S 0796 General Bill, By Land

Similar(H 4345)
 A Bill to amend Title 39, Chapter 24, Code of Laws of South Carolina, 1976,
 relating to drug product selection, by adding Article 3 so as to enact the
 Fair Price Act for Prescription Drugs, to define terms, to prescribe pricing
 procedures under certain circumstances, and to provide penalties; and to
 designate Sections 39-24-10 through 39-24-60 as Article 1 of Chapter 24, Title
 39 and entitled "Drug Product Selection" and to rename Title 39, Chapter 24 as
 "Drug Product Selection and Drug Pricing".

   04/27/95  Senate Introduced and read first time SJ-5
   04/27/95  Senate Referred to Committee on Medical Affairs SJ-5

A BILL

TO AMEND TITLE 39, CHAPTER 24, CODE OF LAWS OF SOUTH CAROLINA, 1976, RELATING TO DRUG PRODUCT SELECTION, BY ADDING ARTICLE 3 SO AS TO ENACT THE FAIR PRICE ACT FOR PRESCRIPTION DRUGS, TO DEFINE TERMS, TO PRESCRIBE PRICING PROCEDURES UNDER CERTAIN CIRCUMSTANCES, AND TO PROVIDE PENALTIES; AND TO DESIGNATE SECTIONS 39-24-10 THROUGH 39-24-60 AS ARTICLE 1 OF CHAPTER 24, TITLE 39 AND ENTITLED "DRUG PRODUCT SELECTION" AND TO RENAME TITLE 39, CHAPTER 24 AS "DRUG PRODUCT SELECTION AND DRUG PRICING".

Be it enacted by the General Assembly of the State of South Carolina:

SECTION 1. Title 39, Chapter 24 of the 1976 Code is amended by adding:

"Article 3

Section 39-24-310. This article may be cited as the `Fair Price Act For Prescription Drugs'.

Section 39-24-320. (A) As used in this article:

(1) `Drug' means a substance subject to Section 503(b)(1) of the Federal Food, Drug and Cosmetic Act.

(2) `Purchaser' means a person doing business in this State who engages in selling or dispensing drugs directly to consumers in this State.

(3) `Manufacturer' means a person, other than a wholesaler, that trades in drugs for resale, either directly or through a wholesaler, to purchasers doing business in this State.

(4) `Wholesaler' means a person other than a manufacturer that sells drugs to purchasers.

(5) `Charitable health care provider' means a health care provider exempt from federal taxation as provided by Section 501(c)(3) of the Internal Revenue Code and which provides health care services to the public, a substantial portion of which are provided free or at a reduced fee based on the patient's ability to pay.

(6) `Covered transaction' means a sale of a drug to a purchaser in this State in which a manufacturer negotiates, establishes, determines, or otherwise controls the price, terms, or conditions of sale, whether by direct sale to a purchaser or through a contractual arrangement implemented by one or more wholesalers.

Section 39-24-330. (A) A manufacturer shall sell drugs in a covered transaction, during the same time period, to a purchaser doing business in this State to whom it sells on the same terms and conditions offered or accorded by the manufacturer to the most favored purchaser doing business in this State, including:

(1) purchase prices for similar volume purchases;

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

(B) This article does not prohibit a manufacturer from offering or providing a discount, so long as the discount is made available to all purchasers on equal terms, including:

(1) discounts justified by the economies of or efficiencies resulting from volume purchases;

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

(3) placing drugs on a formulary;

(4) prompt payment;

(5) prompt delivery;

(6) cash payment;

(7) single-site delivery;

(8) other terms effectively reducing the manufacturer's costs;

(9) formulary management;

(10) therapeutic interchange;

(11 generic substitution;

(12) ability to influence physician prescribing behavior;

(13) other practices that affect market share.

(C) No manufacturer may provide discounts to a purchaser based on the class of trade to which the purchaser belongs.

Section 39-24-340. This article applies to a purchase of drugs which must be delivered to a purchaser or purchaser's facility for sale to consumers in this State.

Section 39-24-350. Manufacturers must be encouraged to develop a variety of marketing programs. Nothing in this article is intended to create a single price for prescription drugs or to eliminate existing discount programs, as long as those programs adhere to the conditions provided for in this article.

Section 39-24-360. The State or its political subdivisions may not purchase drugs from a manufacturer that engages in price discrimination prohibited by this article, including a covered transaction in which a manufacturer sells to the State through a contractual arrangement implemented by one or more wholesalers. Beginning January 1, 1996, a manufacturer selling drugs within this State shall submit to the Director of the Department of Health and Human Services before January first of each year an affidavit stating that it will not engage in conduct prohibited by this article.

Section 39-24-370. For the purposes of this section, the following are not purchasers:

(1) the Department of Veterans' Affairs, the Department of Defense, covered entities under Section 256b(a)(4) of the Public Health Service Act, as amended, and any other federal, state, or local government program that directly procures pharmaceuticals.

(2) the sale of drugs by a manufacturer to a federal agency or institution or to a health care facility if those medications are dispensed on any premises of the health care facility for their own in-patients' use as defined by Robinson-Patman including up to a one-time seventy-two hour supply of prescribed medication for out-patients if the medication is essential to the maintenance of life or to the continuation of therapy.

(3) charitable health care providers, except those purchases pertaining to the issue, offer, or administration of a health insurance policy or employees' benefit plan.

Section 39-24-380. (A) A manufacturer who violates this article or a regulation promulgated under this article shall pay a civil penalty of not less than one thousand dollars nor more than fifty thousand dollars for each violation. The Attorney General shall bring an action in South Carolina courts in which a violation occurred to enforce this article.

(B) A purchaser may bring a civil action against a manufacturer to recover damages suffered as the result of a violation of this article or of a regulation promulgated under this article; however, proof of price discrimination constitutes prima facie evidence of damages. Damages awarded to a purchaser must be trebled.

(C) A manufacturer who violates this article or a regulation promulgated under this article or an order issued by the Department of Health and Human Services shall have all of the manufacturer's drug entities declared ineligible for sale under the state's Medicaid program. Exceptions may be permitted in the case of a necessary and unique drug not otherwise available which is provided by a manufacturer who has violated this article."

SECTION 2. (A) Sections 39-24-10 through 39-24-60 are designated as Article 1, Chapter 24, Title 39 of the 1976 Code and entitled "Drug Product Selection".

(B) Title 39, Chapter 24 of the 1976 Code is renamed "Drug Product Selection and Drug Pricing".

SECTION 3. This act takes effect upon approval by the Governor.