HB1780 (2018) Detail

Prohibiting price gouging by certain prescription drug companies.


HB 1780-FN - AS INTRODUCED

 

 

2018 SESSION

18-2607

01/10

 

HOUSE BILL 1780-FN

 

AN ACT prohibiting price gouging by certain prescription drug companies.

 

SPONSORS: Rep. McBeath, Rock. 26; Rep. Campion, Graf. 12

 

COMMITTEE: Commerce and Consumer Affairs

 

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ANALYSIS

 

This bill prohibits price gouging of essential off-patent or generic drugs.

 

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Explanation: Matter added to current law appears in bold italics.

Matter removed from current law appears [in brackets and struckthrough.]

Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.

18-2607

01/10

 

STATE OF NEW HAMPSHIRE

 

In the Year of Our Lord Two Thousand Eighteen

 

AN ACT prohibiting price gouging by certain prescription drug companies.

 

Be it Enacted by the Senate and House of Representatives in General Court convened:

 

1  New Chapter; Prohibition Against Price Gouging for Essential Off-Patent or Generic Drugs.  Amend RSA by inserting after chapter 318-E the following new chapter:

CHAPTER 318-F

PROHIBITION AGAINST PRICE GOUGING FOR ESSENTIAL OFF-PATENT OR GENERIC DRUGS

318-F:1  Definitions:  In this chapter:

I.  "Commissioner" means the commissioner of the department of health and human services.

II.(a)  "Essential off-patent or generic drug" means any prescription drug:

(1)  For which all exclusive marketing rights, if any, granted under the Federal Food, Drug, and Cosmetic Act, section 351 of the federal Public Health Service Act, and federal patent law have expired;

(2)  That appears on the model list of essential medicines most recently adopted by the World Health Organization; or

(3)  That has been designated by the secretary of the United States Department of Health and Human Services as an essential medicine due to its efficacy in treating a life-threatening health condition or a chronic health condition that substantially impairs an individual's ability to engage in activities of daily living;

(4)  That is actively manufactured and marketed for sale in the United States by 3 or fewer manufacturers; and

(5)  That is made available for sale in New Hampshire.

(b)  "Essential off-patent or generic drug" includes any drug-device combination product used for the delivery of a drug for which all exclusive marketing rights, if any, granted under the Federal Food, Drug, And Cosmetic Act, of the federal Public Health Service Act, and federal patent law have expired.

III.  "Price gouging" means an unconscionable increase in the price of a prescription drug.

IV.  "State health plan" means the state employees group health insurance plan under RSA 21-I.

V.  "Unconscionable increase" means an increase in the price of a prescription drug that:

(a)  Is excessive and not justified by the cost of producing the drug or the cost of appropriate expansion of access to the drug to promote public health; and

(b)  Results in consumers for whom the drug has been prescribed having no meaningful choice about whether to purchase the drug at an excessive price because of:

(1)  The importance of the drug to their health; and

(2)  Insufficient competition in the market for the drug.

VI.  "Wholesale acquisition cost" has the meaning stated in 42 U.S.C. section 1395W-3a.

318-F:2  Price Gouging Prohibited.

I.  A manufacturer or wholesale distributor shall not engage in price gouging in the sale of an essential off-patent or generic drug.

II.  It shall not be a violation of paragraph I for a wholesale distributor to increase the price of an essential off-patent or generic drug if the price increase is directly attributable to additional costs for the drug imposed on the wholesale distributor by the manufacturer of the drug.

318-F:3  Medicaid Managed Care Program.  The commissioner shall notify the attorney general of any increase in the price of any essential off-patent or generic drug under the Medicaid managed care program when the price increase, by itself or in combination with other price increases:

I.  Would result in an increase of 50 percent or more in the wholesale acquisition cost of the drug within the preceding one-year period; or

II.  Would result in an increase of 50 percent or more in the price paid by the Medicaid managed care program for the drug within the preceding a one-year period; and

(a)  A 30-day supply of the maximum recommended dosage of the drug for any indication, according to the label for the drug approved under the Federal Food, Drug, and Cosmetic Act, would cost more than $80 at the drug's wholesale acquisition cost;

(b)  A full course of treatment with the drug, according to the label for the drug approved under the Federal Food, Drug, and Cosmetic Act, would cost more than $80 at the drug's wholesale acquisition cost; or

(c)  If the drug is made available to consumers only in quantities that do not correspond to a 30-day supply, a full course of treatment, or a single dose, it would cost more than $80 at the drug's wholesale acquisition cost to obtain a 30-day supply or a full course of treatment.

