45th legislature - STATE OF NEW MEXICO - first session, 2001

RELATING TO PRESCRIPTION DRUGS; REQUIRING PRESCRIPTION DRUG BULK PURCHASING AGREEMENTS; CREATING THE PRESCRIPTION DRUG BULK PURCHASING ADVISORY COMMITTEE; PROVIDING FOR AN ANNUAL EVALUATION; AMENDING AND ENACTING SECTIONS OF THE NMSA 1978; MAKING AN APPROPRIATION.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:

Section 1. [NEW MATERIAL] SHORT TITLE.--Sections 1 through 5 of this act may be cited as the "Prescription Drug Bulk Purchasing Act".

Section 2. [NEW MATERIAL] DEFINITIONS.--As used in the Prescription Drug Bulk Purchasing Act:

A. "average wholesale price" means the average of the prices charged for a specific prescription drug that is assigned by drug manufacturers and is listed in a nationally recognized drug pricing file;

B. "department" means the department of health;

C. "discounted price" means a price that is less than or equal to the average wholesale price minus a percentage negotiated by or through the prescription drug bulk purchasing agreement;

D. "labeler" means a person that receives prescription drugs from a manufacturer or wholesaler and repackages those drugs for later retail sale and that has a labeler code from the federal food and drug administration;

E. "official compendium" means the official United States pharmacopoeia, the official homeopathic pharmacopoeia of the United States, the official national formulary or a respective supplement to those publications;

F. "pharmacy" means a place of business, licensed by the state, where prescription drugs are compounded or dispensed pursuant to the Pharmacy Act;

G. "prescription drug" means a substance that is recognized in an official compendium and is provided for an individual patient by means of an order pursuant to the Pharmacy Act; and

H. "rebate agreement" means an agreement that requires the prescription drug manufacturer or labeler to make payment to the state or other person according to the schedule and provisions established by the prescription drug bulk purchasing agreement.

Section 3. [NEW MATERIAL] PRESCRIPTION DRUG BULK PURCHASING AGREEMENT--DISCOUNTED PRICES--REBATE AGREEMENTS--OUTREACH AND EDUCATION.--The department shall:

A. enter into one or more prescription drug bulk purchasing agreements pursuant to Section 13-1-98.1 NMSA 1978 to obtain prescription drugs at the most favorable and competitive discounted prices available;

B. enter into one or more prescription drug bulk purchasing agreements pursuant to Section 13-1-98.1 NMSA 1978 with municipalities, counties, other states or their agencies, tribal or pueblo governments or organizations, regional prescription drug service networks, private nonprofit or for-profit corporations or other public or private entities to make prescription drugs available to pharmacies and consumers at the most favorable and competitive discounted prices available;

C. enter into one or more prescription drug bulk purchasing agreements pursuant to Section 13-1-98.1 NMSA 1978 to consolidate the state's buying power in the prescription drug market to use economies of scale to obtain the most favorable and competitive discounted prices for prescription drugs bought or paid for by the state;

D. negotiate the most favorable and competitive discounted prices and rebate agreements available for prescription drugs; and

E. provide outreach and education programs to advise pharmacies and consumers of the availability of prescription drugs through the prescription drug bulk purchasing agreement.

Section 4. [NEW MATERIAL] ADVISORY COMMITTEE.--There is established a "prescription drug bulk purchasing advisory committee" to provide oversight, consultation and direction with respect to the prescription drug bulk purchasing agreements. The secretary of health shall appoint thirteen members to the prescription drug bulk purchasing advisory committee. The members of the committee shall be appointed so that the following organizations and interests are represented: the department; the human services department; the children, youth and families department; the state agency on aging; the New Mexico health policy commission; the purchasing division of the general services department; consumers; consumer advocates; hospitals; nursing homes; managed care organizations; and pharmacies and pharmacists. The committee shall elect a chair and vice chair annually. The committee shall meet at least quarterly and may meet more often if a majority of the committee members agree. The members of the committee shall serve without compensation. Section 5. [NEW MATERIAL] EVALUATION.--The department shall prepare an annual evaluation of the prescription drug bulk purchasing agreements to include the prescription drug formulary, the agreements' efficacy, the quantity of prescription drugs provided through the agreements and associated costs, demand for prescription drugs not covered by the agreements, the schedule of discounted prices and rebate agreements, recommendations and conclusion. The annual evaluation shall be presented by written report to the prescription drug bulk purchasing advisory committee and to the legislature on October 1 of each year beginning October 1, 2002.

Section 6. Section 13-1-98.1 NMSA 1978 (being Laws 1998, Chapter 69, Section 1) is amended to read:

"13-1-98.1. HOSPITAL AND HEALTH CARE EXEMPTION.--[The provisions of the Procurement Code shall not apply to procurement of items of tangible personal property or services by a state agency or a local public body through]

A. A state agency or local public body shall have the authority to enter into an agreement with [any other] another state agency, local public body, [or] external procurement unit or [any] other person [corporation, organization or association] that provides that the parties to the agreement shall join together [for the purpose of making] to make some or all purchases necessary for the operation of public hospitals or public and private hospitals, if the state purchasing agent or a central purchasing office makes a determination that the arrangement will or is likely to reduce health care costs [or].

B. A state agency or local public body has the authority to enter into an agreement with [any other] another state agency, local public body, [or] external procurement unit or [any] other person [corporation, organization or association for the purpose of creating] to create a network of health care providers or suppliers or jointly operating a common health care service, if the state purchasing agent or a central purchasing office makes a determination that the arrangement will or is likely to reduce health care costs or improve the quality of [care] or [improve] access to health care services or supplies.

C. The provisions of the Procurement Code shall not apply to procurement of items of tangible personal property or services described in Subsection A or B of this section by or through a state agency or a local public body."

Section 7. APPROPRIATION.--Two hundred thousand dollars ($200,000) is appropriated from the general fund to the department of health for expenditure in fiscal year 2002 to implement the provisions of the Prescription Drug Bulk Purchasing Act. Any unexpended or unencumbered balance remaining at the end of fiscal year 2002 shall revert to the general fund.