Second Regular Session Sixty-fifth General Assembly STATE OF COLORADO INTRODUCED LLS NO. 06-0034.01 Michele Hanigsberg SENATE BILL 06-001 SENATE SPONSORSHIP Hagedorn, HOUSE SPONSORSHIP Madden, Senate Committees House Committees Health and Human Services A BILL FOR AN ACT Concerning a reduction in the cost of prescription drugs. Bill Summary (Note: This summary applies to this bill as introduced and does not necessarily reflect any amendments that may be subsequently adopted.) Requires the department of health care policy and financing ("department") to apply for federal authorization, as necessary, to enter into a multi-state drug purchasing pool ("purchasing pool") for the benefit of the state's medicaid recipients. Requires the department to contract, through a competitive bidding process, with one or more for-profit or nonprofit entities for purposes of the purchasing pool. Requires the executive director of the department to promulgate any rules necessary for the state to receive the federal authorization necessary to implement the purchasing pool and for the state to generate the maximum amount of savings to the state medicaid program. Contains a reporting requirement. Establishes the Colorado cares Rx program ("program") in the department to allow an eligible person, any political subdivision of the state, and any business to purchase prescription drugs at the discounted rate negotiated by the entity administering the program. Defines the eligibility criteria for the program. Requires the department's contract with one or more entities to implement and administer the program. Requires a pharmaceutical manufacturing company to annually disclose to the medical services board ("board") specific expenditure information, including but not limited to expenditures on direct marketing to consumers and lobbying. Describes the reporting requirements and the disclosure exemptions. Requires the board to make the disclosure information and other specified information regarding prescription drugs available to the public through an internet website. Refers the question of whether the state of Colorado shall enact these measures to reduce the cost of prescription drugs to the electors of Colorado at the next general election. Be it enacted by the General Assembly of the State of Colorado: SECTION 1. Legislative declaration. (1) (a) The general assembly finds that: (I) The state of Colorado pays a substantial amount for prescription drugs under the state's medicaid program. This expenditure is one of the fastest-growing obligations in the state's medicaid program. (II) Every year, there has been an increase in the state's medicaid enrollment, and this increase is even more significant in times of economic decline; (III) The ever-increasing costs of providing prescription drugs to medicaid recipients coupled with the state's revenue restrictions demand that the state attempt to decrease expenditures through available discounts wherever possible. (b) The general assembly, therefore, declares that it is in the best interest of the state to join a multi-state prescription drug purchasing pool to obtain prescription drugs for medicaid recipients at the lowest possible cost. (2) (a) The general assembly finds that: (I) As the population of Colorado ages, there is an increasing demand on Colorado's long-term care system; (II) It is healthier for an individual, and less expensive, to enable a person to stay in their home as long as possible; (III) Funding for mental health services for one of the state's most vulnerable populations has been significantly cut in recent years due to the state's budget constraints. (b) It is, therefore, the intent of the general assembly to use the savings generated by the implementation of the multi-state prescription drug purchasing pool to help pay for the increased need in long-term care services and to begin to restore cuts in mental health services. (3) (a) The general assembly finds that: (I) Uninsured and underinsured residents of Colorado pay a disproportionately greater share of their income for prescription drugs. In many cases, current drug prices have the effect of denying residents access to necessary medical care, thereby threatening their health and safety. (II) The new medicare prescription drug benefit prohibits people from insuring themselves in order to fully cover their prescription drug needs. This restriction on an individual's ability to purchase adequate coverage may threaten the individual's health and safety. (III) Prescription drugs are playing an increasingly important role in improving or stabilizing a person's health status and in reducing overall health care costs; (IV) Direct-to-consumer advertising affects both prescription drug use and a consumer's shift to higher-priced prescription drugs; (V) The practices of direct-to-consumer advertising, lobbying, and educating and entertaining medical professionals for the purpose of increasing sales of prescription drugs results in an inordinate and unnecessary escalation of the cost of prescription drugs to consumers; (VI) It is important for a consumer to understand what drives the cost of prescription drugs in order for the consumer to make more educated choices. (b) The general assembly, therefore, declares that: (I) It is necessary to provide a mechanism for individuals to purchase lower-cost prescription drugs through the implementation of the Colorado Cares Rx program in order to protect the health status of uninsured and underinsured individuals and older Coloradans; and (II) It is necessary for the Colorado Cares Rx