Drug price increases restrictions elimination provision and sale or distribution withdraw notice requirement elimination provision

A bill for an act

relating to commerce; eliminating restrictions on drug price increases; eliminating

notice requirement for a withdrawal from sale or distribution of a drug; amending

Minnesota Statutes 2024, sections 62J.91, subdivision 2; 151.071, subdivisions 1,

2; repealing Minnesota Statutes 2024, sections 62J.841; 62J.842; 62J.843; 62J.844;

62J.845; 62J.846.

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

ARTICLE 1

REPEALER

Section 1.
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REPEALER.
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Minnesota Statutes 2024, sections 62J.841; 62J.842; 62J.843; 62J.844; 62J.845; and

62J.846,

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are repealed.

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ARTICLE 2

CONFORMING AMENDMENTS

Section 1.

Minnesota Statutes 2024, section 62J.91, subdivision 2, is amended to read:

Subd. 2.

Review considerations.

In reviewing the cost of a prescription drug product,

the board may consider the following factors:

(1) the price at which the prescription drug product has been and will be sold in the state;

(2) manufacturer monetary price concessions, discounts, or rebates, and drug-specific

patient assistance;

(3) the price of therapeutic alternatives;

(4) the cost to group purchasers based on patient access consistent with the FDA-labeled

indications and standard medical practice;

(5) measures of patient access, including cost-sharing and other metrics;

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(6) the extent to which the attorney general or a court has determined that a price increase

for a generic or off-patent prescription drug product was excessive under sections
62J.842

and
62J.844
;

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(7)
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(6)
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any information a manufacturer chooses to provide; and

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(8)
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(7)
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any other factors as determined by the board.

Sec. 2.

Minnesota Statutes 2024, section 151.071, subdivision 1, is amended to read:

Subdivision 1.

Forms of disciplinary action.

When the board finds that a licensee,

registrant, or applicant has engaged in conduct prohibited under subdivision 2, it may do

one or more of the following:

(1) deny the issuance of a license or registration;

(2) refuse to renew a license or registration;

(3) revoke the license or registration;

(4) suspend the license or registration;

(5) impose limitations, conditions, or both on the license or registration, including but

not limited to: the limitation of practice to designated settings; the limitation of the scope

of practice within designated settings; the imposition of retraining or rehabilitation

requirements; the requirement of practice under supervision; the requirement of participation

in a diversion program such as that established pursuant to section
214.31
or the conditioning

of continued practice on demonstration of knowledge or skills by appropriate examination

or other review of skill and competence;

(6) impose a civil penalty not exceeding $10,000 for each separate violation,
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except that

a civil penalty not exceeding $25,000 may be imposed for each separate violation of section

62J.842
,
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the amount of the civil penalty to be fixed so as to deprive a licensee or registrant

of any economic advantage gained by reason of the violation, to discourage similar violations

by the licensee or registrant or any other licensee or registrant, or to reimburse the board

for the cost of the investigation and proceeding, including but not limited to, fees paid for

services provided by the Office of Administrative Hearings, legal and investigative services

provided by the Office of the Attorney General, court reporters, witnesses, reproduction of

records, board members' per diem compensation, board staff time, and travel costs and

expenses incurred by board staff and board members; and

(7) reprimand the licensee or registrant.

Sec. 3.

Minnesota Statutes 2024, section 151.071, subdivision 2, is amended to read:

Subd. 2.

Grounds for disciplinary action.

