New Jersey-2018-S1590-Introduced

An Act concerning pharmaceutical pricing and supplementing Title 24 of the Revised Statutes.

Be It Enacted by the Senate and General Assembly of the State of New Jersey:

1. As used in P.L. , c. (C. ) (pending before the Legislature as this bill):

"Director" means the Director of the Division of Consumer Affairs in the Department of Law and Public Safety.

"Division" means the Division of Consumer Affairs in the Department of Law and Public Safety.

"Essential off-patent or generic drug or biological product" means any prescription drug or biological product, including any drug-device or biological product-device combination product for the delivery of the prescription drug or biological product:

(1) that is made available for sale in the State;

(2) for which all exclusive marketing rights, if any, granted under the 52 Stat. 1040, 21 U.S.C. s.301 et seq., section 351 of the "Public Health Service Act," 58 Stat. 682, 42 U.S.C. s.262, and federal patent law, have expired;

(3) that is actively manufactured and marketed by three or fewer manufacturers; and

(4) that appears on the current Model List of Essential Medicines adopted by the World Health Organization or has been designated by the Commissioner of Health as an essential medicine 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.

"FDA" means the federal Food and Drug Administration.

"Price gouging" means any unconscionable increase in the price of a prescription drug or biological product.

"Unconscionable increase" means an increase in the price of a prescription drug or biological product that:

(1) is excessive and not justified by the cost of producing the drug or biological product or the cost of appropriate expansion of access to the drug or biological product to promote the public health; and

(2) results in consumers for whom the drug or biological product has been prescribed having no alternative but to purchase the drug or biological product at an excessive price because of the importance of the drug to the health of the consumers and insufficient competition in the market for the drug or biological product.

"Wholesale acquisition cost" means, with respect to a drug or biological product, the manufacturer's list price for the drug or biological product to wholesalers or direct purchasers in the United States, not including prompt pay or other discounts, rebates, or reductions in price, for the most recent month for which the information is available, as reported in wholesale price guides or other publications of drug or biological product pricing data.

2. a. A prescription drug or biological product manufacturer or wholesale distributor shall not engage in price gouging in the sale of an essential off-patent or generic drug or biological product.

b. It shall not constitute a violation of subsection a. of this section for a wholesale distributor to increase the price of an essential off-patent or generic drug or biological product if the price increase is directly attributable to additional costs for the drug or biological product imposed on the wholesale distributor by the manufacturer of the drug or biological product.

3. a. The director may notify the Attorney General of any increase in the price of an essential off-patent or generic drug or biological product whenever:

(1) the price increase, individually or in combination with other price increases:

(a) would result in an increase of 50 percent or more in the wholesale acquisition cost of the drug or biological product within the preceding one-year period; or

(b) would result in an increase of 50 percent or more in the price paid by the Medicaid program or NJ FamilyCare program for the drug or biological product within the preceding one-year period, as certified by the Director of the Division of Medical Assistance and Health Services in the Department of Human Services; and

(2) (a) a 30-day supply of the maximum recommended dosage of the drug or biological product for any indication, according to the FDA-approved label for the drug or biological product, would cost more than $80 at the wholesale acquisition cost of the drug or biological product;

(b) a full course of treatment with the drug or biological product, according to the FDA-approved label for the drug or biological product, would cost more than $80 at the wholesale acquisition cost of the drug or biological product; or

(c) if the drug or biological product is made available to consumers only in quantities that do not correspond to a 30-day supply, a full course of treatment, or a single dose, the drug or biological product would cost more than $80 at the wholesale acquisition cost of the drug or biological product to obtain a 30-day supply or a full course of treatment.

b. At the request of the Attorney General, the manufacturer of an essential off-patent or generic drug or biological product identified in a notice provided pursuant to subsection a. of this section shall, no later than 45 days after receipt of the request, submit a statement to the Attorney General:

(1) itemizing the components of the cost of producing the drug or biological product;

(2) identifying the circumstances and timing of any increase in materials or manufacturing costs that caused any increase in the price of the drug or biological product within the one-year period preceding the date of the price increase;

(3) identifying the circumstances and timing of any expenditures made by the manufacturer to expand access to the drug or biological product and explaining any improvement in public health associated with those expenditures; and

(4) providing any other information that the manufacturer believes to be relevant to a determination as to whether a violation of P.L. , c. (C. ) (pending before the Legislature as this bill) has occurred.

c. The Attorney General may require a manufacturer or a wholesale distributor to produce any records or documents that may be relevant to a determination as to whether a violation of P.L. , c. (C. ) (pending before the Legislature as this bill) has occurred.

d. Upon petition of the Attorney General, a court may issue an order:

(1) compelling a manufacturer to submit the statement required pursuant to subsection b. of this section or a manufacturer or wholesale distributor to produce specific records or documents as requested by the Attorney General pursuant to subsection c. of this section;

(2) restraining or enjoining a violation of P.L. , c. (C. ) (pending before the Legislature as this bill);

(3) restoring to any consumer, including any third party payor, any money acquired by a manufacturer or wholesale distributor as a result of a price increase that violates P.L. , c. (C. ) (pending before the Legislature as this bill);

(4) requiring a manufacturer that has engaged in price gouging in the sale of an essential off-patent or generic drug or biological product to make the drug or biological product available to wholesale distributors, pharmacies, and consumers in the State, for a period of up to one year, at a price that does not exceed the price at which the drug or biological product was made available to such wholesale distributors, pharmacies, and consumers immediately prior to the violation of P.L. , c. (C. ) (pending before the Legislature as this bill); and

