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Minnesota Legislature

Office of the Revisor of Statutes

SF 1518

as introduced - 91st Legislature (2019 - 2020) Posted on 02/21/2019 02:36pm

KEY: stricken = removed, old language.
underscored = added, new language.

Current Version - as introduced

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A bill for an act
relating to health; prohibiting a manufacturer or wholesale drug distributor from
price gouging; allowing the Board of Pharmacy, the commissioner of human
services, and health plan companies to notify the attorney general of certain
prescription drug price increases; authorizing the attorney general to obtain drug
pricing information and take action against drug manufacturers and wholesalers
related to certain price increases; imposing civil penalties;amending Minnesota
Statutes 2018, sections 8.31, subdivision 1; 151.071, subdivisions 1, 2; proposing
coding for new law in Minnesota Statutes, chapter 151.

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

Section 1.

Minnesota Statutes 2018, section 8.31, subdivision 1, is amended to read:


Subdivision 1.

Investigate offenses against provisions of certain designated sections;
assist in enforcement.

The attorney general shall investigate violations of the law of this
state respecting unfair, discriminatory, and other unlawful practices in business, commerce,
or trade, and specifically, but not exclusively, new text beginprohibition against price gouging for essential
off-patent or generic drugs (section 151.462),
new text endthe Nonprofit Corporation Act (sections
317A.001 to 317A.909), the Act Against Unfair Discrimination and Competition (sections
325D.01 to 325D.07), the Unlawful Trade Practices Act (sections 325D.09 to 325D.16),
the Antitrust Act (sections 325D.49 to 325D.66), section 325F.67 and other laws against
false or fraudulent advertising, the antidiscrimination acts contained in section 325D.67,
the act against monopolization of food products (section 325D.68), the act regulating
telephone advertising services (section 325E.39), the Prevention of Consumer Fraud Act
(sections 325F.68 to 325F.70), and chapter 53A regulating currency exchanges and assist
in the enforcement of those laws as in this section provided.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2019.
new text end

Sec. 2.

Minnesota Statutes 2018, 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 beginexcept that
a civil penalty not exceeding $....... may be imposed for each separate violation of section
151.462,
new text endthe 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.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2019.
new text end

Sec. 3.

Minnesota Statutes 2018, 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, drunkenness, use of 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, drunkenness, use of 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
distributor, 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;
and

(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;

(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 shall 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 beginand
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 programnew text begin; and
new text end

new text begin (25) for a manufacturer or wholesale drug distributor, a violation of section 151.462new text end.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2019.
new text end

Sec. 4.

new text begin [151.462] PROHIBITION AGAINST PRICE GOUGING FOR ESSENTIAL
OFF-PATENT OR GENERIC DRUGS.
new text end

new text begin Subdivision 1. new text end

new text begin Definitions. new text end

new text begin (a) For purposes of this section, the following definitions
apply.
new text end

new text begin (b) "Essential off-patent or generic drug" means any prescription drug:
new text end

new text begin (1) for which all exclusive marketing rights, if any, granted under the federal Food,
Drug, and Cosmetic Act, United States Code, title 21, chapter 9; section 351 of the federal
Public Health Service Act, United States Code, title 42, section 262; and federal patent law
have expired;
new text end

new text begin (2) that has been designated by the board or commissioner of human services as an
essential medicine due to its efficacy in treating a life-threatening health condition or a
chronic health condition that substantially impairs an individual's ability to engage in
activities of daily living;
new text end

new text begin (3) that is actively manufactured and marketed for sale in the United States by three or
fewer manufacturers; and
new text end

new text begin (4) that is made available for sale in the state of Minnesota.
new text end

new text begin Essential off-patent or generic drug includes any drug-device combination product used for
the delivery of a drug for which all exclusive marketing rights, if any, granted under the
federal Food, Drug, and Cosmetic Act, section 351 of the federal Public Health Service
Act, and federal patent law have expired.
new text end

new text begin (c) "Health plan company" has the meaning provided in section 62Q.01, subdivision 4.
new text end

new text begin (d) "Price gouging" means an unconscionable increase in the price of a prescription
drug.
new text end

new text begin (e) "Unconscionable increase" means an increase in the price of a prescription drug that:
new text end

new text begin (1) is excessive and not justified by the cost of producing the drug or the cost of
appropriate expansion of access to the drug to promote public health; and
new text end

new text begin (2) results in consumers for whom the drug has been prescribed, the commissioner of
human services, and health plan companies having no meaningful choice about whether to
purchase the drug at an excessive price because of:
new text end

new text begin (i) the importance of the drug to the health of the consumer; and
new text end

new text begin (ii) insufficient competition in the market for the drug.
new text end

