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2 | 2 | | HOUSE DOCKET, NO. 3326 FILED ON: 1/20/2023 |
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3 | 3 | | HOUSE . . . . . . . . . . . . . . . No. 1201 |
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4 | 4 | | The Commonwealth of Massachusetts |
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5 | 5 | | _________________ |
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6 | 6 | | PRESENTED BY: |
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7 | 7 | | Kate Hogan |
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8 | 8 | | _________________ |
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9 | 9 | | To the Honorable Senate and House of Representatives of the Commonwealth of Massachusetts in General |
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10 | 10 | | Court assembled: |
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11 | 11 | | The undersigned legislators and/or citizens respectfully petition for the adoption of the accompanying bill: |
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12 | 12 | | An Act to promote transparency in prescription drug prices. |
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13 | 13 | | _______________ |
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14 | 14 | | PETITION OF: |
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15 | 15 | | NAME:DISTRICT/ADDRESS :DATE ADDED:Kate Hogan3rd Middlesex1/18/2023 1 of 16 |
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16 | 16 | | HOUSE DOCKET, NO. 3326 FILED ON: 1/20/2023 |
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17 | 17 | | HOUSE . . . . . . . . . . . . . . . No. 1201 |
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18 | 18 | | By Representative Hogan of Stow, a petition (accompanied by bill, House, No. 1201) of Kate |
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19 | 19 | | Hogan relative to the pricing of prescription drugs. Health Care Financing. |
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20 | 20 | | [SIMILAR MATTER FILED IN PREVIOUS SESSION |
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21 | 21 | | SEE HOUSE, NO. 1272 OF 2021-2022.] |
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22 | 22 | | The Commonwealth of Massachusetts |
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23 | 23 | | _______________ |
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24 | 24 | | In the One Hundred and Ninety-Third General Court |
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25 | 25 | | (2023-2024) |
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26 | 26 | | _______________ |
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27 | 27 | | An Act to promote transparency in prescription drug prices. |
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28 | 28 | | Be it enacted by the Senate and House of Representatives in General Court assembled, and by the authority |
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29 | 29 | | of the same, as follows: |
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30 | 30 | | 1 SECTION 1. Section 1 of Chapter 6D of the General Laws is hereby amended by |
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31 | 31 | | 2inserting after the definition of “Performance penalty” the following definition: - |
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32 | 32 | | 3 “Pharmaceutical manufacturing company”, an entity engaged in the: (i) production, |
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33 | 33 | | 4preparation, propagation, compounding, conversion or processing of prescription drugs, directly |
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34 | 34 | | 5or indirectly, by extraction from substances of natural origin, independently by means of |
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35 | 35 | | 6chemical synthesis or by a combination of extraction and chemical synthesis; or (ii) packaging, |
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36 | 36 | | 7repackaging, labeling, relabeling or distribution of prescription drugs; provided, however, that |
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37 | 37 | | 8“pharmaceutical manufacturing company” shall not include a wholesale drug distributor licensed |
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38 | 38 | | 9under section 36B of chapter 112 or a retail pharmacist registered under section 39 of said |
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39 | 39 | | 10chapter 112. 2 of 16 |
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40 | 40 | | 11 SECTION 2. Section 8 of said chapter 6D, as so appearing, is further amended by |
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41 | 41 | | 12inserting after the word “organization”, in lines 6 and 7, the following words:- , pharmaceutical |
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42 | 42 | | 13manufacturing company. |
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43 | 43 | | 14 SECTION 3. Said section 8 of said chapter 6D, as so appearing, is further amended by |
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44 | 44 | | 15inserting after the word “organizations”, in line 14, the following words:- , pharmaceutical |
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45 | 45 | | 16manufacturing companies. |
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46 | 46 | | 17 SECTION 4. Said section 8 of said chapter 6D, as so appearing, is further amended by |
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47 | 47 | | 18inserting after the word “commission”, in line 59, the first time it appears, the following words:- |
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48 | 48 | | 19; and (iii) in the case of pharmaceutical manufacturing companies, testimony concerning factors |
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49 | 49 | | 20underlying prescription drug costs and price increases including, but not limited to, the initial |
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50 | 50 | | 21prices of drugs coming to market and subsequent price increases, changes in industry profit |
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51 | 51 | | 22levels, marketing expenses, reverse payment patent settlements, the availability of alternative |