program to educate consumers regarding the factors that drive the cost of their prescription drugs. SECTION 2. Part 1 of article 1 of title 25.5, Colorado Revised Statutes, is amended BY THE ADDITION OF A NEW SECTION to read: 25.5-1-114. Multi-state prescription drug purchasing pool - federal authorization - contracting - implementation - rules. (1) The state department shall apply for federal authorization, as necessary, to enter into a multi-state prescription drug purchasing pool for the benefit of the state's medicaid recipients. (2) The state department shall contract, through a competitive bidding process, with one or more for-profit or nonprofit entities capable of administering the necessary components of a multi-state prescription drug purchasing program, including but not limited to a supplemental rebate program, in order to combine the purchasing power of the state's medical assistance program with other states' medicaid programs to obtain prescription drugs at discounted rates. The state department shall have the contract in place on or before February 1, 2007. (3) In addition to the rule-making authority granted in section 25.5-1-108, the executive director shall promulgate any rules necessary for the state to receive the federal authorization specified in subsection (1) of this section and for the state to generate the maximum amount of savings to the medical assistance program through participation in a multi-state prescription drug purchasing pool. (4) The state department may purchase prescription drugs outside of any multi-state purchasing agreement authorized by this section if the state department is able to purchase the prescription drugs for a lower price than is available under the multi-state purchasing agreement. (5) On or before July 1, 2007, the state department shall report to the joint budget committee of the general assembly on the implementation of the requirements of this section. SECTION 3. Article 1 of title 25.5, Colorado Revised Statutes, is amended BY THE ADDITION OF A NEW PART to read: PART 6 THE COLORADO CARES RX PROGRAM 25.5-1-601. Short title. This part 6 shall be known and may be cited as "Colorado Cares Rx". 25.5-1-602. Definitions. As used in this part 6, unless the context otherwise requires: (1) "Clinical trial" means an approved clinical trial conducted in connection with the United States food and drug administration's approval process, a research study designed to answer specific questions about vaccines, new therapies, or new ways of using known treatments, any research performed concerning the efficacy or side effects of a prescription drug or therapy, or any other research performed regarding any prescription drug or therapy prior or subsequent to the drug's approval by the United States food and drug administration. (2) "Eligible entity" means a city, county, city and county, or political subdivision of the state of Colorado, or a business entity that is authorized to conduct and is conducting business in the state of Colorado. (3) "Eligible person" means a person who: (a) Is a resident of the state of Colorado; and (b) Is not eligible for medical assistance pursuant to article 4 of title 26, C.R.S., or the children's basic health plan pursuant to article 19 of title 26, C.R.S. (4) "Pharmaceutical manufacturing company" means any entity that is engaged in the production, preparation, propagation, compounding, conversion, or processing of prescription drugs, either directly or indirectly, by extraction from substances of natural origin, or independently by means of chemical synthesis, or by a combination of extraction and chemical synthesis. "Pharmaceutical manufacturing company" also includes any entity engaged in the packaging, repackaging, labeling, relabeling, or distribution of prescription drugs; except that "pharmaceutical manufacturing company" does not include a wholesaler as defined in section 12-22-102 (34), C.R.S., or a pharmacist licensed pursuant to article 22 of title 12, C.R.S. (5) "Pharmaceutical marketer" means a person who, while employed by or under contract to represent a pharmaceutical manufacturing company, engages in pharmaceutical detailing, promotional activities, or other marketing of prescription drugs in this state to any physician, hospital, nursing home, pharmacist, health benefit plan administrator, or any other person authorized to prescribe, dispense, or purchase prescription drugs. "Pharmaceutical marketer" does not include a wholesaler, as defined in section 12-22-102 (34), C.R.S., or a wholesaler's representative who promotes or otherwise markets the services of the wholesale drug distributor in connection with a prescription drug. (6) "Program" means Colorado cares Rx. 25.5-1-603. Program. (1) (a) There is hereby established the program in the state department. The state department shall contract with one or more entities capable of implementing and administering the prescription drug benefits under the program. A contracted entity may utilize one or more of the following: (I) A multi-state drug purchasing agreement; (II) Negotiation of prescription drug prices with prescription drug manufacturers, wholesalers, and retailers; (III) Any other method for receiving lower cost prescription drugs for eligible persons. (b) The program shall allow an eligible person or an eligible entity to purchase prescription drugs at a discounted rate negotiated by a contracted entity. Any rebates negotiated by a contracted entity shall be used to lower the rates of the prescription drugs available to an eligible person or an eligible entity under the program. A contracted entity is authorized to charge an annual fee to eligible persons, not to exceed twenty-five dollars, and eligible entities for the administration of the program and to determine the amount of any dispensing fees under the program. The dispensing fees and drug reimbursement rates to pharmacies for prescription drugs under the program shall be no less than the medicaid reimbursement rate to pharmacies for dispensing medications to medicaid recipients. 