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

new text begin Subd. 2. new text end

new text begin Prohibition. new text end

new text begin A manufacturer or wholesale drug distributor may not engage in
price gouging in the sale of an essential off-patent or generic drug. It is not a violation of
this subdivision for a wholesale drug distributor to increase the price of an essential off-patent
or generic drug if the price increase is directly attributable to additional costs for the drug
imposed on the wholesale drug distributor by the manufacturer of the drug.
new text end

new text begin Subd. 3. new text end

new text begin Notification of attorney general. new text end

new text begin (a) The board, the commissioner of human
services, or a health plan company may notify the attorney general of any increase in the
price of an essential off-patent or generic drug when:
new text end

new text begin (1) the price increase, by itself or in combination with other price increases:
new text end

new text begin (i) would result in an increase of 50 percent or more, compared to the preceding one-year
period, in the wholesale acquisition cost of the drug or other relevant measure of drug cost;
or
new text end

new text begin (ii) would result in an increase of 50 percent or more in the price paid by the medical
assistance or MinnesotaCare programs, or the health plan company, for the drug compared
to the preceding one-year period; and
new text end

new text begin (2)(i) a 30-day supply of the maximum recommended dosage of the drug for any
indication, according to the label for the drug approved under the federal Food, Drug, and
Cosmetic Act, would cost more than $80 at the drug's wholesale acquisition cost;
new text end

new text begin (ii) a full course of treatment with the drug, according to the label for the drug approved
under the federal Food, Drug, and Cosmetic Act, would cost more than $80 at the drug's
wholesale acquisition cost; or
new text end

new text begin (iii) if the drug is made available to consumers only in quantities that do not correspond
to a 30-day supply, a full course of treatment, or a single dose, it would cost more than $80
at the drug's wholesale acquisition cost to obtain a 30-day supply or a full course of treatment.
new text end

new text begin The commissioner of human services and the health plan company shall notify the board
of any notification to the attorney general provided under this paragraph.
new text end

new text begin (b) On request of the attorney general, the manufacturer of an essential off-patent or
generic drug identified in a notice under paragraph (a) shall, within 45 days after the request,
submit a statement to the attorney general:
new text end

new text begin (1) itemizing the components of the cost of producing the drug;
new text end

new text begin (2) identifying the circumstances and timing of any increase in materials or manufacturing
costs that caused any increase in the price of the drug within the one-year period preceding
the date of the price increase;
new text end

new text begin (3) identifying the circumstances and timing of any expenditures made by the
manufacturer to expand access to the drug and explaining any improvement in public health
associated with those expenditures; and
new text end

new text begin (4) providing any other information that the manufacturer believes to be relevant to a
determination of whether a violation of this section has occurred.
new text end

new text begin (c) The attorney general may require a manufacturer or a wholesale drug distributor to
produce any records or other documents that may be relevant to a determination of whether
a violation of this section has occurred. The attorney general or a person may use the powers
and procedures provided in this section or section 8.31.
new text end

new text begin (d) The attorney general may not bring an action for a remedy under paragraph (c) unless
the attorney general has provided the manufacturer or wholesale drug distributor an
opportunity to meet with the attorney general to offer a justification for the increase in the
price of the essential off-patent or generic drug.
new text end

new text begin (e) The attorney general shall make any information provided by a health plan company,
manufacturer, or wholesale drug distributor under paragraphs (a), (b), and (c) available to
the board upon request. Any information provided by a health plan company, manufacturer,
or wholesale drug distributor to the attorney general under paragraphs (a), (b), and (c) shall
be treated as nonpublic data under section 13.02, subdivision 9, unless the nonpublic
classification of the information is waived by the health plan company, manufacturer, or
wholesale drug distributor.
new text end

new text begin (f) In any action brought by the attorney general under paragraph (c), a person who is
alleged to have violated a requirement of this section may not assert as a defense that the
person did not deal directly with a consumer residing in the state.
new text end

new text begin Subd. 4. new text end

new text begin Private right of action. new text end

new text begin In addition to remedies otherwise provided by law,
any person injured by a violation of this section may bring a civil action and recover damages,
together with costs and disbursements, including costs of investigation and reasonable
attorney fees, and receive other equitable relief as determined by the court. The court may,
as appropriate, enter a consent judgment or decree without the finding of illegality. Any
civil action brought under this subdivision is for the benefit of the public.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2019.
new text end