318-F:4  Statement Required; Order.

I.  Upon request of the attorney general, the manufacturer of an essential off-patent or generic drug identified in a notice under RSA 318-F:2, within 45 days after the request, shall submit a statement to the attorney general:

(a)(1)  Itemizing the components of the cost of producing the drug; and

(2)  Identifying the circumstances and timing of any increase in materials or manufacturing costs that caused any increase in the price of the drug within the one-year period preceding the date of the price increase;

(b)(1)  Identifying the circumstances and timing of any expenditures made by the manufacturer to expand access to the drug; and

(2)  Explaining any improvement in public health associated with those expenditures; and

(c)  Providing any other information that the manufacturer believes to be relevant to a determination of whether a violation of this chapter has occurred.

II.  The attorney general may require a manufacturer or a wholesale distributor to produce any records or other documents that may be relevant to a determination of whether a violation of this chapter has occurred.

III.  Upon petition of the attorney general and subject to paragraph IV, a circuit court may issue an order:

(a)  Compelling a manufacturer or a wholesale distributor;

(1)  To provide the statement required under paragraph I of this section; and

(2)  To produce specific records or other documents requested by the attorney general under paragraph II that may be relevant to a determination of whether a violation of this chapter has occurred;

(b)  Restraining or enjoining a violation of this chapter;

(c)  Restoring to any consumer, including a third party payor, any money acquired as a result of a price increase that violates this chapter;

(d)  Requiring a manufacturer that has engaged in price gouging in the sale of an essential off-patent or generic drug to make the drug available to participants in the state health plan or Medicaid managed care program for a period of up to one year at the price at which the drug was made available to participants in New Hampshire; and

(e)  Imposing a civil penalty of up to $10,000 for each violation of this chapter.

IV.  The attorney general shall not bring an action for a remedy under subparagraph III(b)-(e) unless the attorney general has provided the manufacturer or wholesale distributor an opportunity to meet with the attorney general to offer a justification for the increase in the price of the essential off-patent or generic drug.

318-F:5  Confidentiality.  Any information provided by a manufacturer or a wholesale distributor to the attorney general under RSA 318-F:4 shall be considered confidential commercial information and shall not be subject to RSA 91-A unless the confidentiality of the information is waived by the manufacturer or wholesale distributor.  In any action brought by the attorney general under 318-F:4 of this section, a person who is alleged to have violated this chapter shall not assert as a defense that the person did not deal directly with a consumer residing in New Hampshire.

2  Effective Date.  This act shall take effect January 1, 2019.

 

LBAO

18-2607

11/30/17

 

HB 1780-FN- FISCAL NOTE

AS INTRODUCED

 

AN ACT prohibiting price gouging by certain prescription drug companies.

 

FISCAL IMPACT:      [ X ] State              [    ] County               [    ] Local              [    ] None

 

 

 

Estimated Increase / (Decrease)

STATE:

FY 2019

FY 2020

FY 2021

FY 2022

   Appropriation

$0

$0

$0

$0

   Revenue

Indeterminable Increase

Indeterminable Increase

Indeterminable Increase

Indeterminable Increase

   Expenditures

Indeterminable Increase

Indeterminable Increase

Indeterminable Increase

Indeterminable Increase

Funding Source:

  [ X ] General            [    ] Education            [    ] Highway           [ X ] Other - Funds restored due to violations

 

 

 

 

 

METHODOLOGY:

