SENATE BILL 471

53rd legislature - STATE OF NEW MEXICO - first session, 2017

INTRODUCED BY

Elizabeth "Liz" Stefanics

AN ACT

RELATING TO STATE PURCHASING; PROVIDING FOR PRICE TRANSPARENCY AND ACCOUNTABILITY IN CERTAIN STATE AGENCIES' DIRECT PROCUREMENT OF ESSENTIAL GENERIC MEDICATIONS.

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

     SECTION 1. A new section of the Public Assistance Act is enacted to read:

     "[NEW MATERIAL] DIRECT PURCHASING ENTITIES--ESSENTIAL GENERIC MEDICATIONS PRICE INCREASES--DEMAND FOR ACCOUNTING-- ATTORNEY GENERAL.--

          A. A direct purchasing entity shall issue a demand for accounting to the manufacturer of an essential generic medication and notify the attorney general when there is an increase in the price of an essential generic medication when:

                (1) three or fewer manufacturers are actively manufacturing and marketing the medication for sale in the United States; and

                (2) the price increase, by itself or in combination with other price increases:

                     (a) would result in a suspect price increase or an unjust price increase in the wholesale acquisition cost of the medication; or

                     (b) would result in a suspect price increase or an unjust price increase relating to the price paid by the direct purchasing entity for the medication.

          B. Within twenty days of receipt of notice pursuant to Subsection A of this section, the manufacturer of an essential generic medication shall submit a statement to the attorney general:

                (1) itemizing the components of the cost of producing the medication and identifying the circumstances and timing of any increase in materials or manufacturing costs that caused any increase in the price of the medication within the preceding two-year period;

                (2) identifying the circumstances and timing of any expenditures to expand access to the medication, along with an explanation of any improvement in public health associated with those expenditures; and

                (3) providing any other information that the manufacturer believes to be pertinent to a determination of whether the manufacturer has complied with the provisions of this section.

          C. The attorney general may require a manufacturer to produce any records or documents that may be relevant to a determination of whether the manufacturer has complied with the provisions of this section.

          D. On petition of the attorney general, a district court may issue an order:

                (1) compelling the manufacturer of an essential generic medication:

                     (a) to provide a statement required pursuant to Subsection B of this section; or

                     (b) to produce specific records or documents requested by the attorney general pursuant to Subsection C of this section that may be relevant to a determination of whether a violation of this section has occurred;

                (2) restraining or enjoining a violation of a provision of this section;

                (3) restoring to any consumer, including any third-party payer, any money acquired as a result of a price increase that violates a provision of this section;

                (4) requiring a manufacturer that has engaged in unjustified price increases in the sale of an essential generic medication to make the medication available to participants in any state health plan or state health program for a period of up to one year at the price at which the medication was made available to participants in the state health plan or state health program immediately prior to the manufacturer's violation of a provision of this section; and

                (5) imposing a civil penalty of up to ten thousand dollars ($10,000) for each violation of this section.

          E. A direct purchasing entity shall post in a conspicuous manner on the state's sunshine portal the list price, any price increase and any rebates available for a generic medication that the direct purchasing entity purchases.

          F. As used in this section:

                (1) "direct purchasing entity" means a state agency that purchases pharmaceuticals directly from a pharmaceuticals manufacturer, including the children, youth and families department, the corrections department, the department of health and the university of New Mexico hospitals;

                (2) "essential generic medication" means any prescription medication:

                     (a) for which any exclusive marketing rights granted under federal law have expired;

                     (b) that appears on the model list of essential medicines most recently adopted by the world health organization; or

                     (c) that has been designated by the secretary as an essential medicine due to its efficacy in treating a life-threatening health condition or a chronic health condition that substantially impairs a person's ability to engage in activities of daily living; and

                     (d) that is made available for sale in the state;

                (3) "suspect price increase" means price increase that does not accurately reflect the input costs of an essential generic medication. An increase in the price of a prescription medication is suspect when the rate of the price increase exceeds the rate of national economic inflation plus ten percent over a two-year period beginning in calendar year 2018;

                (4) "unjustified price increase" means a price increase for which the rate of increase bears little relationship to the cost of producing the medication or the cost of appropriate expansion of access to the medication to promote public health; and

                (5) "wholesale acquisition cost" means the cost to purchase, produce or acquire a drug at wholesale."

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