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52 | 52 | | 23drugs or treatments and any other matters as determined by the commission |
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53 | 53 | | 24 SECTION 5. Subsection (g) of said section 8 of said chapter 6D, as so appearing, is |
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54 | 54 | | 25hereby amended by striking out the second sentence and inserting in place thereof the following |
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55 | 55 | | 26sentence:- The report shall be based on the commission’s analysis of information provided at the |
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56 | 56 | | 27hearings by witnesses, providers, provider organizations, payers, and pharmaceutical |
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57 | 57 | | 28manufacturing companies, registration data collected under section 11, data collected or analyzed |
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58 | 58 | | 29by the center under sections 8, 9, 10, and 10A of chapter 12C and any other available |
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59 | 59 | | 30information that the commission considers necessary to fulfill its duties under this section as |
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60 | 60 | | 31defined in regulations promulgated by the commission. 3 of 16 |
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61 | 61 | | 32 SECTION 6. Section 9 of said chapter 6D, as so appearing, is hereby amended by |
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62 | 62 | | 33inserting after the word “organization”, in line 72, the following words:- , pharmaceutical |
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63 | 63 | | 34manufacturing company. |
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64 | 64 | | 35 SECTION 7. Said chapter 6D is further amended by inserting after section 19 the |
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65 | 65 | | 36following new section:- |
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66 | 66 | | 37 SECTION 20. Pharmaceutical Cost Transparency |
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67 | 67 | | 38 (a) As used in this section, the following terms shall have the following meanings:- |
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68 | 68 | | 39 Pharmaceutical manufacturing company”, an entity engaged in the: (i) production, |
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69 | 69 | | 40preparation, propagation, compounding, conversion or processing of prescription drugs, directly |
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70 | 70 | | 41or indirectly, by extraction from substances of natural origin, independently by means of |
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71 | 71 | | 42chemical synthesis or by a combination of extraction and chemical synthesis; or (ii) packaging, |
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72 | 72 | | 43repackaging, labeling, relabeling or distribution of prescription drugs; provided, however, that |
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73 | 73 | | 44“pharmaceutical manufacturing company” shall not include a wholesale drug distributor licensed |
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74 | 74 | | 45under section 36B of chapter 112 or a retail pharmacist registered under section 39 of said |
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75 | 75 | | 46chapter 112. |
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76 | 76 | | 47 “Prescription drug”, as defined in 21 U.S.C. § 321. |
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77 | 77 | | 48 (b)(1) The Health Policy Commission, in collaboration with the Center for Health |
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78 | 78 | | 49Information and Analysis, shall identify annually up to 25 prescription drugs on which the State |
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79 | 79 | | 50spends significant health care dollars and for which the wholesale acquisition cost has increased |
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80 | 80 | | 51by 50 percent or more over the past five years or by 15 percent or more over the past 12 |
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81 | 81 | | 52months, or is a new drug whose price may have a significant impact on the cost growth 4 of 16 |
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82 | 82 | | 53benchmark. When determining whether a drug price may have a significant impact on the cost |
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83 | 83 | | 54growth benchmark, the commission shall consider both the volume of prescriptions issued in the |
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84 | 84 | | 55commonwealth and single dose wholesale acquisition cost. |
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85 | 85 | | 56 The drugs identified shall represent different drug classes. |
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86 | 86 | | 57 (2) The Commission shall provide to the Office of the Attorney General the list of |
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87 | 87 | | 58prescription drugs developed pursuant to this subsection and the percentage of the wholesale |
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88 | 88 | | 59acquisition cost increase for each drug and shall make the information available to the public on |
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89 | 89 | | 60the Commission’s website. |
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90 | 90 | | 61 (c)(1) For each prescription drug identified pursuant to subsection (b) of this section, the |
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91 | 91 | | 62commission shall require the drug’s pharmaceutical manufacturing company to provide a |
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92 | 92 | | 63justification for the increase in the wholesale acquisition cost of the drug in a format that the |
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93 | 93 | | 64commission determines to be understandable and appropriate. The pharmaceutical manufacturing |
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94 | 94 | | 65company shall submit to the commission all relevant information and supporting documentation |
