1.1                          A bill for an act 
  1.2             relating to health; strengthening prescription drug 
  1.3             price discrimination provisions; modifying provisions 
  1.4             of the Nongovernmental Pharmaceutical Contracting 
  1.5             Alliance; requiring prescription drug contracting 
  1.6             disclosures; providing criminal penalties; 
  1.7             appropriating money; amending Minnesota Statutes 2000, 
  1.8             sections 16B.94; 62J.381; and 151.061. 
  1.9   BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.10     Section 1.  Minnesota Statutes 2000, section 16B.94, is 
  1.11  amended to read: 
  1.12     16B.94 [NONGOVERNMENTAL PHARMACEUTICAL CONTRACTING 
  1.13  ALLIANCE.] 
  1.14     Subdivision 1.  [ESTABLISHMENT AND ADMINISTRATION.] The 
  1.15  commissioner, in consultation with appropriate experts on 
  1.16  pharmaceutical pricing, shall establish and administer a 
  1.17  Nongovernmental Pharmaceutical Contracting Alliance.  The 
  1.18  Nongovernmental Alliance shall negotiate contracts for 
  1.19  prescription drugs with manufacturers and sellers and shall make 
  1.20  the contract prices negotiated available to purchasers.  The 
  1.21  commissioner shall select the prescription drugs for which price 
  1.22  contracts are negotiated.  The commissioner shall, to the 
  1.23  greatest extent feasible, operate the alliance using the 
  1.24  administrative and contracting procedures of the Minnesota 
  1.25  Multistate Governmental Contracting Alliance for Pharmaceuticals 
  1.26  administered by the commissioner under the authority granted in 
  1.27  section 471.59.  The commissioner may negotiate a price 
  2.1   differential based on volume purchasing and may also grant 
  2.2   multiple awards. 
  2.3      Subd. 1a.  [UNFAIR PRICE DISCRIMINATION.] If a contract 
  2.4   price disclosed under section 62J.381, subdivision 3, is lower 
  2.5   than the contract price negotiated by the commissioner under 
  2.6   this section for the same prescription drug, the manufacturer or 
  2.7   seller must show cause as to why this discrepancy does not 
  2.8   violate section 151.061. 
  2.9      Subd. 2.  [USE OF CONTRACTOR.] The commissioner may 
  2.10  contract with an individual, business entity, or other private 
  2.11  organization to serve as a contractor to negotiate and 
  2.12  administer the price contracts for prescription drugs.  In 
  2.13  developing requirements for the contractor, the commissioner 
  2.14  shall consult with appropriate experts on pharmaceutical pricing.
  2.15  The contractor may negotiate a price differential based on 
  2.16  volume purchasing and may also grant multiple awards. 
  2.17     Subd. 3.  [ADMINISTRATIVE COSTS.] The commissioner may 
  2.18  charge manufacturers and sellers that enter into prescription 
  2.19  drug price contracts with the commissioner under subdivision 
  2.20  1 the Nongovernmental Pharmaceutical Contracting Alliance a fee 
  2.21  to cover the commissioner's expenses in negotiating and 
  2.22  administering the price contracts.  The fee established shall 
  2.23  have the force and effect of law if the requirements of section 
  2.24  14.386, paragraph (a), are met.  Section 14.386, paragraph (b), 
  2.25  does not apply.  Fees collected by the commissioner under this 
  2.26  subdivision must be deposited in the state treasury and credited 
  2.27  to a special account.  Money in the account is appropriated to 
  2.28  the commissioner to pay the costs of negotiating and 
  2.29  administering price contracts under this section. 
  2.30     Subd. 4.  [EXPANSION TO OTHER STATES.] The commissioner may 
  2.31  expand the Nongovernmental Alliance to other states and make the 
  2.32  contract prices negotiated available to non-Minnesota purchasers.
  2.33     Sec. 2.  Minnesota Statutes 2000, section 62J.381, is 
  2.34  amended to read: 
  2.35     62J.381 [PRESCRIPTION DRUG PRICE DISCLOSURE.] 
  2.36     Subdivision 1.  [DEFINITION.] For purposes of this section, 
  3.1   "manufacturer" has the meaning given under section 151.44, 
  3.2   paragraph (c), and "wholesale drug distributor" has the meaning 
  3.3   given under section 151.44, paragraph (b). 
  3.4      Subd. 2.  [AGGREGATE REPORTING.] (a) By April 1, 1999, and 
  3.5   annually thereafter, hospitals licensed under chapter 144 and 
  3.6   group purchasers required to file a full report under section 
  3.7   62J.38 and the rules promulgated thereunder, must submit to the 
  3.8   commissioner of health the total amount of: 
  3.9      (1) aggregate purchases of or payments for prescription 
  3.10  drugs; and 
  3.11     (2) aggregate cash rebates, discounts, other payments 
  3.12  received, and any fees associated with education, data 
  3.13  collection, research, training, or market share movement, which 
  3.14  are received during the previous calendar year from a 
  3.15  manufacturer as defined under section 151.44, paragraph (c), or 
  3.16  a wholesale drug distributor as defined under section 151.44, 
  3.17  paragraph (d). 
