Report Title:

Prescription Drugs

Description:

Establishes a prescription drug cost control education program to provide physicians with unbiased information on cost-effective use of prescription drugs; requires prescription drug manufacturers to disclose certain expenditures.

HOUSE OF REPRESENTATIVES

H.B. NO.

13

TWENTY-SECOND LEGISLATURE, 2003

 

STATE OF HAWAII

 


 

A BILL FOR AN ACT

 

relating to prescription drug cost control.

 

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

SECTION 1. The legislature finds that the cost of prescription drugs has risen steadily in recent years, affecting consumers, businesses or employers, and public programs. These rising prescription drug costs threaten the health of Hawaii residents. A recent report by the National Institute for Health Care Management Research and Educational Foundation reports that, in 2000, the pharmaceutical industry spent $2,500,000,000 on direct to consumer advertising expenditures, a thirty-five per cent increase from the previous year's $1,800,000,000 spending.

Significantly, increases in the sales of the fifty drugs most heavily advertised to consumers accounted for nearly half of the $20,800,000,000 increase in retail spending on prescription drugs from 1999 to 2000; retail sales of the fifty most advertised drugs rose thirty-two per cent from 1999 to 2000, in contrast with a thirteen per cent increase for all other drugs combined. Although it is uncertain how much direct to consumer advertising contributes to the rising cost of prescription drugs, it is clear that direct to consumer advertising has made certain prescription drugs household names and has significantly increased the sales of certain advertised drugs.

The legislature further finds that direct to consumer advertising is only part of the promotional spending by pharmaceutical manufacturers. In 2000, pharmaceutical drug manufacturers spent $15,700,000,000 promoting their products, with most of the money spent on "detailing" and providing free drug samples to physicians--these biased sales pitches in doctor's offices are often a physician's primary source of prescription drug information.

In an effort to provide Hawaii residents with access to prescription drugs at reasonable prices, the legislature finds that a prescription drug cost control educational program would provide physicians with unbiased information not currently provided by pharmaceutical manufacturers on the therapeutic and cost-effective use of prescription drugs without compromising quality of care.

The purposes of this Act are to: establish a prescription drug cost control educational program, or "counter-detailing" program, aimed at educating physicians and other health care providers authorized to prescribe or dispense prescription drugs about the costs and benefits of various prescription drugs; and require pharmaceutical manufacturers doing business in this State to submit annual reports that disclose certain advertising, marketing, and promotion expenditures in Hawaii.

SECTION 2. The Hawaii Revised Statutes is amended by adding a new chapter to be appropriately designated and to read as follows:

"CHAPTER

PHARMACEUTICAL MANUFACTURERS

§ -1 Pharmaceutical manufacturers; annual report; disclosure. (a) Each pharmaceutical manufacturing company doing business in this State shall submit an annual report to the board of pharmacy and to the department of health that discloses the value, nature and purpose of any gift, fee, payment, subsidy or other economic benefit provided in connection with detailing, promotional, or other marketing activities by the company, directly or through its representatives, to any physician, hospital, nursing home, pharmacist, pharmacy, health benefit plan administrator, or any other person authorized to prescribe or dispense prescription drugs in this State.

(b) The annual report shall be on a form and in a manner prescribed by the board of pharmacy.

(c) Initial reports shall be submitted on or before January 1, 2005, for the twelve-month period ending June 30, 2004.

(d) Each company subject to this section shall disclose to the board and to the department of health, on or before October 1, 2003, and annually thereafter, the name and address of the individual responsible for the company's compliance with this section.

§ -2 Confidentiality. (a) The board of pharmacy and the department of health shall keep confidential all trade secret information. The annual report form prescribed by the board shall permit a company to identify information that is a trade secret.