This bill would prohibit price gouging of essential off-patent or generic drugs.  The Judicial Branch indicates the potential impact to the Branch would be from proposed RSA 318-F:4, III concerning equitable actions in the superior court and the imposition of a civil penalty of up to $10,000.  The equitable actions would be classified as complex equity actions and the type of proceeding most like the civil action (penalty) would be a complex civil case.  The Branch does not have information how many additional actions would be filed in the superior court, but it does have information on the average cost of processing such cases.  The cost to the Judicial Branch of an average complex equity case in the superior court will be $740 in FY 2019 and $746 in FY 2020.  The estimated average cost of a complex civil case is estimated to be $737 in FY 2019 and $745 in FY 2020.  These amounts do not consider the cost of appeals that may be taken following trial.  It should be noted that average case cost estimates for FY 2019 and FY 2020 are based on data that is more than ten years old and does not reflect changes to the courts over that same period of time or the impact these changes may have on processing the various case types.  

 

The Department of Justice would be charged with enforcing the statute.  To determine whether a manufacturer or wholesaler engaged in illegal conduct, the Department would need to hire experts with knowledge of the pharmaceutical industry and the pricing of drugs.  The experts would assist the Department in analysis of a specific drug’s pricing to determine if the price increase was “excessive and not justified by the cost of producing the drug or the cost of appropriate expansion of access to the drug to promote public health”.  Any enforcement actions taken against the company would result in litigation requiring the continued assistance of experts.  The Department indicates the cost of such experts is likely to be substantial as would the cost of investigation and enforcement which would require additional attorney and investigator hours.  The Department has no basis upon which to estimate these costs.

 

The Department of Administrative Services indicates the bill does not require the State Health Plan to notify the Attorney of prescription drugs costs that could constitute price gouging.  The Risk Management Unit within the Department would be permitted to work with the Attorney General and the State Health Plan’s Pharmacy Benefits Manager (PBM) to determine whether price gouging has occurred.  The effort to determine if price gouging has occurred may impact expenditures for PBM administrative charges, refunds to the plan in cases of price gouging and additional costs associated with monitoring reports and calculating payments due from manufacturers.  These costs cannot be determined. Lastly, the Department suggests, in the short term, the legislation may make drug manufacturers and/or PBMs reluctant to do business in the state.

 

The Department of Health and Human Services states it would not be able to fulfill its mandatory, ongoing responsibilities in this bill with existing staff or existing contract resources and additional resources would be needed to meet the new responsibilities.  The Department assumes it would need to develop a comprehensive data collection and analytic process to identify and continuously monitor all essential off patent or generic drugs available through the Medicaid Managed Care Program.  With an effective date of January 1, 2019 costs associated with developing a process and system would begin in FY 2019 and be ongoing.  Revenue received from manufacturers or distributors resulting from action by the Attorney General for violations are speculative and indeterminable.

 

AGENCIES CONTACTED:

Departments of Justice, Administrative Services and Health and Human Services, and the Judicial Branch

 

Links

HB1780 at GenCourtMobile

Action Dates

Date Body Type
Jan. 17, 2018 House Hearing
Jan. 31, 2018 House Exec Session
House Floor Vote
Feb. 22, 2018 House Floor Vote

Bill Text Revisions

HB1780 Revision: 2370 Date: Dec. 1, 2017, 12:41 p.m.

Docket

Date Status
Jan. 3, 2018 Introduced 01/03/2018 and referred to Commerce and Consumer Affairs HJ 1 P. 23
Jan. 17, 2018 Public Hearing: 01/17/2018 02:10 PM LOB 302
Jan. 30, 2018 Subcommittee Work Session: 01/30/2018 11:15 AM LOB 302
Jan. 30, 2018 Subcommittee Work Session: 01/30/2018 01:15 PM LOB 302
Jan. 31, 2018 Executive Session: 01/31/2018 LOB 302
Committee Report: Inexpedient to Legislate (Vote 20-0; CC)
Feb. 22, 2018 Committee Report: Inexpedient to Legislate for 02/22/2018 (Vote 20-0; CC) HC 7 P. 5
Feb. 22, 2018 Inexpedient to Legislate: MA VV 02/22/2018 HJ 5 P. 4