAL 
  2.31  CONTRACTING ALLIANCE.] 
  2.32     Subdivision 1.  [ESTABLISHMENT AND ADMINISTRATION.] The 
  2.33  commissioner, in consultation with the University of Minnesota 
  2.34  college of pharmacy, shall establish and administer a 
  2.35  nongovernmental pharmaceutical contracting alliance.  The 
  2.36  nongovernmental alliance shall negotiate contracts for 
  3.1   prescription drugs with manufacturers and sellers and shall make 
  3.2   the contract prices negotiated available to purchasers.  The 
  3.3   commissioner shall select the prescription drugs for which price 
  3.4   contracts are negotiated.  The commissioner shall, to the 
  3.5   greatest extent feasible, operate the alliance using the 
  3.6   administrative and contracting procedures of the Minnesota 
  3.7   multistate governmental contracting alliance for pharmaceuticals 
  3.8   administered by the commissioner under the authority granted in 
  3.9   section 471.50.  The commissioner may negotiate a price 
  3.10  differential based on volume purchasing and may also grant 
  3.11  multiple awards. 
  3.12     Subd. 2.  [USE OF CONTRACTOR.] The commissioner may 
  3.13  contract with an individual, business entity, or other private 
  3.14  organization to serve as a contractor to negotiate and 
  3.15  administer the price contracts for prescription drugs.  In 
  3.16  developing requirements for the contractor, the commissioner 
  3.17  shall consult with the University of Minnesota college of 
  3.18  pharmacy. 
  3.19     Subd. 3.  [ADMINISTRATIVE COSTS.] The commissioner may 
  3.20  charge manufacturers and sellers that enter into prescription 
  3.21  drug price contracts with the commissioner under subdivision 1 a 
  3.22  fee to cover the commissioner's expenses in negotiating and 
  3.23  administering the price contracts.  The commissioner is exempt 
  3.24  from rulemaking requirements in chapter 14 when establishing 
  3.25  this fee.  The fee established shall have the force and effect 
  3.26  of law if the requirements of section 14.386, paragraph (a), are 
  3.27  met.  Section 14.386, paragraph (b), does not apply.  Fees 
  3.28  collected by the commissioner under this subdivision must be 
  3.29  deposited in the state treasury and credited to a special 
  3.30  account.  Money in the account is appropriated to the 
  3.31  commissioner to pay the costs of negotiating and administering 
  3.32  price contracts under this section. 
  3.33     Subd. 4.  [EXPANSION TO OTHER STATES.] The commissioner may 
  3.34  expand the nongovernmental alliance to other states and make the 
  3.35  contract prices negotiated available to non-Minnesota purchasers.
  3.36     Sec. 4.  [16B.95] [STATE CONTRACT PRICE.] 
  4.1      Subdivision 1.  [MANUFACTURER AND SELLER REQUIREMENT.] A 
  4.2   manufacturer or seller that contracts with the commissioner 
  4.3   shall make the contract price negotiated available to all 
  4.4   purchasers.  
  4.5      Subd. 2.  [PURCHASER REQUIREMENT.] The commissioner shall 
  4.6   require purchasers that purchase prescription drugs at the 
  4.7   contract price to pass at least 75 percent of the savings 
  4.8   resulting from purchases at the negotiated contract price to 
  4.9   consumers.  The commissioner may require a purchaser that plans 
  4.10  to purchase prescription drugs at the contract price negotiated 
  4.11  by the commissioner to submit any information regarding 
  4.12  prescription drug purchase projections the commissioner 
  4.13  determines is necessary for contract price negotiations. 
  4.14     Sec. 5.  [16B.96] [NONDISCRIMINATION.] 
  4.15     A health plan company, as defined in section 62Q.01, shall 
  4.16  not discriminate against a purchaser for taking advantage of the 
  4.17  contract price negotiated by the commissioner. 
  4.18     Sec. 6.  Minnesota Statutes 1996, section 151.21, 
  4.19  subdivision 2, is amended to read: 
  4.20     Subd. 2.  When a pharmacist receives a written prescription 
  4.21  on which the prescriber has personally written in handwriting 
  4.22  "dispense as written" or "D.A.W. - brand medically necessary," 
  4.23  or an oral prescription in which the prescriber has expressly 
  4.24  indicated that the prescription is to be dispensed as 
  4.25  communicated, the pharmacist shall dispense the brand name 
  4.26  legend drug as prescribed.  If the prescriber specifies orally 
  4.27  that the prescription shall be dispensed as communicated, 
  4.28  written certification in the prescriber's handwriting bearing 
  4.29  the phrase "dispense as written - brand medically necessary" 
  4.30  must be sent to the dispensing pharmacy within ten days. 
  4.31     Sec. 7.  Minnesota Statutes 1996, section 151.21, 
  4.32  subdivision 3, is amended to read: 
  4.33     Subd. 3.  When a pharmacist receives a written prescription 
  4.34  on which the prescriber has not personally written in 
  4.35  handwriting "dispense as written" or "D.A.W. - brand medically 
  4.36  necessary," or an oral prescription in which the prescriber has 
  5.1   not expressly indicated that the prescription is to be dispensed 
  5.2   as communicated, and there is available in the pharmacist's 
  5.3   stock a less expensive generically equivalent drug that, in the 
  5.4   pharmacist's professional judgment, is safely interchangeable 
  5.5   with the prescribed drug, then the pharmacist shall, after 
  5.6   disclosing the substitution to the purchaser, dispense the 
  5.7   generic drug, unless the purchaser objects.  A pharmacist may 
  5.8   also substitute pursuant to the oral instructions of the 
  5.9   prescriber.  A pharmacist may not substitute a generically 
  5.10  equivalent drug product unless, in the pharmacist's professional 
  5.11  judgment, the substituted drug is therapeutically equivalent and 
  5.12  interchangeable to the prescribed drug.  A pharmacist shall 
  5.13  notify the purchaser if the pharmacist is dispensing a drug 
  5.14  other than the brand name drug prescribed.  
  5.15     Sec. 8.  Minnesota Statutes 1996, section 151.21, is 
  5.16  amended by adding a subdivision to read: 
  5.17     Subd. 4a.  A pharmacy must post a sign in a conspicuous 
  5.18  location and in a typeface easily seen at the counter where 
  5.19  prescriptions are dispensed stating:  "In order to save you 
  5.20  money, this pharmacy will substitute whenever possible an 
  5.21  FDA-approved, less expensive, generic drug product, which is 
  5.22  therapeutically equivalent to and safely interchangeable with 
  5.23  the one prescribed by your doctor, unless you object to this 
  5.24  substitution." 
  5.25     Sec. 9.  [APPROPRIATION.] 
  5.26     $....... is appropriated from the general fund to the 
  5.27  commissioner of administration for the biennium ending June 30, 
  5.28  1999, to implement sections 2 to 5.