(b) The following shall be exempt from disclosure:

(1) Free samples of prescription drugs intended to be distributed to patients;

(2) Payment of reasonable compensation and reimbursement of expenses in connection with bona fide clinical trials. As used in this section, "clinical trial" means an approved clinical trial conducted in connection with a research study designed to answer specific questions about vaccines, new therapies, or new ways of using known treatments;

(3) Any gift, payment, fee, subsidy, or other economic benefit valued at less than $25; and

(4) Any scholarship or other support for medical students, residents, and fellows to attend a significant educational, scientific, or policy-making conference of a national, regional, or specialty medical or other professional association if the recipient of the scholarship or other support is selected by the association.

(c) Unless expressly identified as trade secret information, information provided in an annual report shall be public information and available for inspection upon request.

§ -3 Action for violation. The attorney general may bring an action for injunctive relief, costs, and attorneys' fees and to impose a civil penalty of not more than $10,000 per violation. Each failure to file an annual report shall constitute a separate violation.

§ -4 Definitions. As used in this part:

"Board" means the board of pharmacy.

"Board of pharmacy" shall have the same meaning as in chapter 461.

"Pharmaceutical manufacturing company" means any entity that is engaged in the production, preparation, propagation, compounding, conversion, or processing of prescription drugs, either directly or indirectly by extraction from substances of natural origin, or independently by means of chemical synthesis, or by a combination of extraction and chemical synthesis, or any entity engaged in the packaging, repackaging, labeling, relabeling, or distribution of prescription drugs. The term does not include a wholesale drug distributor or a pharmacist licensed under this chapter.

"Pharmaceutical representative" means a person who, while employed by or under contract to represent a pharmaceutical manufacturing company, engages in pharmaceutical detailing, promotional activities, or other marketing of prescription drugs in this State to any physician, hospital, nursing home, pharmacist, health benefit plan administrator, or any other person authorized to prescribe or dispense prescription drugs. The term does not include a wholesale prescription drug distributor, the distributor's representative who promotes or otherwise markets the services of the wholesale drug distributor in connection with a prescription drug."

SECTION 3. Chapter 321, Hawaii Revised Statutes, is amended by adding a new part to be appropriately designated and to read as follows:

"PART . PRESCRIPTION DRUG COST CONTROL EDUCATION PROGRAM

§321-A Prescription drug cost control education program. (a) The department of health shall establish, promote, and maintain a prescription drug cost control education program to provide independent information and education on the therapeutic and cost-effective utilization of prescription drugs without compromising quality of care to physicians, pharmacists, and any health care provider who is authorized to prescribe or dispense prescription drugs.

(b) The program shall develop and provide independent informational materials relating to the therapeutic and cost effective utilization of prescription drugs by patients, the fiscal impact of prescribing expensive and nationally advertised drugs, as well as the relative costs and benefits of a variety of prescription drugs, with an emphasis on:

(1) Generic substitution for brand name prescription drugs when available and appropriate;

(2) Prescribing established, less costly drugs instead of newer, more expensive prescription drugs when available and appropriate;

(3) Prescribing lower dosages of prescription drugs when available and appropriate; and

(4) Providing information about potentially harmful drug combinations, drug recalls, and drug studies.

§321-B Program implementation. The department shall:

(1) Provide sufficient staff to implement the program;

(2) Provide appropriate training for program staff;

(3) Identify the appropriate entities to carry out the program;

(4) Base the program on the most up-to-date information and findings; and

(5) Identify and, when appropriate, replicate or use successful prescription drug cost control education programs and procure related materials and services from organizations with appropriate expertise and knowledge of therapeutic and cost effective utilization of prescription drugs without compromising the quality of care.

§321-C Professional education. The department shall use, but is not limited to, the following strategies for educating physicians and health professionals and training community service providers on the most up-to-date, accurate scientific and medical information concerning the therapeutic and cost-effective utilization of prescription drugs without compromising quality:

(1) Identify and obtain education materials for the professional that translates the latest scientific and medical information into clinical applications;

(2) Raise awareness among physicians and health and human services professionals as to the importance of prescribing a cost effective prescription drug without sacrificing quality of care; and

(3) Conduct a statewide conference on therapeutic and cost-effective utilization of prescription drugs without compromising quality of care at appropriate intervals.

