House Bill 137

AN ACT TO CREATE THE "PROHIBITION ON PRICE GOUGING FOR ESSENTIAL DRUGS ACT"; TO DEFINE "PRICE GOUGING" AND CERTAIN OTHER TERMS; TO PROHIBIT MANUFACTURERS AND WHOLESALE DISTRIBUTORS OF ESSENTIAL GENERIC DRUGS FROM ENGAGING IN PRICE GOUGING; TO REQUIRE THE DIVISION OF MEDICAID AND DEPARTMENT OF HUMAN SERVICES TO NOTIFY THE ATTORNEY GENERAL OF EXCESSIVE PRICE INCREASES FOR ESSENTIAL GENERIC DRUGS; TO AUTHORIZE THE ATTORNEY GENERAL TO REQUEST CERTAIN INFORMATION FROM DRUG MANUFACTURERS AND TO INSTITUTE PROCEEDINGS FOR VIOLATIONS OF THIS ACT; TO AUTHORIZE THE IMPOSITION OF A CIVIL PENALTY IN THE AMOUNT OF $100,000.00 FOR VIOLATIONS; AND FOR RELATED PURPOSES.

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

SECTION 1. This act shall be known and may be cited as the "Prohibition on Price Gouging for Essential Drugs Act."

SECTION 2. As used in this act, the following words and phrases have the meanings ascribed in this section unless the context clearly indicates otherwise:

(a) "Essential generic drug" means a prescription drug

that is made available for sale in the state and for which all exclusive marketing rights, if any, granted under the Federal Food, Drug and Cosmetic Act (FD&C Act, 21 USC ch. 9), Section 351 of the Public Health Service Act (42 USC ch. 6A), and federal patent law have expired, and which either:

(i) Appears on the Model List of Essential Medicines most recently adopted by the World Health Organization; or

(ii) Has been designated as an essential medicine by the United States Secretary of Health and Human Services due to its efficacy in treating a life-threatening health condition or a chronic health condition that substantially impairs a person's ability to engage in activities of daily living.

The term "essential generic drug" includes any drug-device combination product for the delivery of an essential generic drug.

(b) "Medical assistance program" means a program administered by the state to provide payment, in whole or in part, of the cost of medical care and services to persons whose income and resources are insufficient to meet the cost of the medical care and services.

(d) "State Health Plan" means and has the same definition as that term has in Section 41-7-173.

(e) "Unconscionable increase" means an increase in the price of a prescription drug which:

(i) Is excessive and not justified by the cost of producing the drug or the cost of appropriate expansion of access to the drug to promote public health; and

(ii) Results in consumers for whom the drug has been prescribed having no meaningful choice about whether to purchase the drug at an excessive price because of the importance of the drug to their health and insufficient competition in the market for the drug.

(f) "Wholesale acquisition cost" has the meaning stated in 42 USC sec. 1395w-3a.

SECTION 3. A manufacturer or wholesale distributor may not engage in price gouging in the sale of an essential generic drug.

SECTION 4. (1) The Division of Medicaid and the Mississippi Department of Human Services shall notify the Attorney General of any increase in the price of an essential generic drug when the price increase, by itself or in combination with another price increase or increases, would:

(a) Result in an increase of fifty percent (50%) or more in the wholesale acquisition cost of the drug within the preceding one-year period; or

(b) Result in an increase of fifty percent (50%) or more in the price paid by a medical assistance program for the drug within the preceding one-year period.

(2) On request of the Attorney General, the manufacturer of an essential generic drug identified in a notice under subsection (1) of this section must submit the following information to the Attorney General within forty-five (45) days of receiving the request:

(a) An itemization of the components of the cost of producing the drug;

(b) A statement identifying the circumstances and timing of any expenditures made by the manufacturer to expand access to the essential generic drug;

(d) Any other information that the manufacturer believes to be relevant to a determination of whether a violation of this act has occurred.

(3) The Attorney General may require a manufacturer to produce any records or documents that may be relevant to a determination of whether a violation of this act has occurred.

(4) The Attorney General may institute proceedings against a manufacturer or wholesale distributor of an essential generic drug alleging a violation of this act in the Circuit Court of the First Judicial District of Hinds County. On petition of the Attorney General, the court may issue an order:

(a) Compelling a manufacturer or wholesale distributor to provide the information required under subsection (2) or to produce specific records or documents requested by the Attorney General under subsection (3) which may be relevant to a determination of whether a violation of this act has occurred;

(b) Restraining or enjoining a violation of this act;

(c) Restoring to any consumer, including any third-party payor, any money acquired as a result of a price increase that violates this act;

(d) Requiring a manufacturer that has engaged in price gouging in the sale of an essential generic drug to make the drug available to participants under the State Health Plan or a medical assistance program for a period of up to one (1) year at the price at which the drug was made available to participants under the State Health Plan or medical assistance program immediately before the manufacturer's violation of this act; and

(e) Imposing a civil penalty of up to One Hundred Thousand Dollars ($100,000.00) for each violation of this act.

(5) In any action brought by the Attorney General under subsection (4), a person who is alleged to have violated a requirement of this act may not assert as a defense that the person did not deal directly with a consumer in this state.

SECTION 5. This act shall take effect and be in force from and after July 1, 2018.