ASSEMBLY, No. 231



STATE OF NEW JERSEY

208th LEGISLATURE



PRE-FILED FOR INTRODUCTION IN THE 1998 SESSION





Sponsored by:

Assemblyman NICHOLAS R. FELICE

District 40 (Bergen and Passaic)

Assemblyman JOSEPH AZZOLINA

District 13 (Middlesex and Monmouth)









SYNOPSIS

Prohibits discrimination by a manufacturer or wholesale distributor owned in full or in part by a manufacturer in the pricing of drugs.



CURRENT VERSION OF TEXT

Introduced Pending Technical Review by Legislative Counsel.



An Act concerning certain sales of prescription drugs in this State and supplementing Title 56 of the Revised Statutes.



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



1. As used in this act:

"Drug" means any substance subject to paragraph 1 of subsection (b) of 21 U.S.C. 353.

"In-patient use" means the dispensing of drugs by a health care facility to care for its in-patients and not the sale of drugs to out-patients by the health care facility pharmacy.

"Manufacturer" means any person engaged in the manufacture or processing of a drug or drugs and does not include a wholesale distributor of drugs or a retail pharmacy licensed in this State, except that if a manufacturer has an ownership interest in a wholesale distributor, that wholesale distributor shall be a manufacturer.

"Purchaser" means any person who purchases a drug or drugs for resale directly to consumers in this State or for dispensing directly to consumers in this State.

"Wholesale distributor" means any person, other than a manufacturer, who purchases drugs for resale to purchasers.



2. A manufacturer shall offer a drug it manufactures or processes to purchasers and wholesale distributors on the terms and conditions offered or accorded to the manufacturer's most favored purchaser or wholesale distributor, including, but not limited to, any transaction in which a manufacturer sells to a purchaser through a contractual arrangement implemented by one or more wholesale distributors, except for variations because of the actual costs of distribution of the drug by the manufacturer; discounts for volume purchases of the drug and prompt payment for purchases of the drug, which discounts shall be made available to all purchasers and wholesale distributors on equal terms and be directly proportional to the economies and efficiencies realized by the manufacturer; and discounts for reasonable reimbursement for the value to the manufacturer of a purchaser's or wholesale distributor's actual marketing functions, provided that these discounts shall be available to every purchaser or wholesale distributor which performs these functions in this State.



3. a. An action may be maintained in any court of competent jurisdiction to prevent, restrain or enjoin a violation, or potential violation, of this act. The action may be instituted by any person injured by a violation or potential violation of this act or by the Attorney General. If a violation or potential violation of this act is established in the action, the court shall enjoin and restrain, or otherwise prohibit, that violation or potential violation. In the action it shall not be necessary that actual damages to the plaintiff be alleged or proved, but if alleged and proved, the plaintiff in the action, in addition to such injunctive relief and costs of suit, including filing fees, reasonable attorneys' fees and reasonable expenses of discovery and document reproduction, shall be entitled to recover from the defendant the actual damages sustained by the plaintiff. Proof of a violation of this act shall constitute prima facie evidence of damage to the plaintiff. Actual damages to the plaintiff may be determined by loss of prescription activity, diminished profit or any other legally recognized formula.

b. If no injunctive relief is sought or required, any person injured by a violation of this act may maintain an action for damages and costs of suit, including filing fees, reasonable attorneys' fees and reasonable expenses of discovery and document reproduction, in any court of competent jurisdiction. Proof of a violation of this act shall constitute prima facie evidence of damage to the plaintiff. Actual damages to the plaintiff may be determined by loss of prescription activity, diminished profit or any other legally recognized formula.



4. The provisions of this act shall not apply to;

a. the sale of drugs by a manufacturer to any federal agency or institution or to a health care facility as defined in the "Health Care Facilities Planning Act," P.L.1971, c.136 (C.26:2H-1 et seq.) if those drugs are only dispensed on the premises of the health care facility for in-patient use;

b. rebates provided by a manufacturer pursuant to the provisions of the "Pharmaceutical Rebate Act," P.L.1992, c.83 (C.30:4D-35.1 et seq.) ; or

c. the sale of drugs by a manufacturer to a purchaser which is exempt from federal taxation pursuant to section 501(c)(3) of the Internal Revenue Code (26 U.S.C. 501(c)(3)), and which dispenses those drugs free of charge or at a reduced fee based on the patient's ability to pay, except that the sale of drugs to a purchaser which is a health insurer, hospital, medical or health service corporation, health maintenance organization or employee benefit plan subject to regulation by the Department of Insurance or the Department of Health shall not be exempt pursuant to this subsection.



5. This act shall take effect on the 30th day after enactment and shall apply to sales of drugs on or after that 30th day.



STATEMENT



This bill requires a prescription drug manufacturer to offer a drug it manufactures or processes to any purchasers or wholesale distributors on the terms and conditions offered or accorded to the manufacturer's most favored purchaser or wholesale distributor, except for variations because of the manufacturer's actual distribution costs; volume and payment discounts, which discounts must be made available to all purchasers or wholesale distributors on equal terms; and reasonable purchaser or wholesale distributor margins.

An injured party or the Attorney General may seek injunctive relief for violations of the provisions of this bill. An injured party may also sue for damages caused by such violations.

The provisions of the bill do not apply to purchases of drugs by federal agencies or institutions or to purchases of drugs by health care facilities if the drugs are only dispensed on the premises for in-patient use. The provisions of the bill also do not apply to rebates pursuant to the "Pharmaceutical Rebate Act."

If a manufacturer has an ownership interest in a wholesale distributor, that wholesale distributor shall be deemed a manufacturer for the purposes of the bill.

In addition, the bill exempts from its provisions the sale of drugs by a manufacturer to a purchaser which is exempt from federal taxation pursuant to section 501(c)(3) of the Internal Revenue Code (26 U.S.C. 501(c)(3)), and which dispenses those drugs free of charge or at a reduced fee based on the patient's ability to pay, except that the sale of drugs to a purchaser which is a health insurer, hospital, medical or health service corporation, health maintenance organization or employee benefit plan subject to regulation by the Department of Insurance or the Department of Health is not subject to exemption.