(5) assessing a civil penalty of up to $10,000 against a manufacturer or wholesale distributor for each violation of P.L. , c. (C. ) (pending before the Legislature as this bill). For the purposes of this paragraph, each sale of an essential off-patent or generic drug or biological product at a price that constitutes price gouging shall be deemed to be a separate violation.

e. The Attorney General shall not commence an action seeking relief pursuant to paragraphs (2) through (5) of subsection d. of this section unless the Attorney General has provided the manufacturer or wholesale distributor an opportunity to meet with the Attorney General to provide a justification for the increase in the price of the essential off-patent or generic drug or biological product.

f. Any information provided by a manufacturer pursuant to subsection b. of this section, or by a manufacturer or wholesale distributor pursuant to subsection c. of this section, shall be deemed confidential and shall not be disclosed to the public or otherwise subject to public access, inspection, or copying, unless such confidentiality is waived by the manufacturer or wholesale distributor.

g. It shall not be a defense to an action brought by the Attorney General pursuant to subsection d. of this section that a manufacturer alleged to have violated P.L. , c. (C. ) (pending before the Legislature as this bill) did not sell the essential off-patent or generic drug or biological product directly to a consumer in this State.

4. The Director of the Division of Consumer Affairs in the Department of Law and Public Safety shall, pursuant to the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.) adopt such rules and regulations as shall be necessary to implement the provisions of this act.

5. This act shall take effect the first day of the seventh month next following the date of enactment, except that the Director of the Division of Consumer Affairs in the Department of Law and Public Safety may take any advance administrative action as may be necessary to implement the provisions of this act.

STATEMENT

This bill prohibits manufacturers and wholesale distributors of prescription drugs biological products from excessively increasing the price of certain prescription drugs and biological products without justification.

Specifically, manufacturers and wholesale distributors may not engage in price gouging in the sale of an essential off-patent or generic drug or biological product. Price gouging is defined to mean an increase in the price of a drug or biological product that: (1) is excessive and not justified by the cost of producing the drug or biological product or expanding access to the drug or biological product to promote the public health; and (2) results in consumers having no alternative but to purchase the drug or biological product at an excessive price because of the importance of the drug or biological product to their health and insufficient marketplace competition. Under the bill, wholesale distributors will not be found to have violated this prohibition if the distributor increases the price of a drug or biological product in direct response to additional costs for the drug or biological product imposed on the distributor by the manufacturer.

The bill defines "essential off-patent or generic drug or biological product" to mean any prescription drug or biological product, including any drug-device or biological product-device combination product for the delivery of the prescription drug or biological product: (1) that is made available for sale in the State; (2) for which all exclusive marketing rights granted under federal law have expired; (3) that is actively manufactured and marketed by three or fewer manufacturers; and (4) that appears on the current Model List of Essential Medicines adopted by the World Health Organization or has been otherwise designated as an essential medicine by the Commissioner of Health.

The Director of the Division of Consumer Affairs in the Department of Law and Public Safety may notify the Attorney General of any increase in the price of an essential off-patent or generic drug or biological product whenever: (1) the price increase, individually or in combination with other price increases, would result in an increase of 50 percent or more in the wholesale acquisition cost for the drug or biological product or in the price paid for the drug or biological product by the State Medicaid or NJ FamilyCare programs within a one-year period; and (2) the wholesale acquisition cost of the drug or biological product is more than $80 for a 30-day supply or a full course of treatment.

At the request of the Attorney General, the manufacturer of an essential off-patent or generic drug or biological product identified in a notice provided under the bill will be required to submit, within 45 days of receiving the request, a statement to the Attorney General: (1) detailing the cost of producing the drug or biological product; (2) identifying the circumstances and timing of any cost increases in the preceding year; (3) identifying the circumstances and timing of any expenditures made by the manufacturer to expand access to the drug or biological product, and explaining any resulting improvements in public health; and (4) any other information the manufacturer determines to be relevant to a determination as to whether a violation of the provisions of the bill has occurred.

The Attorney General may require a manufacturer or a wholesale distributor to produce any records or documents that may be relevant to a determination as to whether a violation of the bill has occurred. The Attorney General may additionally petition for a court order compelling submission of any required statement or records; restraining or enjoining a violation of the bill; restoring to any consumer, including any third party payor, any money acquired by the manufacturer or wholesale distributor as a result of a price increase that violates the bill; requiring a manufacturer that has engaged in price gouging to make the drug or biological product available in the State, for a period of up to one year, at a price that does not exceed the price immediately prior to the violation; and assessing a civil penalty of up to $10,000 against a manufacturer or wholesale distributor who has violated the provisions of the bill. For the purposes of assessing the civil penalty, each sale of a drug or biological product at a price that constitutes price gouging will be deemed a separate violation. It will not be a defense to an action brought by the Attorney General that a manufacturer did not sell the essential off-patent or generic drug or biological product directly to a consumer in New Jersey.

The Attorney General may not commence an action seeking a court order for any relief, other than an order compelling submission of required statements or records, unless the Attorney General has provided the manufacturer or wholesale distributor the opportunity to meet with the Attorney General to provide a justification for the price increase.

Any information provided by a manufacturer or wholesale distributor under the bill will be confidential and may not be disclosed to the public or otherwise subjected to public access, inspection, or copying, unless the manufacturer or wholesale distributor waives confidentiality.