HF 1183

2nd Engrossment - 92nd Legislature (2021 - 2022) Posted on 04/09/2021 12:49pm

A bill for an act
relating to health; prohibiting excessive price increases by manufacturers to generic
or off-patent drugs; authorizing the attorney general to take action against
manufacturers for certain price increases; prohibiting withdrawal of certain generic
or off-patent drugs sales; imposing civil penalties; amending Minnesota Statutes
2020, section 151.071, subdivisions 1, 2; proposing coding for new law in
Minnesota Statutes, chapter 62J.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1.

new text begin [62J.841] DEFINITIONS.
new text end

new text begin Subdivision 1. new text end

new text begin Scope. new text end

new text begin For purposes of sections 62J.841 to 62J.845, the following
definitions apply.
new text end

new text begin Subd. 2. new text end

new text begin Consumer Price Index. new text end

new text begin "Consumer Price Index" means the Consumer Price
Index, Annual Average, for All Urban Consumers, CPI-U: U.S. City Average, All Items,
reported by the United States Department of Labor, Bureau of Labor Statistics, or its
successor or, if the index is discontinued, an equivalent index reported by a federal authority
or, if no such index is reported, "Consumer Price Index" means a comparable index chosen
by the Bureau of Labor Statistics.
new text end

new text begin Subd. 3. new text end

new text begin Generic or off-patent drug. new text end

new text begin "Generic or off-patent drug" means any prescription
drug for which any exclusive marketing rights granted under the Federal Food, Drug, and
Cosmetic Act, section 351 of the federal Public Health Service Act, and federal patent law
have expired, including any drug-device combination product for the delivery of a generic
drug.
new text end

new text begin Subd. 4. new text end

new text begin Manufacturer. new text end

new text begin "Manufacturer" has the meaning provided in section 151.01,
subdivision 14a.
new text end

new text begin Subd. 5. new text end

new text begin Prescription drug. new text end

new text begin "Prescription drug" means a drug for human use subject
to United States Code, title 21, section 353(b)(1).
new text end

new text begin Subd. 6. new text end

new text begin Wholesale acquisition cost. new text end

new text begin "Wholesale acquisition cost" has the meaning
provided in United States Code, title 42, section 1395w-3a.
new text end

new text begin Subd. 7. new text end

new text begin Wholesale distributor. new text end

new text begin "Wholesale distributor" has the meaning provided in
section 151.441, subdivision 14.
new text end

Sec. 2.

new text begin [62J.842] EXCESSIVE PRICE INCREASES PROHIBITED.
new text end

new text begin Subdivision 1. new text end

new text begin Prohibition. new text end

new text begin No manufacturer shall impose, or cause to be imposed, an
excessive price increase, whether directly or through a wholesale distributor, pharmacy, or
similar intermediary, on the sale of any generic or off-patent drug sold, dispensed, or
delivered to any consumer in the state.
new text end

new text begin Subd. 2. new text end

new text begin Excessive price increase. new text end

new text begin A price increase is excessive for purposes of this
section when:
new text end

new text begin (1) the price increase, adjusted for inflation utilizing the Consumer Price Index, exceeds:
new text end

new text begin (i) 15 percent of the wholesale acquisition cost over the immediately preceding calendar
year; or
new text end

new text begin (ii) 40 percent of the wholesale acquisition cost over the immediately preceding three
calendar years; and
new text end

new text begin (2) the price increase, adjusted for inflation utilizing the Consumer Price Index, exceeds
$30 for:
new text end

new text begin (i) a 30-day supply of the drug; or
new text end

new text begin (ii) a course of treatment lasting less than 30 days.
new text end

new text begin Subd. 3. new text end

new text begin Exemption. new text end

new text begin It is not a violation of this section for a wholesale distributor or
pharmacy to increase the price of a generic or off-patent drug if the price increase is directly
attributable to additional costs for the drug imposed on the wholesale distributor or pharmacy
by the manufacturer of the drug.
new text end

Sec. 3.