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95 | 95 | | 66necessary to justify the manufacturer’s wholesale acquisition cost increase, which may include: |
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96 | 96 | | 67 (A) all factors that have contributed to the wholesale acquisition cost increase; |
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97 | 97 | | 68 (B) the percentage of the total wholesale acquisition cost increase attributable to each |
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98 | 98 | | 69factor; and |
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99 | 99 | | 70 (C) an explanation of the role of each factor in contributing to the wholesale acquisition |
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100 | 100 | | 71cost increase. 5 of 16 |
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101 | 101 | | 72 (2) Nothing in this section shall be construed to restrict the legal ability of a |
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102 | 102 | | 73pharmaceutical manufacturing company to changes prices to the extent permitted under federal |
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103 | 103 | | 74law. |
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104 | 104 | | 75 (d) The commission shall publish an Annual Prescription Drug Transparency Report on |
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105 | 105 | | 76or before December 1 of each year based on the information received from pharmaceutical |
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106 | 106 | | 77manufacturing companies pursuant to this section. |
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107 | 107 | | 78 (e) In carrying out this section, the commission shall ensure the protection of confidential |
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108 | 108 | | 79commercial information and trade secrets. |
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109 | 109 | | 80 (f) The commission shall promulgate regulations to implement and enforce this section |
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110 | 110 | | 81and may impose financial penalties on a pharmaceutical manufacturing company that fails to |
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111 | 111 | | 82provide the information required by subsection (c) of this section in an amount not to exceed |
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112 | 112 | | 83$10,000.00 per violation. Each unlawful failure to provide information shall constitute a separate |
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113 | 113 | | 84violation. |
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114 | 114 | | 85 SECTION 8. Said chapter 6D, as so appearing, is further amended by inserting after |
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115 | 115 | | 86section 20 the following new section:- |
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116 | 116 | | 87 SECTION 20A. Transparency in Patient Advocacy |
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117 | 117 | | 88 The commission shall require a pharmaceutical manufacturing company to annually |
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118 | 118 | | 89disclose payments and other transfers of value provided to a patient advocacy organization, |
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119 | 119 | | 90consumer advocacy organization, voluntary health agency, or a coalition of such organizations, |
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120 | 120 | | 91including a disease-specific advocacy organization. The commission shall issue an annual report |
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121 | 121 | | 92identifying the payments or other transfers of value made by manufacturers to a patient advocacy 6 of 16 |
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122 | 122 | | 93organization, consumer advocacy organization, voluntary health agency, or a coalition of such |
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123 | 123 | | 94organizations, including a disease-specific advocacy organization and analyzing the impact of |
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124 | 124 | | 95such payments or transfers of value on health care public policy in the commonwealth. |
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125 | 125 | | 96 SECTION 9. Said chapter 6D is further amended by inserting after section 20 the |
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126 | 126 | | 97following new section:- |
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127 | 127 | | 98 SECTION 21. Early Notice of High Cost Drugs |
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128 | 128 | | 99 (a) As used in this section, the following terms have the following meanings:- |
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129 | 129 | | 100 “Average Manufacturer Price”, as defined in section 1927(k)(1) of the Social Security |
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130 | 130 | | 101Act (42 U.S.C. 1396r–8(k)(1)). |
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131 | 131 | | 102 “Pharmaceutical manufacturing company”, an entity engaged in the: (i) production, |
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132 | 132 | | 103preparation, propagation, compounding, conversion or processing of prescription drugs, directly |
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133 | 133 | | 104or indirectly, by extraction from substances of natural origin, independently by means of |
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134 | 134 | | 105chemical synthesis or by a combination of extraction and chemical synthesis; or (ii) packaging, |
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135 | 135 | | 106repackaging, labeling, relabeling or distribution of prescription drugs; provided, however, that |
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136 | 136 | | 107“pharmaceutical manufacturing company” shall not include a wholesale drug distributor licensed |
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137 | 137 | | 108under section 36B of chapter 112 or a retail pharmacist registered under section 39 of said |
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138 | 138 | | 109chapter 112. |