The following conduct is prohibited and is

grounds for disciplinary action:

(1) failure to demonstrate the qualifications or satisfy the requirements for a license or

registration contained in this chapter or the rules of the board. The burden of proof is on

the applicant to demonstrate such qualifications or satisfaction of such requirements;

(2) obtaining a license by fraud or by misleading the board in any way during the

application process or obtaining a license by cheating, or attempting to subvert the licensing

examination process. Conduct that subverts or attempts to subvert the licensing examination

process includes, but is not limited to: (i) conduct that violates the security of the examination

materials, such as removing examination materials from the examination room or having

unauthorized possession of any portion of a future, current, or previously administered

licensing examination; (ii) conduct that violates the standard of test administration, such as

communicating with another examinee during administration of the examination, copying

another examinee's answers, permitting another examinee to copy one's answers, or

possessing unauthorized materials; or (iii) impersonating an examinee or permitting an

impersonator to take the examination on one's own behalf;

(3) for a pharmacist, pharmacy technician, pharmacist intern, applicant for a pharmacist

or pharmacy license, or applicant for a pharmacy technician or pharmacist intern registration,

conviction of a felony reasonably related to the practice of pharmacy. Conviction as used

in this subdivision includes a conviction of an offense that if committed in this state would

be deemed a felony without regard to its designation elsewhere, or a criminal proceeding

where a finding or verdict of guilt is made or returned but the adjudication of guilt is either

withheld or not entered thereon. The board may delay the issuance of a new license or

registration if the applicant has been charged with a felony until the matter has been

adjudicated;

(4) for a facility, other than a pharmacy, licensed or registered by the board, if an owner

or applicant is convicted of a felony reasonably related to the operation of the facility. The

board may delay the issuance of a new license or registration if the owner or applicant has

been charged with a felony until the matter has been adjudicated;

(5) for a controlled substance researcher, conviction of a felony reasonably related to

controlled substances or to the practice of the researcher's profession. The board may delay

the issuance of a registration if the applicant has been charged with a felony until the matter

has been adjudicated;

(6) disciplinary action taken by another state or by one of this state's health licensing

agencies:

(i) revocation, suspension, restriction, limitation, or other disciplinary action against a

license or registration in another state or jurisdiction, failure to report to the board that

charges or allegations regarding the person's license or registration have been brought in

another state or jurisdiction, or having been refused a license or registration by any other

state or jurisdiction. The board may delay the issuance of a new license or registration if an

investigation or disciplinary action is pending in another state or jurisdiction until the

investigation or action has been dismissed or otherwise resolved; and

(ii) revocation, suspension, restriction, limitation, or other disciplinary action against a

license or registration issued by another of this state's health licensing agencies, failure to

report to the board that charges regarding the person's license or registration have been

brought by another of this state's health licensing agencies, or having been refused a license

or registration by another of this state's health licensing agencies. The board may delay the

issuance of a new license or registration if a disciplinary action is pending before another

of this state's health licensing agencies until the action has been dismissed or otherwise

resolved;

(7) for a pharmacist, pharmacy, pharmacy technician, or pharmacist intern, violation of

any order of the board, of any of the provisions of this chapter or any rules of the board or

violation of any federal, state, or local law or rule reasonably pertaining to the practice of

pharmacy;

(8) for a facility, other than a pharmacy, licensed by the board, violations of any order

of the board, of any of the provisions of this chapter or the rules of the board or violation

of any federal, state, or local law relating to the operation of the facility;

(9) engaging in any unethical conduct; conduct likely to deceive, defraud, or harm the

public, or demonstrating a willful or careless disregard for the health, welfare, or safety of

a patient; or pharmacy practice that is professionally incompetent, in that it may create

unnecessary danger to any patient's life, health, or safety, in any of which cases, proof of

actual injury need not be established;

(10) aiding or abetting an unlicensed person in the practice of pharmacy, except that it

is not a violation of this clause for a pharmacist to supervise a properly registered pharmacy

technician or pharmacist intern if that person is performing duties allowed by this chapter

or the rules of the board;

(11) for an individual licensed or registered by the board, adjudication as mentally ill

or developmentally disabled, or as a chemically dependent person, a person dangerous to

the public, a sexually dangerous person, or a person who has a sexual psychopathic

personality, by a court of competent jurisdiction, within or without this state. Such

adjudication shall automatically suspend a license for the duration thereof unless the board

orders otherwise;

