BP BHEAD INT H

AN ACT Relating to pharmaceutical price discrimination; adding a new chapter to Title 69 RCW; and prescribing penalties.

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

NEW SECTION. Sec. 1. Unless the context clearly requires otherwise, the definitions in this section apply throughout this chapter.

(1) "Drug" means a prescription drug that is subject to the provisions of section 503(b)(1) of the federal food, drug, and cosmetic act.

(2) "Manufacturer" means a person, other than a wholesaler, who trades in drugs for resale to purchasers or sale to consumers either directly or through a wholesaler.

(3) "Purchaser" means a person that purchases drugs for resale directly to consumers in the state or for dispensing directly to consumers in the state.

(4) "Wholesaler" means a person, other than a manufacturer, that sells drugs to purchasers.

(5) "Price discrimination" means a difference in a contemporaneous price, volume or blended product volume discount, rebate, payment terms, free merchandise, or related trade concessions by a manufacturer as between different wholesalers or purchasers in this state, where the effect of such discrimination may be substantially to lessen competition or tend to create a monopoly in any line of commerce.

The prohibitions on price discrimination under this chapter include a prohibition on price discrimination for any drugs that are sold for delivery to a wholesaler, wholesaler facility, purchaser, purchaser facility, or consumers located in the state.

NEW SECTION. Sec. 2. (1)(a) A manufacturer shall sell drugs to every wholesaler in the state to which it sells or distributes on the same terms and conditions contemporaneously accorded to the manufacturer's most favored wholesaler, purchaser, or consumer in the state, including:

(i) Purchase prices for similar or blended volume purchases; and

(ii) Rebates, free merchandise, payment terms, and related trade concessions.

(b) This subsection does not prohibit a manufacturer from offering a discount to a wholesaler for volume purchases, if:

(i) The discount is justified by the economies or efficiencies resulting from the volume purchases; and

(ii) The discount is made available to all wholesalers on proportionally equal terms; or

(iii) The discount represents reasonable reimbursement for the value to the manufacturer of a wholesaler's actual marketing functions, provided that such discounts are made available to every wholesaler who performs such functions; or

(iv) The discount meets in good faith the equally low prices or terms of a competitor.

(2)(a) A manufacturer shall sell drugs to every purchaser in the state to which it sells or distributes on the same terms and conditions contemporaneously accorded to the manufacturer's most favored purchaser or consumer in the state, including:

(i) Any transaction in which a manufacturer sells to a purchaser through a contractual arrangement implemented by one or more wholesalers;

(ii) Purchase prices for similar or blended volume purchases; and

(iii) Rebates, free merchandise, payment terms, and related trade concessions.

(b) This subsection does not prohibit a manufacturer from offering a discount to a purchaser for volume purchases, if:

(i) The discount is justified by the economies or efficiencies resulting from the volume purchases; and

(ii) The discount is made available to all purchasers on proportionally equal terms; or

(iii) The discount represents reasonable reimbursement for the value to the manufacturer of a purchaser's actual marketing function, provided that such discounts are made available to every purchaser who performs such functions; or

(iv) The discount meets in good faith the equally low prices or terms of a competitor.

NEW SECTION. Sec. 3. (1) Agencies of government and political subdivisions are not wholesalers or purchasers under this chapter, and manufacturers are not prohibited from according to them pricing or related arrangements that are not made available to wholesalers or purchasers in the state.

(2) An agency of the state may not purchase any drugs from a manufacturer that engages in any price discrimination prohibited under this chapter.

(3) A manufacturer that wishes to do business with an agency of the state shall agree in writing not to engage in any price discrimination prohibited under this chapter in any of its business dealings in the state.

(4) No wholesaler or purchaser shall knowingly induce or receive a discrimination in price, rebates, free merchandise, payment terms, or related trade concessions that is prohibited under this chapter.

NEW SECTION. Sec. 4. (1) Any person who violates this chapter or any rule adopted under this chapter or any order or injunction to cease and desist from such violations shall for purposes of the state medicaid program, have all of its drug entities declared ineligible for sale under the state medicaid program.

(2) A person who violates any provision of this chapter is liable for any damage caused by the violation, and for court costs and reasonable attorneys' fees.

(3) In any action under this chapter, the court may award, in addition to any other appropriate legal or equitable relief, an amount equal to three times the damages sustained by any person in interest.

(4) An action under this chapter is barred if it is not commenced within two years after the cause of action accrues.

NEW SECTION. Sec. 5. Sections 1 through 4 of this act shall constitute a new chapter in Title 69 RCW.