[atlas:bill]

AN ACT Relating to prescription drug price reduction; amending RCW 74.09.010; adding new sections to chapter 74.09 RCW; and creating new sections.

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

NEW SECTION. Sec. 1. The legislature finds that affordability is critical in providing access to prescription drugs for Washington residents. The legislature intends to make prescription drugs more affordable for qualified Washington residents, thereby increasing the overall health of Washington residents, promoting healthy communities, and protecting the public health and welfare of Washington residents.

Sec. 2. RCW 74.09.010 and 1990 c 296 s 6 are each amended to read as follows:

As used in this chapter:

(1) "Children's health program" means the health care services program provided to children under eighteen years of age and in households with incomes at or below the federal poverty level as annually defined by the federal department of health and human services as adjusted for family size, and who are not otherwise eligible for medical assistance or the limited casualty program for the medically needy.

(2) ((~~"Committee" means the children's health services committee created in section 3 of this act.~~)) "Commission" means the prescription drug advisory commission.

(3) "County" means the board of county commissioners, county council, county executive, or tribal jurisdiction, or its designee. A combination of two or more county authorities or tribal jurisdictions may enter into joint agreements to fulfill the requirements of RCW 74.09.415 through 74.09.435.

(4) "Department" means the department of social and health services.

(5) "Department of health" means the Washington state department of health created pursuant to RCW 43.70.020.

(6) "Internal management" means the administration of medical assistance, medical care services, the children's health program, and the limited casualty program.

(7) "Limited casualty program" means the medical care program provided to medically needy persons as defined under Title XIX of the federal social security act, and to medically indigent persons who are without income or resources sufficient to secure necessary medical services.

(8) "Medical assistance" means the federal aid medical care program provided to categorically needy persons as defined under Title XIX of the federal social security act.

(9) "Medical care services" means the limited scope of care financed by state funds and provided to general assistance recipients, and recipients of alcohol and drug addiction services provided under chapter 74.50 RCW.

(10) "Nursing home" means nursing home as defined in RCW 18.51.010.

(11) "Poverty" means the federal poverty level determined annually by the United States department of health and human services, or successor agency.

(12) "Secretary" means the secretary of social and health services.

NEW SECTION. Sec. 3. A new section is added to chapter 74.09 RCW to read as follows:

(1) The prescription drug advisory commission is established to review access to and the pricing of prescription drugs for state residents, to advise the secretary on prescription drug pricing and to provide periodic reports to the secretary, the governor, and the legislature.

(2) The commission consists of the following twelve members:

(a) Three members of the public, appointed by the president of the senate, one of whom must represent the interests of senior citizens. Of the initial appointees, one must be appointed for a two-year term and two for three-year terms;

(b) Three members of the public, appointed by the speaker of the house of representatives, one of whom must represent the interests of senior citizens. Of the initial appointees, one must be appointed for a two-year term and two for three-year terms;

(c) Two members who are authorized by the laws of this state to prescribe drugs, appointed by the governor. Of the initial appointees, one must be appointed for a two-year term and one for a three-year term;

(d) Two pharmacists, appointed by the governor. Of the initial appointees, one must be appointed for a two-year term and one for a three-year term. To be appointed to and remain on the commission, each pharmacist must: (i) Be licensed to practice pharmacy and be engaged in the practice of retail pharmacy in this state; (ii) have at least five years of experience in this state as a licensed pharmacist; and (iii) be a resident of this state; and

(e) The insurance commissioner and the executive director of the state board of pharmacy, or their designees, who shall serve as ex officio, nonvoting members.

(3) With the exception of the initial appointees, all members of the commission serve for terms of three years and may be reappointed. With the exception of the pharmacist members, if the profession or qualifications of a commission member change during the term of commission membership, the member may continue to complete the term for which the appointment was made.

(4) The commission shall meet at least four times per year. The members shall select a chair from among the members. Additional meetings may be called by the chair.