(12) for a pharmacist or pharmacy intern, engaging in unprofessional conduct as specified

in the board's rules. In the case of a pharmacy technician, engaging in conduct specified in

board rules that would be unprofessional if it were engaged in by a pharmacist or pharmacist

intern or performing duties specifically reserved for pharmacists under this chapter or the

rules of the board;

(13) for a pharmacy, operation of the pharmacy without a pharmacist present and on

duty except as allowed by a variance approved by the board;

(14) for a pharmacist, the inability to practice pharmacy with reasonable skill and safety

to patients by reason of illness, use of alcohol, drugs, narcotics, chemicals, or any other type

of material or as a result of any mental or physical condition, including deterioration through

the aging process or loss of motor skills. In the case of registered pharmacy technicians,

pharmacist interns, or controlled substance researchers, the inability to carry out duties

allowed under this chapter or the rules of the board with reasonable skill and safety to

patients by reason of illness, use of alcohol, drugs, narcotics, chemicals, or any other type

of material or as a result of any mental or physical condition, including deterioration through

the aging process or loss of motor skills;

(15) for a pharmacist, pharmacy, pharmacist intern, pharmacy technician, medical gas

dispenser, or controlled substance researcher, revealing a privileged communication from

or relating to a patient except when otherwise required or permitted by law;

(16) for a pharmacist or pharmacy, improper management of patient records, including

failure to maintain adequate patient records, to comply with a patient's request made pursuant

to sections
144.291
to
144.298
, or to furnish a patient record or report required by law;

(17) fee splitting, including without limitation:

(i) paying, offering to pay, receiving, or agreeing to receive, a commission, rebate,

kickback, or other form of remuneration, directly or indirectly, for the referral of patients;

(ii) referring a patient to any health care provider as defined in sections
144.291
to

144.298
in which the licensee or registrant has a financial or economic interest as defined

in section
144.6521, subdivision 3
, unless the licensee or registrant has disclosed the

licensee's or registrant's financial or economic interest in accordance with section
144.6521
;

and

(iii) any arrangement through which a pharmacy, in which the prescribing practitioner

does not have a significant ownership interest, fills a prescription drug order and the

prescribing practitioner is involved in any manner, directly or indirectly, in setting the price

for the filled prescription that is charged to the patient, the patient's insurer or pharmacy

benefit manager, or other person paying for the prescription or, in the case of veterinary

patients, the price for the filled prescription that is charged to the client or other person

paying for the prescription, except that a veterinarian and a pharmacy may enter into such

an arrangement provided that the client or other person paying for the prescription is notified,

in writing and with each prescription dispensed, about the arrangement, unless such

arrangement involves pharmacy services provided for livestock, poultry, and agricultural

production systems, in which case client notification would not be required;

(18) engaging in abusive or fraudulent billing practices, including violations of the

federal Medicare and Medicaid laws or state medical assistance laws or rules;

(19) engaging in conduct with a patient that is sexual or may reasonably be interpreted

by the patient as sexual, or in any verbal behavior that is seductive or sexually demeaning

to a patient;

(20) failure to make reports as required by section
151.072
or to cooperate with an

investigation of the board as required by section
151.074
;

(21) knowingly providing false or misleading information that is directly related to the

care of a patient unless done for an accepted therapeutic purpose such as the dispensing and

administration of a placebo;

(22) aiding suicide or aiding attempted suicide in violation of section
609.215
as

established by any of the following:

(i) a copy of the record of criminal conviction or plea of guilty for a felony in violation

of section
609.215, subdivision 1
or 2;

(ii) a copy of the record of a judgment of contempt of court for violating an injunction

issued under section
609.215, subdivision 4
;

(iii) a copy of the record of a judgment assessing damages under section
609.215
,

subdivision 5; or

(iv) a finding by the board that the person violated section
609.215, subdivision
1 or 2.

