1997 Regular Session
To: Public Health and Welfare
By: Representatives Read, Howell, Hudson, Nettles
House Bill 1275
AN ACT TO PROVIDE PHARMACEUTICAL PURCHASERS EQUAL ACCESS TO MANUFACTURERS' DISCOUNTS; TO PROHIBIT PRICE DISCRIMINATION BY SELLERS OF DRUGS; TO PROHIBIT THE STATE AND ITS POLITICAL SUBDIVISIONS FROM PURCHASING DRUGS FROM A SELLER THAT ENGAGES IN PRICE DISCRIMINATION; TO EXEMPT CERTAIN ENTITIES FROM THE DEFINITION OF PURCHASER UNDER THIS ACT; TO PROVIDE PENALTIES FOR VIOLATIONS OF THIS ACT; AND FOR RELATED PURPOSES.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MISSISSIPPI:
SECTION 1. The following words and phrases shall have the meanings ascribed in this section unless the context clearly indicates otherwise:
(a) "Drug" means any substance subject to Section 503(b)(1) of the Federal Food, Drug and Cosmetic Act;
(b) "Purchaser" means any person doing business in this state that sells or dispenses drugs directly to consumers in this state;
(c) "Seller" means any person that lawfully sells drugs to purchasers, including, but not limited to, drug manufacturers and wholesalers;
(d) "Manufacturer" means any person, other than a wholesaler, that sells drugs for resale, either directly or through a wholesaler, to purchasers;
(e) "Wholesaler" means any person other than a manufacturer that sells drugs to purchasers;
(f) "Charitable health care provider" means any health care provider exempted from federal taxation by Section 501(c)(3) of the Internal Revenue Code that 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.
SECTION 2. (1) During the same time period, a seller shall offer drugs to all purchasers on the same terms and conditions, whether the sale is a direct transaction between a manufacturer and a purchaser or one in which a manufacturer sells to a purchaser through a contractual arrangement implemented by one or more wholesalers.
(2) This section does not prohibit a seller from offering any price reduction or program as long as each is made available to all purchasers on the same terms and conditions, including:
(a) Reductions justified by economies or efficiencies realized through volume purchases;
(b) Reductions available through market share movement agreements;
(c) Reductions for placing drugs on a formulary;
(d) Reductions for prompt payment;
(e) Reductions for limited site delivery; and
(f) Opportunities involving free merchandise, samples, and similar trade concessions.
(3) No seller shall provide price reductions to any purchaser based solely on the class of trade to which the purchaser belongs.
(4) This section shall apply to any purchase of drugs delivered to a purchaser for sale to consumers in this state.
(5) It is the intent of this legislation that sellers be encouraged to develop a variety of marketing programs. Nothing in this section is intended to create a single price for prescription drugs or to eliminate existing price reduction programs as long as those programs adhere to the above conditions.
SECTION 3. The state and its political subdivisions shall not purchase any drugs from a seller that engages in price discrimination prohibited by this act, including transactions in which a seller sells to the state through a contractual arrangement implemented by one or more wholesalers. Beginning January 1, 1998, a seller selling drugs within this state shall submit to the State Board of Pharmacy before January 1 of each year an affidavit stating that it will not engage in conduct prohibited by this act.
SECTION 4. For the purposes of this act, the following are not purchasers:
(a) 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;
(b) Hospitals that purchase drugs for their inpatients' own use, but not for resale or outpatient use; and
(c) Charitable health care providers, except those that issue, offer, or administer a health insurance policy or an employee benefit plan.
SECTION 5. (1) Any seller violating this act shall pay a civil penalty of not less than One Thousand Dollars ($1,000.00) nor more than Fifty Thousand Dollars ($50,000.00) for each violation. The Attorney General shall bring an action in any court of appropriate jurisdiction to enforce the provisions of this act.
(2) Any purchaser may bring a civil action against any seller to recover damages suffered as the result of a violation of this act or any rule adopted hereunder; however, proof of price discrimination shall constitute prima facie evidence of damages. Damages awarded to any such purchaser shall be trebled.
SECTION 6. This act shall take effect and be in force from and after July 1, 1997.