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139 | 139 | | 110 (b)(1) A pharmaceutical manufacturing company shall submit a report to the commission |
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140 | 140 | | 111notifying the commission of each price increase of a prescription drug that will result in an |
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141 | 141 | | 112increase in the average manufacturer price of that drug that is equal to 10 percent or more over a |
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142 | 142 | | 11312-month period, or the introduction of a new drug whose price may threaten the cost benchmark 7 of 16 |
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143 | 143 | | 114either due to anticipated volume of prescriptions filled in the commonwealth or the increase in |
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144 | 144 | | 115the average manufacturer price for a single dose. |
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145 | 145 | | 116 (2) Each report described in paragraph (1) shall be submitted to the commission not later |
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146 | 146 | | 117than 30 days prior to the planned effective date of such price increase. |
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147 | 147 | | 118 (c) A report under subsection (b) shall, at a minimum, include: |
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148 | 148 | | 119 (1) With respect to the prescription drug— |
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149 | 149 | | 120 (A) the percentage by which the pharmaceutical manufacturing company will raise the |
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150 | 150 | | 121average manufacturer price of the drug on the planned effective date of such price increase; |
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151 | 151 | | 122 (B) a justification for, and description of, each pharmaceutical manufacturing company’s |
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152 | 152 | | 123price increase that occurred during the 12-month period described in subsection (b)(1); |
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153 | 153 | | 124 (C) the identity of the initial developer of the drug; |
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154 | 154 | | 125 (D) a description of the history of the pharmaceutical manufacturing company 's price |
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155 | 155 | | 126increases for the drug since the approval of the application for the drug under section 505 of the |
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156 | 156 | | 127Federal Food, Drug, and Cosmetic Act or the issuance of the license for the drug under section |
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157 | 157 | | 128351, or since the pharmaceutical manufacturing company acquired such approved application or |
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158 | 158 | | 129license; |
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159 | 159 | | 130 (E) the current list price of the drug; |
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160 | 160 | | 131 (F) the total expenditures of the pharmaceutical manufacturing company on— |
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161 | 161 | | 132 (i) materials and manufacturing for such drug; and 8 of 16 |
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162 | 162 | | 133 (ii) acquiring patents and licensing for such drug; |
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163 | 163 | | 134 (G) the percentage of total expenditures of the pharmaceutical manufacturing company |
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164 | 164 | | 135on research and development for such drug that was derived from Federal funds; |
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165 | 165 | | 136 (H) the total expenditures of the pharmaceutical manufacturing company on research and |
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166 | 166 | | 137development for such drug that is used for— |
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167 | 167 | | 138 (i) basic and preclinical research; |
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168 | 168 | | 139 (ii) clinical research; |
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169 | 169 | | 140 (iii) new drug development; |
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170 | 170 | | 141 (iv) pursuing new or expanded indications for such drug through supplemental |
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171 | 171 | | 142applications under section 505 of the Federal Food, Drug, and Cosmetic Act; and |
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172 | 172 | | 143 (v) carrying out post market requirements related to such drug, including those under |
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173 | 173 | | 144section 505(o)(3) of such Act; |
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174 | 174 | | 145 (I) the total revenue and the net profit generated from the prescription drug for each |
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175 | 175 | | 146calendar year since the approval of the application for the drug under section 505 of the Federal |
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176 | 176 | | 147Food, Drug, and Cosmetic Act or the issuance of the license for the drug under section 351, or |
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177 | 177 | | 148since the pharmaceutical manufacturing company acquired such approved application or license; |
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178 | 178 | | 149and |
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179 | 179 | | 150 (J) the total costs associated with marketing and advertising for the prescription drug; |
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180 | 180 | | 151 (2) With respect to the pharmaceutical manufacturing company: 9 of 16 |
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181 | 181 | | 152 (A) the total revenue and the net profit of the pharmaceutical manufacturing company for |
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182 | 182 | | 153the 12-month period described in subsection (b)(1); |
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183 | 183 | | 154 (B) the amount the pharmaceutical manufacturing company has spent on dividends and |