  3.18     (b) The data collected under this section subdivision shall 
  3.19  be distributed through the information clearinghouse under 
  3.20  section 62J.2930.  The identification of individual 
  3.21  manufacturers or wholesalers or specific drugs shall not be 
  3.22  required under this section.  
  3.23     Subd. 3.  [PRICE DISCLOSURE.] (a) Beginning with contracts 
  3.24  entered into or renewed on or after April 1, 2002, hospitals 
  3.25  licensed under chapter 144 and group purchasers required to file 
  3.26  a full report under section 62J.38 and the rules adopted 
  3.27  thereunder must annually disclose to the commissioner of health 
  3.28  the terms of any contract entered into with a manufacturer or 
  3.29  wholesale drug distributor that relate to the purchase or use of 
  3.30  prescription drugs.  The disclosure must include the price paid 
  3.31  for the drug and any discount or rebate provided to the hospital 
  3.32  or group purchaser by a manufacturer or wholesale drug 
  3.33  distributor for the direct purchase of the drug or for the 
  3.34  inclusion of the drug on a drug formulary.  Each hospital and 
  3.35  group purchaser must also disclose any payment or fee associated 
  3.36  with education, data collection, research, training, or market 
  4.1   share movement received from a manufacturer or a wholesale drug 
  4.2   distributor. 
  4.3      (b) The data collected under this subdivision shall be 
  4.4   available to the public through the information clearinghouse 
  4.5   under section 62J.2930 and shall be provided to the commissioner 
  4.6   of administration and the commissioner's contractor to be used 
  4.7   as part of the negotiation and administration of the 
  4.8   Nongovernmental Pharmaceutical Contracting Alliance under 
  4.9   sections 16B.93 to 16B.96. 
  4.10     (c) A manufacturer or wholesale drug distributor shall not 
  4.11  retaliate against a hospital or group purchaser for disclosing 
  4.12  data according to this subdivision.  A hospital or group 
  4.13  purchaser shall have a cause of action against a manufacturer or 
  4.14  wholesale drug distributor for violation of this paragraph.  
  4.15  Retaliation includes, but is not limited to, refusal to 
  4.16  negotiate, refusal to renew a contract, or offering less 
  4.17  favorable terms. 
  4.18     Sec. 3.  Minnesota Statutes 2000, section 151.061, is 
  4.19  amended to read: 
  4.20     151.061 [UNFAIR PRICE DISCRIMINATION.] 
  4.21     Subdivision 1.  [UNFAIR DISCRIMINATION DEFINED.] Any person 
  4.22  doing business in this state and engaged in the distribution 
  4.23  (other than at retail) of any prescription drugs, who shall 
  4.24  discriminate between purchasers by selling prescription drugs at 
  4.25  a lower price or rate to one purchaser or association of 
  4.26  purchasers than offered to another purchaser or association of 
  4.27  purchasers within this state (other than at retail) after making 
  4.28  allowance for the difference, if any, in the grade, quality, or 
  4.29  quantity, and after equalizing the distance from the point of 
  4.30  distribution and freight costs therefrom, shall be guilty of 
  4.31  unfair discrimination.  Unfair discrimination occurs when 
  4.32  quantity discounts are not reasonably based on actual cost 
  4.33  savings to all like purchasers.  Unfair discrimination shall 
  4.34  embrace any scheme of special rebates, collateral contracts, or 
  4.35  any device of any nature which in substance violates the 
  4.36  provisions of this subdivision.  Nothing in this subdivision 
  5.1   shall apply to purchases for their own use by schools, colleges, 
  5.2   universities, public libraries, churches, hospitals or 
  5.3   charitable institutions not operated for profit.  
  5.4      Subd. 2.  [RELIEF; PENALTIES.] (a) Any person injured by 
  5.5   unfair discrimination as defined in subdivision 1 may bring a 
  5.6   civil action and recover damages, together with costs and 
  5.7   disbursements, including reasonable attorney's fees, and receive 
  5.8   other equitable relief as determined by the court.  
  5.9      (b) Unfair discrimination as defined in subdivision 1 is an 
  5.10  unlawful trade practice punishable under section 325D.15, 
  5.11  violations of which shall be investigated by the attorney 
  5.12  general according to section 8.31. 
  5.13     (c) The remedies provided by this section are cumulative 
  5.14  and shall not be construed as restricting any remedy which is 
  5.15  otherwise available.  
  5.16     Sec. 4.  [APPROPRIATION.] 
  5.17     $....... is appropriated from the general fund to the 
  5.18  commissioner of administration for fiscal year 2002 to establish 
  5.19  the Nongovernmental Pharmaceutical Contracting Alliance under 
  5.20  Minnesota Statutes, sections 16B.93 to 16B.96. 
  5.21     Sec. 5.  [EFFECTIVE DATE.] 
  5.22     Sections 1 and 2 are effective for a contract entered into 
  5.23  or renewed on or after April 1, 2002.