§321-D Contributions. The department may accept grants, services, and property from the federal government, foundations, organizations, medical schools, and other entities as may be available for the purposes of fulfilling the obligations of this program.

§321-E Rules. The department of health shall adopt rules pursuant to chapter 91 as may be necessary to implement this part."

SECTION 4. Section 328-22, Hawaii Revised Statutes, is amended to read as follows:

"§328-22 Duties of department. (a) The department of health shall inquire carefully into the quality of any food, drug, device, or cosmetic manufactured, sold, or kept or exhibited or offered for sale by any person; and it may in a lawful manner procure samples thereof, submit the same to careful examination and report the result of such analysis of all or any such food, drugs, devices, or cosmetics as are adulterated, impure, or unwholesome, in contravention of the laws of the State, to the director; and the director shall make complaint with the necessary evidence through the proper authorities, against such person; provided that nothing in this part shall require the department to report for the institution of proceedings under this part, minor violations of this part, whenever it believes that the public interest will be adequately served in the circumstances by a suitable written notice or warning; provided further that whenever the department believes that the public interest will be adequately served by the issuance of a warning to the general public by virtue of the degree of adulteration, impurity, or unwholesomeness in contravention of the laws of the State present in any food, drugs, devices, or cosmetics which constitute a hazardous condition, it shall issue a warning through all available news media including television, radio, newspaper, and other available methods of communication. When the hazardous condition has been corrected, the department shall issue a statement to be made through all available news media that conditions as corrected have returned to a safe and normal level.

(b) The department shall receive, review, and make available to the public, upon request, annual reports that are submitted from pharmaceutical manufacturers doing business in this State as required by section -A.

(c) The department shall investigate complaints on the information of any person who lays before it satisfactory evidence of the same."

SECTION 5. Section 461-4.5, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

"(a) In addition to any other powers and duties authorized by law, the board:

(1) Shall adopt, amend, and repeal rules pursuant to chapter 91, as it deems proper for the purposes of this chapter, Public Law 100-293, and 21 Code of Federal Regulations part 205;

(2) Shall examine, license, reinstate, and renew the licenses of qualified applicants for registered pharmacists and wholesale prescription drug distributors, and issue and renew permits to operate pharmacies;

(3) May require the inspection of any wholesale prescription drug distributor premises in the State to ensure compliance with this chapter and rules adopted under this chapter, or may require an applicant for a pharmacy license to submit a statement that the premises, including but not limited to security and sanitation, are in conformance with the board's requirements and that the applicant possesses the reference materials and technical clinical equipment and supplies as may be specified in rules adopted under this chapter; and

[(4) May fine, suspend, or revoke any license or permit for any cause prescribed by this chapter, or for any violation of the rules adopted under this chapter, and refuse to grant or renew any license or permit for any cause which would be ground for revocation or suspension of a license or permit.]

(4) Shall receive, review, and make available to the public, upon request, annual reports that are submitted from pharmaceutical manufacturers doing business in this State as required by section -A; and

(5) May fine, suspend, or revoke any license or permit for any cause prescribed by this chapter, or for any violation of the rules adopted under this chapter, and refuse to grant or renew any license or permit for any cause that would be ground for revocation or suspension of a license or permit."

SECTION 6. There is appropriated out of the general revenues of the State of Hawaii the sum of $          , or so much thereof as may be necessary for fiscal year 2003-2004, and the same sum, or so much thereof as may be necessary for fiscal year 2004-2005, for the establishment of a prescription drug cost control education program within the department of health as provided in section 3 of this Act.

The sums appropriated shall be expended by the department of health for the purposes of section 3 of this Act.

SECTION 7. In codifying the new part added by section 3 of this Act, the revisor of statutes shall substitute appropriate section numbers for the letters used in the new sections designated in this Act.

SECTION 8. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 9. This Act shall take effect upon its approval; provided that section 5 of this Act shall take effect on July 1, 2003.

INTRODUCED BY:

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