The board must investigate any complaint of a violation of section
609.215
, subdivision 1

or 2;

(23) for a pharmacist, practice of pharmacy under a lapsed or nonrenewed license. For

a pharmacist intern, pharmacy technician, or controlled substance researcher, performing

duties permitted to such individuals by this chapter or the rules of the board under a lapsed

or nonrenewed registration. For a facility required to be licensed under this chapter, operation

of the facility under a lapsed or nonrenewed license or registration;
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and
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(24) for a pharmacist, pharmacist intern, or pharmacy technician, termination or discharge

from the health professionals services program for reasons other than the satisfactory

completion of the program
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; and
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.
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(25) for a manufacturer, a violation of section
62J.842
or
62J.845
.

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APPENDIX

Repealed Minnesota Statutes: 26-07367

62J.841 DEFINITIONS.

Subdivision 1.

Scope.

For purposes of sections
62J.841
to
62J.845
, the following definitions apply.

Subd. 2.

Consumer Price Index.

"Consumer Price Index" means the Consumer Price Index, Annual Average, for All Urban Consumers, CPI-U: U.S. City Average, All Items, reported by the United States Department of Labor, Bureau of Labor Statistics, or its successor or, if the index is discontinued, an equivalent index reported by a federal authority or, if no such index is reported, "Consumer Price Index" means a comparable index chosen by the Bureau of Labor Statistics.

Subd. 3.

Generic or off-patent drug.

"Generic or off-patent drug" means any prescription drug for which any exclusive marketing rights granted under the Federal Food, Drug, and Cosmetic Act, section 351 of the federal Public Health Service Act, and federal patent law have expired, including any drug-device combination product for the delivery of a generic drug.

Subd. 4.

Manufacturer.

"Manufacturer" has the meaning given in section
151.01
, subdivision 14a, but does not include an entity that must be licensed solely because the entity repackages or relabels drugs.

Subd. 5.

Prescription drug.

"Prescription drug" means a drug for human use subject to United States Code, title 21, section 353(b)(1).

Subd. 6.

Wholesale acquisition cost.

"Wholesale acquisition cost" has the meaning provided in United States Code, title 42, section 1395w-3a.

Subd. 7.

Wholesale distributor.

"Wholesale distributor" has the meaning provided in section
151.441, subdivision 14
.

62J.842 EXCESSIVE PRICE INCREASES PROHIBITED.

Subdivision 1.

Prohibition.

No manufacturer shall impose, or cause to be imposed, an excessive price increase, whether directly or through a wholesale distributor, pharmacy, or similar intermediary, on the sale of any generic or off-patent drug sold, dispensed, or delivered to any consumer in the state.

Subd. 2.

Excessive price increase.

A price increase is excessive for purposes of this section when:

(1) the price increase, adjusted for inflation utilizing the Consumer Price Index, exceeds:

(i) 15 percent of the wholesale acquisition cost over the immediately preceding calendar year; or

(ii) 40 percent of the wholesale acquisition cost over the immediately preceding three calendar years; and

(2) the price increase, adjusted for inflation utilizing the Consumer Price Index, exceeds $30 for:

(i) a 30-day supply of the drug; or

(ii) a course of treatment lasting less than 30 days.

Subd. 3.

Exemption.

It is not a violation of this section for a wholesale distributor or pharmacy to increase the price of a generic or off-patent drug if the price increase is directly attributable to additional costs for the drug imposed on the wholesale distributor or pharmacy by the manufacturer of the drug.

62J.843 REGISTERED AGENT AND OFFICE WITHIN THE STATE.

Any manufacturer that sells, distributes, delivers, or offers for sale any generic or off-patent drug in the state must maintain a registered agent and office within the state.

62J.844 ENFORCEMENT.

Subdivision 1.

Notification.

(a) The commissioner of health shall notify the manufacturer of a generic or off-patent drug and the attorney general of any price increase that the commissioner believes may violate section
62J.842
.