new text begin [62J.843] REGISTERED AGENT AND OFFICE WITHIN THE STATE.
new text end

new text begin Any manufacturer that sells, distributes, delivers, or offers for sale any generic or
off-patent drug in the state is required to maintain a registered agent and office within the
state.
new text end

Sec. 4.

new text begin [62J.844] ENFORCEMENT.
new text end

new text begin Subdivision 1. new text end

new text begin Notification. new text end

new text begin The commissioner of management and budget and any
other state agency that provides or purchases a pharmacy benefit, and any entity under
contract with a state agency to provide a pharmacy benefit other than an entity under contract
with the Department of Human Services, shall notify the manufacturer of a generic or
off-patent drug, the attorney general, and the Board of Pharmacy of any price increase that
is in violation of section 62J.842.
new text end

new text begin Subd. 2. new text end

new text begin Submission of drug cost statement and other information by manufacturer;
investigation by attorney general. new text end

new text begin (a) Within 45 days of receiving a notice under subdivision
1, the manufacturer of the generic or off-patent drug shall submit a drug cost statement to
the attorney general. The statement must:
new text end

new text begin (1) itemize the cost components related to production of the drug;
new text end

new text begin (2) identify the circumstances and timing of any increase in materials or manufacturing
costs that caused any increase during the preceding calendar year, or preceding three calendar
years as applicable, in the price of the drug; and
new text end

new text begin (3) provide any other information that the manufacturer believes to be relevant to a
determination of whether a violation of section 62J.842 has occurred.
new text end

new text begin (b) The attorney general may investigate whether a violation of section 62J.842 has
occurred, is occurring, or is about to occur, in accordance with section 8.31, subdivision 2.
new text end

new text begin Subd. 3. new text end

new text begin Petition to court. new text end

new text begin (a) On petition of the attorney general, a court may issue an
order:
new text end

new text begin (1) compelling the manufacturer of a generic or off-patent drug to:
new text end

new text begin (i) provide the drug cost statement required under subdivision 2, paragraph (a); and
new text end

new text begin (ii) answer interrogatories, produce records or documents, or be examined under oath,
as required by the attorney general under subdivision 2, paragraph (b);
new text end

new text begin (2) restraining or enjoining a violation of sections 62J.841 to 62J.845, including issuing
an order requiring that drug prices be restored to levels that comply with section 62J.842;
new text end

new text begin (3) requiring the manufacturer to provide an accounting to the attorney general of all
revenues resulting from a violation of section 62J.842;
new text end

new text begin (4) requiring the manufacturer to repay to all consumers, including any third-party payers,
any money acquired as a result of a price increase that violates section 62J.842;
new text end

new text begin (5) notwithstanding section 16A.151, requiring that all revenues generated from a
violation of section 62J.842 be remitted to the state and deposited into a special fund, to be
used for initiatives to reduce the cost to consumers of acquiring prescription drugs, if a
manufacturer is unable to determine the individual transactions necessary to provide the
repayments described in clause (4);
new text end

new text begin (6) imposing a civil penalty of up to $10,000 per day for each violation of section 62J.842;
new text end

new text begin (7) providing for the attorney general's recovery of its costs and disbursements incurred
in bringing an action against a manufacturer found in violation of section 62J.842, including
the costs of investigation and reasonable attorney's fees; and
new text end

new text begin (8) providing any other appropriate relief, including any other equitable relief as
determined by the court.
new text end

new text begin (b) For purposes of paragraph (a), clause (6), every individual transaction in violation
of section 62J.842 shall be considered a separate violation.
new text end

new text begin Subd. 4. new text end

new text begin Private right of action. new text end

new text begin Any action brought pursuant to section 8.31, subdivision
3a, by a person injured by a violation of this section is for the benefit of the public.
new text end

Sec. 5.

