1.1                          A bill for an act 
  1.2             relating to pharmacy; modifying wholesale drug 
  1.3             distributor requirements; amending Minnesota Statutes 
  1.4             2002, section 151.47, subdivision 1. 
  1.5   BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.6      Section 1.  Minnesota Statutes 2002, section 151.47, 
  1.7   subdivision 1, is amended to read: 
  1.8      Subdivision 1.  [REQUIREMENTS.] All wholesale drug 
  1.9   distributors are subject to the requirements in paragraphs (a) 
  1.10  to ~~(f)~~ (g).  
  1.11     (a) No person or distribution outlet shall act as a 
  1.12  wholesale drug distributor without first obtaining a license 
  1.13  from the board and paying the required fee. 
  1.14     (b) No license shall be issued or renewed for a wholesale 
  1.15  drug distributor to operate unless the applicant agrees to 
  1.16  operate in a manner prescribed by federal and state law and 
  1.17  according to the rules adopted by the board. 
  1.18     (c) The board may require a separate license for each 
  1.19  facility directly or indirectly owned or operated by the same 
  1.20  business entity within the state, or for a parent entity with 
  1.21  divisions, subsidiaries, or affiliate companies within the 
  1.22  state, when operations are conducted at more than one location 
  1.23  and joint ownership and control exists among all the entities. 
  1.24     (d) As a condition for receiving and retaining a wholesale 
  1.25  drug distributor license issued under sections 151.42 to 151.51, 
  2.1   an applicant shall satisfy the board that it has complied with 
  2.2   paragraph (g) and that it has and will continuously maintain: 
  2.3      (1) adequate storage conditions and facilities; 
  2.4      (2) minimum liability and other insurance as may be 
  2.5   required under any applicable federal or state law; 
  2.6      (3) a viable security system that includes an after hours 
  2.7   central alarm, or comparable entry detection capability; 
  2.8   restricted access to the premises; comprehensive employment 
  2.9   applicant screening; and safeguards against all forms of 
  2.10  employee theft; 
  2.11     (4) a system of records describing all wholesale drug 
  2.12  distributor activities set forth in section 151.44 for at least 
  2.13  the most recent two-year period, which shall be reasonably 
  2.14  accessible as defined by board regulations in any inspection 
  2.15  authorized by the board; 
  2.16     (5) principals and persons, including officers, directors, 
  2.17  primary shareholders, and key management executives, who must at 
  2.18  all times demonstrate and maintain their capability of 
  2.19  conducting business in conformity with sound financial practices 
  2.20  as well as state and federal law; 
  2.21     (6) complete, updated information, to be provided to the 
  2.22  board as a condition for obtaining and retaining a license, 
  2.23  about each wholesale drug distributor to be licensed, including 
  2.24  all pertinent corporate licensee information, if applicable, or 
  2.25  other ownership, principal, key personnel, and facilities 
  2.26  information found to be necessary by the board; 
  2.27     (7) written policies and procedures that assure reasonable 
  2.28  wholesale drug distributor preparation for, protection against, 
  2.29  and handling of any facility security or operation problems, 
  2.30  including, but not limited to, those caused by natural disaster 
  2.31  or government emergency, inventory inaccuracies or product 
  2.32  shipping and receiving, outdated product or other unauthorized 
  2.33  product control, appropriate disposition of returned goods, and 
  2.34  product recalls; 
  2.35     (8) sufficient inspection procedures for all incoming and 
  2.36  outgoing product shipments; and 
  3.1      (9) operations in compliance with all federal requirements 
  3.2   applicable to wholesale drug distribution. 
  3.3      (e) An agent or employee of any licensed wholesale drug 
  3.4   distributor need not seek licensure under this section. 
  3.5      (f) A wholesale drug distributor shall file with the board 
  3.6   an annual report, in a form and on the date prescribed by the 
  3.7   board, identifying all payments, honoraria, reimbursement or 
  3.8   other compensation authorized under section 151.461, clauses (3) 
  3.9   to (5), paid to practitioners in Minnesota during the preceding 
  3.10  calendar year.  The report shall identify the nature and value 
  3.11  of any payments totaling $100 or more, to a particular 
  3.12  practitioner during the year, and shall identify the 
  3.13  practitioner.  Reports filed under this provision are public 
  3.14  data. 
  3.15     (g) Manufacturers shall, on a quarterly basis, report by 
  3.16  National Drug Code the following pharmaceutical pricing criteria 
  3.17  to the board and the commissioner of human services for each of 
  3.18  their drugs:  average wholesale price, wholesale acquisition 
  3.19  cost, average manufacturer price as defined in United States 
  3.20  Code, title 42, chapter 7, subchapter XIX, section 1396r-8(k), 
  3.21  and best price as defined in United States Code, title 42, 
  3.22  chapter 7, subchapter XIX, section 1396r-8(c)(1)(C).  The 
  3.23  calculation of average wholesale price and wholesale acquisition 
  3.24  cost shall be the net of all volume discounts, prompt payment 
  3.25  discounts, chargebacks, short-dated product discounts, cash 
  3.26  discounts, free goods, rebates, and all other price concessions 
  3.27  or incentives provided to a purchaser that result in a reduction 
  3.28  in the ultimate cost to the purchaser.  When reporting average 
  3.29  wholesale price, wholesale acquisition cost, average 
  3.30  manufacturer price, and best price, manufacturers shall also 
  3.31  include a detailed description of the methodology by which the 
  3.32  prices were calculated.  When a manufacturer reports average 
  3.33  wholesale price, wholesale acquisition cost, average 
  3.34  manufacturer price, or best price, the president or chief 
  3.35  executive officer of the manufacturer shall certify to the 
  3.36  Medicaid program, on a form provided by the commissioner of 
  4.1   human services, that the reported prices are accurate.