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184 | 184 | | 155stock repurchases and the specific metrics used by the pharmaceutical manufacturing company to |
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185 | 185 | | 156determine executive compensation, including any stock-based performance metrics, for the 12- |
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186 | 186 | | 157month period described in subsection (b)(1); and |
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187 | 187 | | 158 (C) the amount the pharmaceutical manufacturing company has provided in funding to |
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188 | 188 | | 159consumer and disease advocacy groups for the 12-month period described in subsection (b)(1); |
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189 | 189 | | 160 (D) any additional information the manufacturer chooses to provide related to drug |
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190 | 190 | | 161pricing decisions, such as total expenditures on— |
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191 | 191 | | 162 (i) drug research and development; or |
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192 | 192 | | 163 (ii) clinical trials on drugs that failed to receive approval by the Food and Drug |
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193 | 193 | | 164Administration; and |
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194 | 194 | | 165 (3) such other related information as the commission considers appropriate. |
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195 | 195 | | 166 (d) The commission shall promulgate regulations to implement and enforce this section |
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196 | 196 | | 167and may impose financial penalties on a pharmaceutical manufacturing company that fails to |
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197 | 197 | | 168provide the information required by subsection (c) of this section in an amount not to exceed |
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198 | 198 | | 169$10,000.00 per violation. Each unlawful failure to provide information shall constitute a separate |
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199 | 199 | | 170violation. |
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200 | 200 | | 171 (e)(1) Not later than 30 days after the submission of a report under subsection (b), the |
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201 | 201 | | 172commission shall post the report on the public website of the commission. 10 of 16 |
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202 | 202 | | 173 (2) In carrying out this section, the commission shall ensure the protection of confidential |
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203 | 203 | | 174commercial information and trade secrets. |
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204 | 204 | | 175 SECTION 10. Section 1 of chapter 12C of the General Laws, as so appearing, is hereby |
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205 | 205 | | 176amended by inserting after the definition of “Patient-centered medical home” the following |
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206 | 206 | | 177definition:- |
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207 | 207 | | 178 “Pharmaceutical manufacturing company”, an entity engaged in the: (i) production, |
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208 | 208 | | 179preparation, propagation, compounding, conversion or processing of prescription drugs, directly |
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209 | 209 | | 180or indirectly, by extraction from substances of natural origin, independently by means of |
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210 | 210 | | 181chemical synthesis or by a combination of extraction and chemical synthesis; or (ii) packaging, |
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211 | 211 | | 182repackaging, labeling, relabeling or distribution of prescription drugs; provided, however, that |
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212 | 212 | | 183“pharmaceutical manufacturing company” shall not include a wholesale drug distributor licensed |
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213 | 213 | | 184under section 36B of chapter 112 or a retail pharmacist registered under section 39 of said |
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214 | 214 | | 185chapter 112. |
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215 | 215 | | 186 SECTION 11. Section 3 of said chapter 12C, as so appearing, is hereby amended by |
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216 | 216 | | 187inserting after the word “organizations”, in lines 13 and 14, the following words:- , |
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217 | 217 | | 188pharmaceutical manufacturing companies. |
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218 | 218 | | 189 SECTION 12. Said section 3 of said chapter 12C, as so appearing, is hereby further |
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219 | 219 | | 190amended by striking out, in line 24, the words “and payer” and inserting in place thereof the |
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220 | 220 | | 191following words:- , payer, and pharmaceutical manufacturing company. |
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221 | 221 | | 192 SECTION 13. Section 5 of said chapter 12C, as so appearing, is hereby further amended |
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222 | 222 | | 193by striking out, in line 15, the words “and affected payers” and inserting in place thereof the |
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223 | 223 | | 194following words:- affected payers, and affected pharmaceutical manufacturing companies. 11 of 16 |
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224 | 224 | | 195 SECTION 14 Said chapter 12C is hereby further amended by inserting after section 10 |
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225 | 225 | | 196 the following new section:- |
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226 | 226 | | 197 Section 10A. (a) The center shall promulgate regulations necessary to ensure the uniform |