new text begin [62J.845] PROHIBITION ON WITHDRAWAL OF GENERIC OR
OFF-PATENT DRUGS FOR SALE.
new text end

new text begin Subdivision 1. new text end

new text begin Prohibition. new text end

new text begin A manufacturer of a generic or off-patent drug is prohibited
from withdrawing that drug from sale or distribution within this state for the purpose of
avoiding the prohibition on excessive price increases under section 62J.842.
new text end

new text begin Subd. 2. new text end

new text begin Notice to board and attorney general. new text end

new text begin Any manufacturer that intends to
withdraw a generic or off-patent drug from sale or distribution within the state shall provide
a written notice of withdrawal to the Board of Pharmacy and the attorney general, at least
180 days prior to the withdrawal.
new text end

new text begin Subd. 3. new text end

new text begin Financial penalty. new text end

new text begin The attorney general shall assess a penalty of $500,000 on
any manufacturer of a generic or off-patent drug that it determines has failed to comply
with the requirements of this section.
new text end

Sec. 6.

new text begin [62J.846] SEVERABILITY.
new text end

new text begin If any provision of sections 62J.841 to 62J.845 or the application thereof to any person
or circumstance is held invalid for any reason in a court of competent jurisdiction, the
invalidity does not affect other provisions or any other application of sections 62J.841 to
62J.845 that can be given effect without the invalid provision or application.
new text end

Sec. 7.

Minnesota Statutes 2020, section 151.071, subdivision 1, is amended to read:

Subdivision 1.

Forms of disciplinary action.

When the board finds that a licensee,
registrant, or applicant has engaged in conduct prohibited under subdivision 2, it may do
one or more of the following:

(1) deny the issuance of a license or registration;

(2) refuse to renew a license or registration;

(3) revoke the license or registration;

(4) suspend the license or registration;

(5) impose limitations, conditions, or both on the license or registration, including but
not limited to: the limitation of practice to designated settings; the limitation of the scope
of practice within designated settings; the imposition of retraining or rehabilitation
requirements; the requirement of practice under supervision; the requirement of participation
in a diversion program such as that established pursuant to section 214.31 or the conditioning
of continued practice on demonstration of knowledge or skills by appropriate examination
or other review of skill and competence;

(6) impose a civil penalty not exceeding $10,000 for each separate violation, new text begin except that
a civil penalty not exceeding $25,000 may be imposed for each separate violation of section
62J.842, new text end the amount of the civil penalty to be fixed so as to deprive a licensee or registrant
of any economic advantage gained by reason of the violation, to discourage similar violations
by the licensee or registrant or any other licensee or registrant, or to reimburse the board
for the cost of the investigation and proceeding, including but not limited to, fees paid for
services provided by the Office of Administrative Hearings, legal and investigative services
provided by the Office of the Attorney General, court reporters, witnesses, reproduction of
records, board members' per diem compensation, board staff time, and travel costs and
expenses incurred by board staff and board members; and

(7) reprimand the licensee or registrant.

Sec. 8.

Minnesota Statutes 2020, section 151.071, subdivision 2, is amended to read:

Subd. 2.

Grounds for disciplinary action.

The following conduct is prohibited and is
grounds for disciplinary action:

(1) failure to demonstrate the qualifications or satisfy the requirements for a license or
registration contained in this chapter or the rules of the board. The burden of proof is on
the applicant to demonstrate such qualifications or satisfaction of such requirements;

(2) obtaining a license by fraud or by misleading the board in any way during the
application process or obtaining a license by cheating, or attempting to subvert the licensing
examination process. Conduct that subverts or attempts to subvert the licensing examination
process includes, but is not limited to: (i) conduct that violates the security of the examination
materials, such as removing examination materials from the examination room or having
unauthorized possession of any portion of a future, current, or previously administered
licensing examination; (ii) conduct that violates the standard of test administration, such as
communicating with another examinee during administration of the examination, copying
another examinee's answers, permitting another examinee to copy one's answers, or
possessing unauthorized materials; or (iii) impersonating an examinee or permitting an
impersonator to take the examination on one's own behalf;

