Drug Law Changes Could Frustrate Pharmacy Industry Business and Operations

State legislatures around the country are enacting legislation and considering bills that would have a significant impact on our drug industry clients. Here, Quarles & Brady provides insight on some of the new laws and pending bills to highlight certain proposals that could significantly impact our clients’ business operations.

California:

A California bill would allow patients to opt out of mandatory mail order refill requirements and permit prescription synchronization.

California is considering a bill (AB 2418) that would do three things: (1) allow insureds to opt out of prescription drug plan requirements that force people to have refills filled by mail-order pharmacies, beginning on January 1, 2016; (2) ensure payment to pharmacies that partially fill patients’ prescriptions to synchronize their refill dates; and (3) permit early refills of covered topical ophthalmic products at 70% of the predicted days of use.

A report to the California Legislature from the California Health Benefits Review Program at the University of California estimated that:

• 1.07 million enrollees who have mandatory mail-order requirements would gain access to an opt-process;
• 10.28 million enrollees would gain coverage for synchronization refills;
• 10.43 million enrollees who have coverage for topical ophthalmic product refills at 75-85% would gain coverage for topical ophthalmic product refills at 70% of expected days of use;
• retail pharmacy refills would increase by 0.26%, with a commensurate decrease in mandatory mail refills due to switching from mail to retail refills; and
• topical ophthalmic product refills would increase by 0.12%.

As of July 1, 2014, the bill had been passed by the State Assembly and was in committee in the Senate.

Pharmacy Benefit Management companies and mail-order pharmacies should carefully track this bill and be prepared for system and program changes, in the event the bill becomes law.

Connecticut:

A new Connecticut law requires pharmacies to inform customers signing up for rewards programs if, and how, their medical information could be used.

A new law (SB 208) concerning pharmacy rewards programs and protected health information went into effect in Connecticut on July 1, 2014. The law requires retailers to give consumers a written, plain-language summary of a pharmacy rewards program’s terms and conditions before enrolling consumers in the program. In addition, it requires additional disclosures about the use of protected health information if consumers must sign a HIPAA authorization form to participate in pharmacy rewards programs.

Specifically, if a consumer must sign a HIPAA authorization form, the retailer must include information on the form, adjacent to the signature block, stating: (i) the specific uses or disclosures of protected health information (“PHI”) that the HIPAA authorization allows; (ii) whether PHI will be disclosed to third parties and, if it is, that it is not protected by federal or state privacy laws; (iii) which third parties, if any, will have access to the consumer’s PHI; (iv) how the consumer can revoke the HIPAA authorization; and (v) that the consumer is entitled to a copy of their signed HIPAA authorization form.

This law impacts every pharmacy that offers a rewards program in Connecticut. These pharmacies must revisit their marketing and enrollment materials ASAP to ensure they contain all appropriate disclosures. Also, pharmacies that offer rewards contingent on HIPAA authorizations must review and revise all authorizations to bring them current with Connecticut law. As indicated above, this process will require pharmacies to identify all third parties with which the pharmacy shares the participant’s PHI.

Michigan:

Gov. Rick Snyder has a bill on his desk that would create new compounding requirements, and new criminal penalties for violating those rules.

On June 12, 2014, the Michigan legislature passed a bill (SB 704) concerning compounding practices. If signed into law by the governor, the bill would permit the state Department of Licensing and Regulatory Affairs to summarily suspend a pharmacy license upon receipt of a notice from the FDA or the CDC that there is an imminent risk to public health, safety, or welfare. It would also impose misdemeanor and felony penalties for failure to comply with new compounding regulations. Given the recent publication of federal compounding standards, it is not yet clear how this law would interact with the federal requirements. Nevertheless, the initiative is underway to impose strict criminal liability for noncompliance with compounding safety standards in Michigan.

New York:

New York is considering legislation that, if enacted, could create administrative difficulties for pharmacies. One bill would impose additional counseling requirements on pharmacists dispensing antidepressant or antianxiety medications that have an increased risk of suicidal behavior. The other bill would require nonresident pharmacies to be managed by a New York-licensed pharmacist.

SB 7383 and AB 10042 would add new counseling requirements for prescriptions for antidepressant or antianxiety medications that have an increased risk of suicidal behavior. For the medication to be dispensed to a child under 17, a parent or legal guardian would have to be present during counseling. During counseling, pharmacists would be required to provide patients with New York State’s toll-free suicide prevention phone number, a suicide prevention website address, and a pamphlet regarding the increased risk of suicide. The bills were introduced in May and June 2014 and, as of July 2, 2014, were pending in committee.

In addition, two companion bills (SB 5392 and AB 7702) would have a major impact on nonresident pharmacies, requiring all nonresident pharmacies to be supervised and managed at all times by a New York-licensed pharmacist. Though the bills were introduced in 2013, both are still alive in committee as of July 2, 2014.

Ohio:

On June 17, 2014, Ohio passed a new law that generally prohibits pharmacies from dispensing non-self-injectable cancer drugs.

Pharmacies should be aware that a new law (SB 230) prevents pharmacists from dispensing to a patient, a patient’s agent, or a patient’s private residence cancer treatment drugs that must be administered intravenously or by injection and that cannot be self-administered. There are exceptions if the patient’s private residence is an institution or a health care facility or, if certain notifications have been provided, when the patient is in hospice or is a home health agency client.

The law also eliminates the requirement that the Executive Director of the State Board of Pharmacy be a licensed Ohio pharmacist. It goes into effect in September 2014, 90 days after it was signed into law.

For more information, please contact Roger Morris at (602) 229-5269 / roger.morris@quarles.com or your Quarles & Brady attorney.