(b) The commissioner of management and budget and any other state agency that provides or purchases a pharmacy benefit except the Department of Human Services, and any entity under contract with a state agency to provide a pharmacy benefit other than an entity under contract with the Department of Human Services, may notify the manufacturer of a generic or off-patent drug and the attorney general of any price increase that the commissioner or entity believes may violate section
62J.842
.

Subd. 2.

Submission of drug cost statement and other information by manufacturer; investigation by attorney general.

(a) Within 45 days of receiving a notice under subdivision 1, the manufacturer of the generic or off-patent drug shall submit a drug cost statement to the attorney general. The statement must:

(1) itemize the cost components related to production of the drug;

(2) identify the circumstances and timing of any increase in materials or manufacturing costs that caused any increase during the preceding calendar year, or preceding three calendar years as applicable, in the price of the drug; and

(3) provide any other information that the manufacturer believes to be relevant to a determination of whether a violation of section
62J.842
has occurred.

(b) The attorney general may investigate whether a violation of section
62J.842
has occurred, in accordance with section
8.31, subdivision 2
.

Subd. 3.

Petition to court.

(a) On petition of the attorney general, a court may issue an order:

(1) compelling the manufacturer of a generic or off-patent drug to:

(i) provide the drug cost statement required under subdivision 2, paragraph (a); and

(ii) answer interrogatories, produce records or documents, or be examined under oath, as required by the attorney general under subdivision 2, paragraph (b);

(2) restraining or enjoining a violation of sections
62J.841
to
62J.845
, including issuing an order requiring that drug prices be restored to levels that comply with section
62J.842
;

(3) requiring the manufacturer to provide an accounting to the attorney general of all revenues resulting from a violation of section
62J.842
;

(4) requiring the manufacturer to repay to all Minnesota consumers, including any third-party payers, any money acquired as a result of a price increase that violates section
62J.842
;

(5) notwithstanding section
16A.151
, requiring that all revenues generated from a violation of section
62J.842
be remitted to the state and deposited into a special fund, to be used for initiatives to reduce the cost to consumers of acquiring prescription drugs, if a manufacturer is unable to determine the individual transactions necessary to provide the repayments described in clause (4);

(6) imposing a civil penalty of up to $10,000 per day for each violation of section
62J.842
;

(7) providing for the attorney general's recovery of costs and disbursements incurred in bringing an action against a manufacturer found in violation of section
62J.842
, including the costs of investigation and reasonable attorney's fees; and

(8) providing any other appropriate relief, including any other equitable relief as determined by the court.

(b) For purposes of paragraph (a), clause (6), every individual transaction in violation of section
62J.842
is considered a separate violation.

Subd. 4.

Private right of action.

Any action brought pursuant to section
8.31, subdivision
3a, by a person injured by a violation of section
62J.842
is for the benefit of the public.

62J.845 PROHIBITION ON WITHDRAWAL OF GENERIC OR OFF-PATENT DRUGS FOR SALE.

Subdivision 1.

Prohibition.

A manufacturer of a generic or off-patent drug is prohibited from withdrawing that drug from sale or distribution within this state for the purpose of avoiding the prohibition on excessive price increases under section
62J.842
.

Subd. 2.

Notice to board and attorney general.

Any manufacturer that intends to withdraw a generic or off-patent drug from sale or distribution within the state shall provide a written notice of withdrawal to the attorney general at least 90 days prior to the withdrawal.

Subd. 3.

Financial penalty.

The attorney general shall assess a penalty of $500,000 on any manufacturer of a generic or off-patent drug that the attorney general determines has failed to comply with the requirements of this section.

62J.846 SEVERABILITY.

If any provision of sections
62J.841
to
62J.845
or the application thereof to any person or circumstance is held invalid for any reason in a court of competent jurisdiction, the invalidity does not affect other provisions or any other application of sections
62J.841
to
62J.845
that can be given effect without the invalid provision or application.