(3) for a pharmacist, pharmacy technician, pharmacist intern, applicant for a pharmacist
or pharmacy license, or applicant for a pharmacy technician or pharmacist intern registration,
conviction of a felony reasonably related to the practice of pharmacy. Conviction as used
in this subdivision includes a conviction of an offense that if committed in this state would
be deemed a felony without regard to its designation elsewhere, or a criminal proceeding
where a finding or verdict of guilt is made or returned but the adjudication of guilt is either
withheld or not entered thereon. The board may delay the issuance of a new license or
registration if the applicant has been charged with a felony until the matter has been
adjudicated;

(4) for a facility, other than a pharmacy, licensed or registered by the board, if an owner
or applicant is convicted of a felony reasonably related to the operation of the facility. The
board may delay the issuance of a new license or registration if the owner or applicant has
been charged with a felony until the matter has been adjudicated;

(5) for a controlled substance researcher, conviction of a felony reasonably related to
controlled substances or to the practice of the researcher's profession. The board may delay
the issuance of a registration if the applicant has been charged with a felony until the matter
has been adjudicated;

(6) disciplinary action taken by another state or by one of this state's health licensing
agencies:

(i) revocation, suspension, restriction, limitation, or other disciplinary action against a
license or registration in another state or jurisdiction, failure to report to the board that
charges or allegations regarding the person's license or registration have been brought in
another state or jurisdiction, or having been refused a license or registration by any other
state or jurisdiction. The board may delay the issuance of a new license or registration if an
investigation or disciplinary action is pending in another state or jurisdiction until the
investigation or action has been dismissed or otherwise resolved; and

(ii) revocation, suspension, restriction, limitation, or other disciplinary action against a
license or registration issued by another of this state's health licensing agencies, failure to
report to the board that charges regarding the person's license or registration have been
brought by another of this state's health licensing agencies, or having been refused a license
or registration by another of this state's health licensing agencies. The board may delay the
issuance of a new license or registration if a disciplinary action is pending before another
of this state's health licensing agencies until the action has been dismissed or otherwise
resolved;

(7) for a pharmacist, pharmacy, pharmacy technician, or pharmacist intern, violation of
any order of the board, of any of the provisions of this chapter or any rules of the board or
violation of any federal, state, or local law or rule reasonably pertaining to the practice of
pharmacy;

(8) for a facility, other than a pharmacy, licensed by the board, violations of any order
of the board, of any of the provisions of this chapter or the rules of the board or violation
of any federal, state, or local law relating to the operation of the facility;

(9) engaging in any unethical conduct; conduct likely to deceive, defraud, or harm the
public, or demonstrating a willful or careless disregard for the health, welfare, or safety of
a patient; or pharmacy practice that is professionally incompetent, in that it may create
unnecessary danger to any patient's life, health, or safety, in any of which cases, proof of
actual injury need not be established;

(10) aiding or abetting an unlicensed person in the practice of pharmacy, except that it
is not a violation of this clause for a pharmacist to supervise a properly registered pharmacy
technician or pharmacist intern if that person is performing duties allowed by this chapter
or the rules of the board;

(11) for an individual licensed or registered by the board, adjudication as mentally ill
or developmentally disabled, or as a chemically dependent person, a person dangerous to
the public, a sexually dangerous person, or a person who has a sexual psychopathic
personality, by a court of competent jurisdiction, within or without this state. Such
adjudication shall automatically suspend a license for the duration thereof unless the board
orders otherwise;

(12) for a pharmacist or pharmacy intern, engaging in unprofessional conduct as specified
in the board's rules. In the case of a pharmacy technician, engaging in conduct specified in
board rules that would be unprofessional if it were engaged in by a pharmacist or pharmacist
intern or performing duties specifically reserved for pharmacists under this chapter or the
rules of the board;

(13) for a pharmacy, operation of the pharmacy without a pharmacist present and on
duty except as allowed by a variance approved by the board;

