Report Title:

Prescription Drugs

Description:

Requires prescription drug manufacturers to disclose certain advertising, marketing, and promotional expenditures in the State. (HB13 HD1)

HOUSE OF REPRESENTATIVES

H.B. NO.

13

TWENTY-SECOND LEGISLATURE, 2003

H.D. 1

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.

The purpose of this Act is to 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 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:

(1) 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 of prescription drugs; or

(2) Packaging, repackaging, labeling, relabeling, or distribution of prescription drugs.

The term shall not include a wholesale prescription drug distributor or a pharmacist licensed under chapter 461.

"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 shall not include a wholesale prescription drug distributor or the distributor's representative who promotes or otherwise markets the services of the wholesale prescription drug distributor in connection with a prescription drug.

"Trade secret" shall have the same meaning as in section 482B-2.

§ -2 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.

§ -3 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 the company considers 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.

§ -4 Action for violation. Violation of this chapter shall be subject to a civil penalty of not more than $10,000 per violation. Each failure to file an annual report shall constitute a separate violation. The attorney general may bring an action to impose the penalty and for injunctive relief, costs, and attorneys' fees."

SECTION 3. 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 by pharmaceutical manufacturers doing business in this State as required by section -2.

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

SECTION 4. 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) Shall receive, review, and make available to the public, upon request, annual reports that are submitted by pharmaceutical manufacturers doing business in this State as required by section -2; and

[(4)] (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 which would be ground for revocation or suspension of a license or permit."

SECTION 5. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 6. This Act shall take effect upon its approval.