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227 | 227 | | 198reporting of information from pharmaceutical manufacturing companies that enables the center |
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228 | 228 | | 199to analyze: (i) year-over-year changes in wholesale acquisition cost and average manufacturer |
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229 | 229 | | 200price for prescription drug products; (ii) year-over-year trends in net expenditures; (iii) net |
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230 | 230 | | 201expenditures on subsets of biosimilar, brand name and generic drugs identified by the center; (iv) |
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231 | 231 | | 202trends in estimated aggregated drug rebates, discounts or other remuneration paid or provided by |
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232 | 232 | | 203a pharmaceutical manufacturing company to a pharmacy benefit manager, wholesaler, |
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233 | 233 | | 204distributor, health carrier client, health plan sponsor or pharmacy in connection with utilization |
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234 | 234 | | 205of the pharmaceutical drug products offered by the pharmaceutical manufacturing company; (v) |
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235 | 235 | | 206discounts provided by a pharmaceutical manufacturing company to a consumer in connection |
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236 | 236 | | 207with utilization of the pharmaceutical drug products offered by the pharmaceutical |
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237 | 237 | | 208manufacturing company, including any discount, rebate, product voucher, coupon or other |
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238 | 238 | | 209reduction in a consumer’s out-of-pocket expenses including co-payments and deductibles under |
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239 | 239 | | 210section 3 of chapter 175H; (vi) research and development costs as a percentage of revenue; (vii) |
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240 | 240 | | 211annual marketing and advertising costs, identifying costs for direct-to-consumer advertising; |
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241 | 241 | | 212(viii) annual profits over the most recent 5-year period; (ix) cost disparities between prices |
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242 | 242 | | 213charged to purchasers in the commonwealth and purchasers outside of the United States; and (x) |
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243 | 243 | | 214any other information deemed necessary by the center. |
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244 | 244 | | 215 The center shall require the submission of available data and other information from |
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245 | 245 | | 216pharmaceutical manufacturing companies including, but not limited to: (i) changes in wholesale 12 of 16 |
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246 | 246 | | 217acquisition costs and average manufacturer prices for prescription drug products as identified by |
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247 | 247 | | 218the center; (ii) aggregate, company-level research and development costs to the extent |
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248 | 248 | | 219attributable to a specific product and other relevant capital expenditures for the most recent year |
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249 | 249 | | 220for which final audited data are available for prescription drug products as identified by the |
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250 | 250 | | 221center; (iii) annual marketing and advertising expenditures; and (iv) a description, suitable for |
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251 | 251 | | 222public release, of factors that contributed to reported changes in wholesale acquisition costs and |
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252 | 252 | | 223average manufacturer prices for prescription drug products as identified by the center. |
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253 | 253 | | 224 (b) Except as specifically provided otherwise by the center or under this chapter, data |
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254 | 254 | | 225collected by the center pursuant to this section from pharmaceutical manufacturing companies |
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255 | 255 | | 226shall not be a public record under clause Twenty-sixth of section 7 of chapter 4 or under chapter |
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256 | 256 | | 22766. |
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257 | 257 | | 228 SECTION 15. Said chapter 12C is hereby further amended by striking out section 11, as |
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258 | 258 | | 229appearing in the 2018 Official Edition, and inserting in place thereof the following section:- |
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259 | 259 | | 230 Section 11. The center shall ensure the timely reporting of information required under |
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260 | 260 | | 231sections 8, 9, 10 and 10A. The center shall notify payers, providers, provider organizations, and |
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261 | 261 | | 232pharmaceutical manufacturing companies of any applicable reporting deadlines. The center shall |
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262 | 262 | | 233notify, in writing, a private health care payer, provider, provider organization, or pharmaceutical |
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263 | 263 | | 234manufacturing company that it has failed to meet a reporting deadline and that failure to respond |
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264 | 264 | | 235within 2 weeks of the receipt of the notice may result in penalties. The center may assess a |
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265 | 265 | | 236penalty against a private health care payer, provider, provider organization, or pharmaceutical |
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266 | 266 | | 237manufacturing company that fails, without just cause, to provide the requested information |