(14) for a pharmacist, the inability to practice pharmacy with reasonable skill and safety
to patients by reason of illness, use of alcohol, drugs, narcotics, chemicals, or any other type
of material or as a result of any mental or physical condition, including deterioration through
the aging process or loss of motor skills. In the case of registered pharmacy technicians,
pharmacist interns, or controlled substance researchers, the inability to carry out duties
allowed under this chapter or the rules of the board with reasonable skill and safety to
patients by reason of illness, use of alcohol, drugs, narcotics, chemicals, or any other type
of material or as a result of any mental or physical condition, including deterioration through
the aging process or loss of motor skills;

(15) for a pharmacist, pharmacy, pharmacist intern, pharmacy technician, medical gas
dispenser, or controlled substance researcher, revealing a privileged communication from
or relating to a patient except when otherwise required or permitted by law;

(16) for a pharmacist or pharmacy, improper management of patient records, including
failure to maintain adequate patient records, to comply with a patient's request made pursuant
to sections 144.291 to 144.298, or to furnish a patient record or report required by law;

(17) fee splitting, including without limitation:

(i) paying, offering to pay, receiving, or agreeing to receive, a commission, rebate,
kickback, or other form of remuneration, directly or indirectly, for the referral of patients;

(ii) referring a patient to any health care provider as defined in sections 144.291 to
144.298 in which the licensee or registrant has a financial or economic interest as defined
in section 144.6521, subdivision 3, unless the licensee or registrant has disclosed the
licensee's or registrant's financial or economic interest in accordance with section 144.6521;
and

(iii) any arrangement through which a pharmacy, in which the prescribing practitioner
does not have a significant ownership interest, fills a prescription drug order and the
prescribing practitioner is involved in any manner, directly or indirectly, in setting the price
for the filled prescription that is charged to the patient, the patient's insurer or pharmacy
benefit manager, or other person paying for the prescription or, in the case of veterinary
patients, the price for the filled prescription that is charged to the client or other person
paying for the prescription, except that a veterinarian and a pharmacy may enter into such
an arrangement provided that the client or other person paying for the prescription is notified,
in writing and with each prescription dispensed, about the arrangement, unless such
arrangement involves pharmacy services provided for livestock, poultry, and agricultural
production systems, in which case client notification would not be required;

(18) engaging in abusive or fraudulent billing practices, including violations of the
federal Medicare and Medicaid laws or state medical assistance laws or rules;

(19) engaging in conduct with a patient that is sexual or may reasonably be interpreted
by the patient as sexual, or in any verbal behavior that is seductive or sexually demeaning
to a patient;

(20) failure to make reports as required by section 151.072 or to cooperate with an
investigation of the board as required by section 151.074;

(21) knowingly providing false or misleading information that is directly related to the
care of a patient unless done for an accepted therapeutic purpose such as the dispensing and
administration of a placebo;

(22) aiding suicide or aiding attempted suicide in violation of section 609.215 as
established by any of the following:

(i) a copy of the record of criminal conviction or plea of guilty for a felony in violation
of section 609.215, subdivision 1 or 2;

(ii) a copy of the record of a judgment of contempt of court for violating an injunction
issued under section 609.215, subdivision 4;

(iii) a copy of the record of a judgment assessing damages under section 609.215,
subdivision 5; or

(iv) a finding by the board that the person violated section 609.215, subdivision 1 or 2.
The board must investigate any complaint of a violation of section 609.215, subdivision 1
or 2;

(23) for a pharmacist, practice of pharmacy under a lapsed or nonrenewed license. For
a pharmacist intern, pharmacy technician, or controlled substance researcher, performing
duties permitted to such individuals by this chapter or the rules of the board under a lapsed
or nonrenewed registration. For a facility required to be licensed under this chapter, operation
of the facility under a lapsed or nonrenewed license or registration; deleted text begin and
deleted text end

(24) for a pharmacist, pharmacist intern, or pharmacy technician, termination or discharge
from the health professionals services program for reasons other than the satisfactory
completion of the program deleted text begin . deleted text end new text begin ; and
new text end

new text begin (25) for a manufacturer, a violation of section 62J.842 or section 62J.845.
new text end