25.5-1-604. Consumer education - disclosure - pharmaceutical manufacturers - action by the attorney general. (1) On or before January 1, 2008, and each January 1 thereafter, every pharmaceutical manufacturing company shall disclose to the state board: (a) The value, nature, and purpose of any gift, fee, payment, subsidy, or other economic benefit provided in connection with detailing, promotional, or other marketing activities by the company, directly or through its pharmaceutical marketers, to any physician, medical student, hospital, nursing home, pharmacist, health benefit plan administrator, or any other person authorized to prescribe, dispense, or purchase prescription drugs in this state; (b) The amount of money that the pharmaceutical manufacturing company annually spends on direct marketing to consumers; (c) The amount of money that the pharmaceutical manufacturing company annually spends on lobbying, as defined in section 24-6-301 (3.5) (a), C.R.S., a member of a rule-making board or commission, or a rule-making official of a state agency, that has jurisdiction over the subject matter of a rule, standard, or rate; and (d) The value, nature, and purpose of any gift, payment, subsidy, or other economic benefit provided to an issue committee, political committee, or political party, as defined in section 2 of article XXVIII of the state constitution. (2) Disclosure shall be made on a form and in a manner prescribed by the state board. Initial disclosure shall be made on or before January 1, 2008, for the twelve-month period ending June 30, 2007. All disclosures thereafter shall be made on or before January 1 for the period ending the previous June 30. (3) Each company subject to the provisions of this section shall also disclose to the state board, on or before October 1, 2007, and each October 1 thereafter, the name and address of the individual responsible for the company's compliance with the provisions of this section. (4) The state board and the office of the attorney general shall keep confidential all trade secret information. The disclosure form prescribed by the state board shall permit the company to identify any information that is a trade secret. (5) The following shall be exempt from disclosure: (a) Free samples of prescription drugs intended to be distributed to patients; (b) The payment of reasonable compensation and reimbursement of expenses in connection with bona fide clinical trials; (c) Any gift, fee, payment, subsidy, or other economic benefit, the value of which is less than fifty dollars; and (d) Scholarship or other support for medical students, residents, and fellows to attend a significant educational, scientific, or policy-making conference of a national, regional, or specialty medical or other professional association if the recipient of the scholarship or other support is selected by the association. (6) The attorney general may bring an action in the district court for injunctive relief, costs, attorney fees, and a civil penalty, not to exceed ten thousand dollars per violation, against any pharmaceutical manufacturing company that fails to comply with the disclosure requirements of this section. Each unlawful failure to disclose shall constitute a separate violation. (7) The state board shall make available to the public through an internet website the following information: (a) Information or access to information regarding available clinical trials on prescription drugs, including but not limited to research conducted subsequent to the prescription drug's approval by the United States food and drug administration; (b) The information required to be disclosed pursuant to subsection (1) of this section; and (c) Any other information that may be of value to consumers when evaluating which prescription drugs to purchase. 25.5-1-605. Report. On or before July 1, 2007, the state department shall report to the joint budget committee of the general assembly on the implementation of the requirements of the program. SECTION 4. Refer to people under referendum. This act shall be submitted to a vote of the registered electors of the state of Colorado at the next biennial regular general election, for their approval or rejection, under the provisions of the referendum as provided for in section 1 of article V of the state constitution, and in article 40 of title 1, Colorado Revised Statutes. Each elector voting at said election and desirous of voting for or against said act shall cast a vote as provided by law either "Yes" or "No" on the proposition: "Shall the state of Colorado enact measures to reduce the cost of prescription drugs to qualified low-income persons, and, in connection therewith, enact a multi-state purchasing pool for the state's medicaid program and a Colorado cares rx prescription drug program for low-income individuals who do not qualify for medicaid, which includes an consumer education component?" The votes cast for the adoption or rejection of said act shall be canvassed and the result determined in the manner provided by law for the canvassing of votes for representatives in Congress.