Senate Bill No. 258

(By Senator Dittmar)


[Introduced January 30, 1996; referred to the Committee on Health and Human Resources.]

A BILL to amend chapter thirty of the code of West Virginia, one
thousand nine hundred thirty-one, as amended, by adding thereto a new article, designated article five-a, relating to the equalization of pharmaceutical drug prices; prohibition of price discrimination; state acting as purchaser; exceptions; definitions; and penalties.

Be it enacted by the Legislature of West Virginia:
That chapter thirty of the code of West Virginia, one thousand nine hundred thirty-one, as amended, be amended by adding thereto a new article, designated article five-a, to read as follows:
§30-5A-1. Definitions.
(a) "Charitable health care provider" means any 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.
(b) "Drug" means any substance subject to section 503(b)(1) of the Federal Food, Drug and Cosmetic Act.
(c) "Manufacturer" means any person, other than a wholesaler, who trades in drugs for resale, either directly or through a wholesaler, to purchasers doing business in this state.
(d) "Purchaser" means any person doing business in this state who engages in selling or dispensing drugs directly to consumers in this state.
(e) "Secretary" means the secretary of the department of health and human resources.
(f) "Seller" means any person who lawfully sells drugs to purchasers, including, but not limited to, drug manufacturers and wholesalers.
(g) "Wholesaler" means any person other than a manufacturer who sells drugs to purchasers.
§30-5A-2. Price discrimination prohibited.
(a) A seller shall offer drugs to any purchaser doing business in this state to whom the seller sells or distributes on the same terms and conditions which the seller offers to the most favored purchaser doing business in this state during the same time period, including:
(1) Transactions in which a manufacturer sells to a purchaser through a contractual arrangement implemented by one or more wholesalers;
(2) Purchase prices for similar volume purchases; and
(3) Rebates, free merchandise, samples and similar trade concessions.
(b) This section does not prohibit a seller from offering or providing a discount, so long as the discount is made available to all sellers on equal terms, including:
(1) Discounts justified by the economies of or efficiencies resulting from volume purchases;
(2) Opportunities available to all sellers on equal terms through market share movement agreements;
(3) Placing drugs on a formulary;
(4) Prompt payment; and
(5) Prompt delivery.
(c) No seller may provide discounts to any purchaser based on the class of trade to which the purchaser belongs.
(d) This section applies to any purchase of drugs which is delivered to a purchaser or purchaser's facility for sale to consumers in this state.
(e) Nothing in this section is intended to create a single price for prescription drugs or to eliminate existing discount programs, as long as those programs adhere to the above conditions.
§30-5A-3. State as purchaser.
The state or any of its political subdivisions may not purchase any drugs from a seller who engages in price discrimination prohibited by this article, including transactions in which a seller sells to the state through a contractual arrangement implemented by one or more wholesalers. Beginning on the first day of January, one thousand nine hundred ninety-seven, any seller who sells drugs within this state shall submit to the secretary, before the first day of January of each year, an affidavit stating that he or she will not engage in conduct prohibited by this article.
§30-5A-4. Exceptions.
For purposes of this article, the following are not purchasers:
(a) The department of veterans' affairs, the department of defense, entities defined 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;
(b) Hospitals which purchase drugs dispensed on the premises solely for in-patient use. This subsection does not include pharmaceuticals for resale or outpatient use; and
(c) Charitable health care providers, except those which issue, offer, or administer a health insurance policy or an employee benefit plan.
§30-5A-5. Penalties.
(a) Any seller who violates this article shall be fined not less than one thousand dollars nor more than fifty thousand dollars for each violation. When any person violates a provision of this article, the attorney general shall bring an action in the circuit court of Kanawha County to enforce the provisions of this article.
(b) Any purchaser may bring a civil action against any seller to recover damages suffered as the result of a violation of this article: Provided, That proof of price discrimination constitutes prima facie evidence of damages. Damages awarded to any such purchaser shall be trebled.
(c) The secretary shall declare ineligible for sale under this state's medicaid program drug entities of any seller who violates this article or any order issued by a circuit court. The secretary may grant an exception in the case of a necessary and unique drug not otherwise available which is provided by a seller who has violated this article.

NOTE: The purpose of this bill is to equalize pharmaceutical drug prices and provide penalties for violation of this article.

This article is new; therefore, strike-throughs and underscoring have been omitted.