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267 | 267 | | 238within 2 weeks following receipt of the written notice required under this section of not more 13 of 16 |
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268 | 268 | | 239than $1,000 per week for each week of delay after the 2-week period following receipt of the |
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269 | 269 | | 240written notice. Amounts collected under this section shall be deposited in the Healthcare |
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270 | 270 | | 241Payment Reform Fund established in section 100 of chapter 194 of the acts of 2011. |
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271 | 271 | | 242 SECTION 16. Section 12 of said chapter 12C, as so appearing, is hereby amended by |
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272 | 272 | | 243striking out, in line 2, the words “and 10” and inserting in place thereof the following words:- , |
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273 | 273 | | 244 10 and 10A. |
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274 | 274 | | 245 SECTION 17. Subsection (a) of section 16 of said chapter 12C, as so appearing, is hereby |
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275 | 275 | | 246amended by striking out the first sentence and inserting in place thereof the following sentence:- |
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276 | 276 | | 247 The center shall publish an annual report based on the information submitted under: (i) |
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277 | 277 | | 248 sections 8, 9, 10 and 10A concerning health care provider, provider organization, private |
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278 | 278 | | 249and public health care payer, and pharmaceutical manufacturing company costs, and cost and |
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279 | 279 | | 250price trends; (ii) section 13 of chapter 6D relative to market power reviews; and (iii) section 15 |
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280 | 280 | | 251of said chapter 6D relative to quality data. |
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281 | 281 | | 252 SECTION 18. The General Laws are hereby amended by inserting after chapter 63B the |
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282 | 282 | | 253following new chapter: - |
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283 | 283 | | 254 Chapter 63D. Penalty on drug manufacturers for excessive price increases |
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284 | 284 | | 255 Section 1. As used in this section, the following terms shall have the following |
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285 | 285 | | 256meanings:- “Commissioner”, the commissioner of revenue. |
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286 | 286 | | 257 “Consumer price index”, the consumer price index for all urban consumers for Boston, as |
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287 | 287 | | 258most recently reported by the federal Bureau of Labor Statistics. 14 of 16 |
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288 | 288 | | 259 “Drug”, any medication, as identified by a National Drug Code, approved for sale by the |
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289 | 289 | | 260U.S. Food and Drug Administration. |
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290 | 290 | | 261 “Excessive price,” the price of a drug if it exceeds the sum of (a) the reference price of |
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291 | 291 | | 262that drug, as adjusted for any increase or decrease in the consumer price index since the |
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292 | 292 | | 263reference price was determined, and (b) an additional two percent of the reference price for each |
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293 | 293 | | 264twelve-month period that has elapsed since the date on which the reference price was |
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294 | 294 | | 265determined. The two percent increment provided in (b) of the preceding sentence shall |
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295 | 295 | | 266compound annually on the first day of the first calendar quarter commencing after the end of |
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296 | 296 | | 267each 12-month period described therein. |
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297 | 297 | | 268 “Excessive price increase”, the amount by which the price of a drug exceeds the sum of |
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298 | 298 | | 269(a) the reference price of that drug, as adjusted for any increase or decrease in the consumer price |
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299 | 299 | | 270index since the reference price was determined, and (b) an additional two percent of the |
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300 | 300 | | 271reference price for each twelve-month period that has elapsed since the date on which the |
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301 | 301 | | 272reference price was determined. The two percent increment provided in (b) shall compound |
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302 | 302 | | 273annually on the first day of the first calendar quarter commencing after the end of each twelve- |
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303 | 303 | | 274month period described therein. |
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304 | 304 | | 275 “Person”, any natural person or legal entity. |
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305 | 305 | | 276 “Price”, the wholesale acquisition cost of a drug, per unit, as reported to the First Data |
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306 | 306 | | 277Bank or other applicable price compendium designated by the commissioner. |
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307 | 307 | | 278 “Reference price”, the price of a drug as of October 1, 2019, or in the case of any drug |
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308 | 308 | | 279first commercially marketed in the United States after October 1, 2019, the price of the drug on |
