45th legislature - STATE OF NEW MEXICO - second session, 2002

RELATING TO HEALTH; ENACTING THE PRESCRIPTION DRUG FAIR PRICING ACT; PROVIDING FOR EQUAL ACCESS TO PRESCRIPTION DRUG PRICES; MAKING AN APPROPRIATION.

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

Section 1. SHORT TITLE.--This act may be cited as the "Prescription Drug Fair Pricing Act".

Section 2. DEFINITIONS.--As used in the Prescription Drug Fair Pricing Act:

A. "charitable health care provider" means a health care provider that is exempt from federal taxation under Section 501(c)(3) of the Internal Revenue Code of 1986;

B. "covered transaction" means any sale of a prescription drug to a purchaser doing business in this state in which a manufacturer, whether by direct sale to a purchaser or through a contractual arrangement implemented by one or more wholesalers, negotiates, establishes, determines or otherwise controls the price, terms or conditions of the sale, including rebates, free merchandise, samples and similar trade concessions;

C. "manufacturer" or "seller" means a person, other than a wholesaler, that trades in prescription drugs for resale, either directly or through a wholesaler, to purchasers in this state;

D. "prescription drug" means a drug or device that may be dispensed only upon a prescription pursuant to provisions of the New Mexico Drug, Device and Cosmetic Act;

E. "purchaser" means a person doing business in this state that engages in selling or dispensing prescription drugs directly to consumers but does not include:

(1) the federal department of veterans affairs, the federal department of defense, entities covered under Section 256b(a)(4) of the federal Public Health Service Act and any other federal, state or local government program that directly purchases or procures prescription drugs;

(2) hospitals that purchase prescription drugs for their inpatients' own use, but not for resale or outpatient use; and

(3) charitable health care providers, except those that offer, issue or administer a health insurance policy or an employee benefit plan; and

F. "wholesaler" means a person other than a manufacturer that sells prescription drugs to purchasers.

Section 3. PRESCRIPTION DRUG PRICE DISCRIMINATION PROHIBITED.--

A. A seller that offers prescription drugs in a covered transaction to a purchaser shall, during the same or substantially the same time period, offer the same or substantially the same terms and conditions for the drugs in a covered transaction to any other purchaser. This provision applies to:

(1) transactions in which a manufacturer sells to a purchaser through a contractual arrangement with one or more wholesalers;

(2) purchase prices for similar volume purchases; and

(3) rebates, free merchandise, samples and similar trade concessions.

B. The provisions in Subsection A of this section do not prohibit a seller from offering or providing a discount, provided the discount is made available to all purchasers on equal terms. This includes allowing discounts for:

(1) economies or efficiencies based on volume purchases;

(2) opportunities available to purchasers on equal terms through market share movement agreements;

(3) prompt payment; and

(4) prompt delivery.

C. No seller shall provide discounts to any purchaser based on the class of trade to which the purchaser belongs.

D. The provisions of this section apply to any covered transaction for the purchase of prescription drugs delivered to a purchaser or a purchaser's facility for sale to consumers in this state.

E. Nothing in this section is intended to require a single price for prescription drugs or to eliminate existing discount programs that conform with the provisions of this section.

Section 4. ENFORCEMENT.--

A. A seller that violates a provision of the Prescription Drug Fair Pricing Act shall pay a civil penalty of not less than one thousand dollars ($1,000) and not more than fifty thousand dollars ($50,000) for each violation. The attorney general shall bring an action in district court to enforce the provisions of the Prescription Drug Fair Pricing Act.

B. Any purchaser may bring a civil action against any seller to recover damages suffered as a result of a violation of a provision of the Prescription Drug Fair Pricing Act. Proof of price discrimination shall constitute prima facie evidence that damages have been sustained. When damages are proved, the court shall award the purchaser three times the actual damages caused by the seller's violation of the Prescription Drug Fair Pricing Act.

Section 5. APPROPRIATION.--Fifty thousand dollars ($50,000) is appropriated from the general fund to the office of the attorney general for expenditure in fiscal year 2003 for the purpose of enforcing the Prescription Drug Fair Pricing Act. Any unexpended or unencumbered balance remaining at the end of fiscal year 2003 shall revert to the general fund.