(5) The duties of the commission include the following:

(a) To review access to prescription drugs for residents of the state, including, but not limited to, pricing and affordability information;

(b) To advise the secretary on access to prescription drugs and prescription drug prices, including, but not limited to, insurance and third-party payments for prescription drugs, the need for maximum retail prices, and, if maximum retail prices are established, the procedures for adoption and periodic review of maximum retail prices, the procedures for establishing maximum retail prices for new prescription drugs and for reviewing maximum retail prices of selected drugs and the procedures for phasing out or terminating maximum retail prices;

(d) To report to the secretary, the legislature, and the governor by April 1, 2002, and annually thereafter by the second week in January, including in the report any recommendations for action regarding access to and the pricing of prescription drugs.

(6) The department shall provide staffing for the commission.

(7) Members of the commission may receive compensation for their services in accordance with RCW 43.03.220.

(8) In performing its duties, the commission shall work with the department, the state board of pharmacy, and the insurance commissioner.

NEW SECTION. Sec. 4. A new section is added to chapter 74.09 RCW to read as follows:

(1) The following provisions apply to determinations regarding maximum retail prices for prescription drugs and to the procedures for establishing those prices:

(a) By July 1, 2003, the department must adopt rules establishing the procedures for adoption and periodic review of maximum retail prices, the procedures for establishing maximum retail prices for new prescription drugs and for reviewing maximum retail prices of selected drugs, and the procedures for phasing out or terminating maximum retail prices. Before adopting rules under this subsection, the secretary must consult with and consider the recommendations of the commission regarding the rules.

(b) By January 5, 2004, the secretary must determine whether the cost of prescription drugs provided to qualified residents under the prescription drug price program is reasonably comparable to the lowest cost paid for the same drugs delivered or dispensed in the state. In making this determination the following provisions apply:

(i) The secretary must review prescription drug use in the medicaid program using data from the most recent six-month period for which data is available.

(ii) Using the data reviewed in (b)(i) of this subsection, the secretary must determine the one hundred drugs for which the most units were provided and the one hundred drugs for which the total cost was the highest.

(iii) For each prescription drug listed in (b)(ii) of this subsection, the secretary must determine the cost for each drug for qualified residents provided those drugs under the prescription drug price program on a certain date. The average cost for each such drug must be calculated.

(iv) For each prescription drug listed in (b)(ii) of this subsection, the secretary must determine the lowest cost for each drug paid by any purchaser on the date that is used for (b)(iii) of this subsection delivered or dispensed in the state, taking into consideration the federal supply schedule and prices paid by pharmaceutical benefits managers and by large purchasers and excluding drugs purchased through the prescription drug price program. The average cost for each such drug must be calculated.

(v) If the average cost for one or more prescription drugs under the prescription drug price program as determined in (b)(iii) of this subsection is not reasonably comparable to the average lowest cost for the same drug or drugs as determined in (b)(iv) of this subsection, the secretary must establish maximum retail prices for any or all prescription drugs sold in the state. Maximum prescription drug prices established under this subsection must take effect July 1, 2004.

(c) In establishing maximum retail prices under this subsection, the secretary must consider the advice of the commission and follow procedures set forth by rules adopted by the department.

(2) In making a determination under this section the secretary may rely on pricing information on a selected number of prescription drugs if that list is representative of the prescription drug needs of the residents of the state and is made public as part of the process of establishing maximum retail prices.

(3) The secretary may take actions that the secretary determines necessary if there is a severe limitation or shortage of or lack of access to prescription drugs in the state that could threaten or endanger the public health or welfare.

(4) A retailer of prescription drugs may appeal the maximum retail price of a prescription drug established under this section in accordance with the administrative procedure act, chapter 34.05 RCW.

(5) The legislature finds that the practices covered by this section are matters vitally affecting the public interest for the purpose of applying the consumer protection act, chapter 19.86 RCW. A violation of the maximum retail prices established by this section is not reasonable in relation to the development and preservation of business and is an unfair or deceptive act in trade or commerce and an unfair method of competition for the purpose of applying the consumer protection act, chapter 19.86 RCW.

NEW SECTION. Sec. 5. Sections 3 and 4 of this act may be known and cited as the prescription drugs price reduction act.