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309 | 309 | | 280the date when first marketed. 15 of 16 |
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310 | 310 | | 281 “Related party”, an entity is a related party with respect to a person if that entity belongs |
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311 | 311 | | 282to the same affiliated group as that person under section 1504 of the Internal Revenue Code, as |
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312 | 312 | | 283amended and in effect for the taxable year, or if the entity and the person are otherwise under |
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313 | 313 | | 284common ownership and control. |
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314 | 314 | | 285 “Unit”, the lowest dispensable amount of a drug. |
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315 | 315 | | 286 Section 2. (a) Any person who manufactures and sells drugs, directly or through another |
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316 | 316 | | 287person, for distribution in the commonwealth and who establishes an excessive price for any |
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317 | 317 | | 288such drug directly or in cooperation with a related party, shall pay a per unit penalty on all units |
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318 | 318 | | 289of the drug ultimately dispensed or administered in the commonwealth. The penalty for each unit |
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319 | 319 | | 290shall be 80 percent of the excessive price increase for each unit, determined at the beginning of |
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320 | 320 | | 291the calendar quarter. |
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321 | 321 | | 292 (b) A person who establishes an excessive price for a drug as described in subsection (a) |
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322 | 322 | | 293shall file a return as provided in section 4 declaring all units of excessively priced drug sold for |
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323 | 323 | | 294distribution in the commonwealth during the quarter. In the event that a person filing such a |
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324 | 324 | | 295return pays a penalty with regard to one or more units of drug that are ultimately dispensed or |
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325 | 325 | | 296administered outside of the commonwealth, the person may claim a credit for such penalty |
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326 | 326 | | 297amounts on the return for the tax period during which such units are ultimately dispensed or |
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327 | 327 | | 298administered. |
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328 | 328 | | 299 Section 3. The penalty under section 2 shall apply for any calendar quarter only to a |
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329 | 329 | | 300person who maintains a place of business in the commonwealth or whose total sales of all |
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330 | 330 | | 301products, directly or through another person, for distribution in the commonwealth were more 16 of 16 |
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331 | 331 | | 302than $100,000 in the prior twelve-month period. The penalty shall not apply more than once to |
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332 | 332 | | 303any unit of drug sold. |
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333 | 333 | | 304 Section 4. Any person subject to the penalty under section 2 shall file a return with the |
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334 | 334 | | 305commissioner and shall pay the penalty by the fifteenth day of the third month following the end |
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335 | 335 | | 306of each calendar quarter, subject to such reasonable extensions of time for filing as the |
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336 | 336 | | 307commissioner may allow. The return shall set out the person’s total sales subject to penalty in the |
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337 | 337 | | 308immediately preceding calendar quarter and shall provide such other information as the |
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338 | 338 | | 309commissioner may require. |
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339 | 339 | | 310 Section 5. The penalty imposed under this chapter shall be in addition to, and not a |
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340 | 340 | | 311substitute for or credit against, any other penalty, tax or excise imposed under the General Laws. |
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341 | 341 | | 312 Section 6. The commissioner may disclose information contained in returns filed under |
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342 | 342 | | 313this chapter to the department of public health for purposes of verifying that a filer’s sales subject |
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343 | 343 | | 314to penalty are properly declared and that all reporting is otherwise correct. Return information so |
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344 | 344 | | 315disclosed shall remain confidential and shall not be public record. |
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345 | 345 | | 316 Section 7. To the extent that a person subject to penalty under section 2 fails to pay |
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346 | 346 | | 317amounts due under this chapter, a related party of such person that directly or indirectly |
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347 | 347 | | 318distributes in the commonwealth any drug whose sales are subject to this chapter shall be jointly |
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348 | 348 | | 319and severally liable for the penalty due. |
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349 | 349 | | 320 Section 8. The commissioner may promulgate regulations or issue other guidance for the |
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350 | 350 | | 321implementation of this chapter. |
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