BillCam

HOUSE BILL No. 5223

November 7, 2017, Introduced by Rep. Vaupel and referred to the Committee on Health Policy.

A bill to amend 1978 PA 368, entitled

"Public health code,"

(MCL 333.1101 to 333.25211) by adding sections 17748e and 17748f.

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

Sec. 17748e. (1) Beginning January 1, 2019, if a prescription

drug has an annual wholesale acquisition cost of $10,000.00 or more

or a wholesale acquisition cost of $10,000.00 or more per course of

treatment, and the manufacturer of the prescription drug

distributes the prescription drug for sale in this state, the

manufacturer shall file an annual report with the department of

health and human services on costs associated with the prescription

drug for the preceding calendar year. A report filed under this

subsection must be filed on or before May 1 of each year, beginning

May 1, 2019, in a form and manner prescribed by the department of

health and human services.

(2) A report filed under subsection (1) must contain an

itemized account of all of the following information for the

calendar year covered by the report:

(a) Total costs paid by the manufacturer and any predecessor

manufacturer for manufacturing and distributing the prescription

drug.

(b) Costs paid by the manufacturer or any predecessor

manufacturer for researching and developing the prescription drug,

including, but not limited to, all of the following:

(i) Costs for researching and developing the prescription drug

with money made available to the manufacturer or predecessor

manufacturer through a federal, state, or other governmental

program or through a subsidy, grant, or other form of monetary

support.

(ii) After-tax research and development costs for the

prescription drug.

(iii) Costs of clinical trials for the prescription drug.

the prescription drug.

(d) Costs paid by the manufacturer or any predecessor

manufacturer for acquiring the prescription drug, including, but

not limited to, costs paid for purchasing a patent or licensing the

prescription drug or costs paid to acquire a property right to the

prescription drug.

(e) The costs paid by the manufacturer for marketing and

advertising the prescription drug to consumers of the prescription

drug, including any costs associated with offering and redeeming

coupons or other discounts.

(3) In addition to the itemized accounting of the costs

described in subsection (2), a report filed under subsection (1)

must contain all of the following information for the calendar year

covered by the report:

(a) Each increase in the average wholesale price of the

prescription drug for that year, expressed as a percentage of the

average wholesale price, and the date on which each increase

occurred.

(b) Each increase in the wholesale acquisition cost for the

prescription drug for that year, expressed as a percentage of the

wholesale acquisition cost, and the date on which each increase

occurred.

prescription drug.

(d) The total profit derived from sales of the prescription

drug, expressed in total dollars and as a percentage of the

manufacturer's total profit for that year.

(e) The price for the prescription drug that is charged to

consumers of the prescription drug who are located in a country

other than the United States, as required by the department of

health and human services.

(4) A manufacturer must obtain an audit by an independent

third party of a report prepared under this section before the

report is filed under subsection (1). The manufacturer shall select

the third party from among a list of potential auditors made

available by the department of health and human services.

(5) After completing an audit under subsection (4), the third

party that conducted the audit shall file a summary of the audit

with the department of health and human services on or before May 1

of the following year, in a form and manner prescribed by the

department of health and human services. The manufacturer shall pay

all costs associated with auditing and filing a summary under this

subsection.

(6) Subject to section 17748f(14), the department of health

and human services shall post on its internet website a searchable

database with data from the reports filed under subsection (1) and

any information that the department of health and human services

determines is necessary to assist the general public in

understanding the data.

(7) A manufacturer who fails to file the report required under

subsection (1) is subject to an administrative fine of $100,000.00.

(8) The department of health and human services, in

consultation with the department and the board, may promulgate

rules to implement this section.

Sec. 17748f. (1) The prescription drug cost advisory

commission is created within the department of health and human

services.

(2) The commission consists of the following members appointed

by the director of the department of health and human services:

(a) An individual who represents the pharmaceutical industry.

(b) An individual who represents the largest insurer in this

state. As used in this subdivision, "insurer" means that term as

defined in section 106 of the insurance code of 1956, 1956 PA 218,

MCL 500.106.

organization as that term is defined in section 3501 of the

insurance code of 1956, 1956 PA 218, MCL 500.3501.

(d) An individual who represents pharmacy benefit managers.

(e) One or more individuals who represent consumers of

prescription drugs.

(f) One or more individuals who represent prescribers.

(3) The members first appointed to the commission must be

appointed within 15 days after the effective date of this section.

(4) Members of the commission shall serve for terms of 4 years

or until a successor is appointed, whichever is later, except that

of the members first appointed 1 shall serve for 1 year, 3 shall

serve for 2 years, and 3 shall serve for 3 years.

(5) If a vacancy occurs on the commission, the director of the

department of health and human services shall make an appointment

for the unexpired term in the same manner as the original

appointment.

(6) The director of the department of health and human

services may remove a member of the commission for incompetence,

dereliction of duty, malfeasance, misfeasance, or nonfeasance in

office, or any other good cause.

(7) The director of the department of health and human

services shall call the first meeting of the commission. At the

first meeting, the commission shall elect from among its members a

chairperson and other officers as it considers necessary or

appropriate. After the first meeting, the commission shall meet at

least quarterly, or more frequently at the call of the chairperson

or if requested by 4 or more members.

(8) A majority of the members of the commission constitute a

quorum for the transaction of business at the meeting of the

commission. A majority of the members present and serving are

required for official action of the commission.

(9) The business that the commission may perform must be

conducted at a public meeting of the commission held in compliance

with the open meetings act, 1976 PA 267, MCL 15.261 to 15.275.

(10) Subject to subsection (14), a writing prepared, owned,

used, in the possession of, or retained by the commission is

subject to the freedom of information act, 1976 PA 442, MCL 15.231

to 15.246.

(11) Members of the commission shall serve without

compensation. However, members of the commission may be reimbursed

for their actual and necessary expenses incurred in the performance

of their official duties as members of the commission.

(12) The commission shall do all of the following:

(a) Subject to subsection (14), assist the department of

health and human services in creating a report that includes all of

the following based on data obtained from the reports filed under

section 17748e:

(i) Details on prescription drug prices, costs, and cost

trends.

(ii) Policy recommendations on ways to mitigate increases in

the prices of prescription drugs as a means to reduce the costs of

health care in this state while maintaining access to quality

health care.

(iii) Any additional information considered necessary by the

department of health and human services.

(b) Make recommendations to the department of health and human

services regarding the countries to be included in the report for

purposes of section 17748e(3)(e).

services regarding information to post on the internet website of

the department of health and human services to assist the general

public in understanding the data obtained under section 17748e.

(13) The department of health and human services shall post

the report created in subsection (12) on the website of the

department of health and human services and submit a copy of the

report to the house of representatives and senate standing

committees on health policy, insurance, and appropriations.

(14) If the department of health and human services or the

commission determines from the data obtained from a report filed

under section 17748e or any other information that a manufacturer

has potentially violated the Michigan antitrust reform act, 1984 PA

274, MCL 445.771 to 445.788, the Michigan consumer protection act,

1976 PA 331, MCL 445.901 to 445.922, or any other law of this

state, the department of health and human services or the

commission shall notify the office of the attorney general.

Information obtained by the department of health and human services

or the commission under section 17745e is exempt from disclosure

under the freedom of information act, 1976 PA 442, MCL 15.231 to

15.246, or from publication under this section and section 17745e,

if the attorney general determines that publication of the

information would be inappropriate or would undermine an

investigation or litigation.

(15) As used in this section, "commission" means the

prescription drug advisory commission created in subsection (1).

Enacting section 1. This amendatory act takes effect 90 days

after the date it is enacted into law.