First Substitute H.B. 69

Representative Rosalind J. McGee proposes the following substitute bill:

1 PHARMACEUTICAL COST REDUCTION
2 AMENDMENTS
3 2004 GENERAL SESSION
4 STATE OF UTAH
5 Sponsor: Rosalind J. McGee
6
7 LONG TITLE
8 General Description:
9 This bill requires a pharmacist to dispense a generic drug in substitution of another drug
10 if the generic is less expensive and is a therapeutically equivalent drug product.
11 Highlighted Provisions:
12 This bill:
13 . requires a pharmacist to dispense a generic drug in substitution of another drug if
14 the generic is less expensive and is a therapeutically equivalent drug product;
15 . requires a pharmacist, pharmacy intern, or pharmacy technician to inform the person
16 presenting the prescription that he may refuse to accept the substitution, unless the
17 pharmacist is being paid for the drug by a governmental agency; and
18 . does not apply to:
19 . any inpatient of a hospital; or
20 . a prescription drug if the substitution would make the transaction ineligible for
21 reimbursement by a third party.
22 Monies Appropriated in this Bill:
23 None
24 Other Special Clauses:
25 This bill provides a coordination clause.

26 Utah Code Sections Affected:
27 AMENDS:
28 58-17a-605.1, as last amended by Chapter 18, Laws of Utah 2002, Fifth Special Session
29
30 Be it enacted by the Legislature of the state of Utah:
31 Section 1. Section 58-17a-605.1 is amended to read:
32 58-17a-605.1. Restrictive drug formulary prohibited -- Dispensing of generic
33 drugs.
34 (1) As used in this section:
35 (a) "generic form" means a prescription drug that is available in generic form and has
36 an A rating in the United States Pharmacopeia and Drug Index;
37 (b) "legend drug" means any drug that requires a prescription under state or federal
38 law; and
39 (c) "restrictive drug formulary" means a list of legend drugs, other than drugs for
40 cosmetic purposes, that are prohibited by the Utah Department of Health from dispensation, but
41 are approved by the federal Food and Drug Administration.
42 (2) A practitioner may prescribe legend drugs in accordance with this chapter that, in
43 his professional judgment and within the lawful scope of his practice, he considers appropriate
44 for the diagnosis and treatment of his patient.
45 (3) Except as provided in Subsection (4), the Utah Department of Health may not
46 maintain a restrictive drug formulary that restricts a physician's ability to treat a patient with a
47 legend drug that has been approved and designated as safe and effective by the federal Food
48 and Drug Administration, except for drugs for cosmetic purposes.
49 (4) When a multisource legend drug is available in the generic form, the Department of
50 Health may only reimburse for the generic form of the drug unless the treating physician
51 demonstrates to the Department of Health a medical necessity for dispensing the nongeneric,
52 brand-name legend drug.
53 (5) This section does not affect the state's ability to exercise the exclusion options
54 available under the federal Omnibus Budget Reconciliation Act of 1990.
55 (6) (a) Except as otherwise provided in this section, if a practitioner has prescribed a
56 drug by brand name and the practitioner has not indicated, by a method set forth in Subsection

57 (6)(c), that a substitution is prohibited, the pharmacist or pharmacy intern who fills or refills
58 the prescription shall dispense, in substitution, another drug which is available to him if:
59 (i) the substituted drug is less expensive than the drug prescribed by brand name;
60 (ii) the substituted drug is of the same generic type and is designated a therapeutic
61 equivalent in the approved drug products with therapeutic equivalence evaluations prepared by
62 the Center for Drug Evaluation and Research of the Federal Food and Drug Administration;
63 (iii) the substituted drug is permitted to move in interstate commerce; and
64 (iv) the pharmacist or pharmacy intern counsels the patient on the use and the expected
65 response to the prescribed drug, whether a substitute or not, and the substitution is not
66 otherwise prohibited by this chapter;
67 (b) Before a pharmacist dispenses a drug in substitution for a drug prescribed by brand
68 name, the pharmacist, pharmacy intern, or pharmacy technician shall:
69 (i) advise the person who presents the prescription that the pharmacist intends to
70 dispense a drug in substitution; and
71 (ii) advise the person that he may refuse to accept the drug that the pharmacist intends
72 to dispense in substitution, unless the pharmacist is being paid for the drug by a governmental
73 agency, in which case the pharmacist shall dispense the drug as provided in Subsection (4).
74 (iii) If a person refuses to accept the drug that the pharmacist intends to dispense in
75 substitution, the pharmacist shall dispense the drug prescribed by brand name, unless the
76 pharmacist is being paid for the drug by a governmental agency, in which case the pharmacist
77 shall dispense the drug as provided in Subsection (4).
78 (c) A pharmacist shall not dispense a drug in substitution for a drug prescribed by
79 brand name:
80 (i) if the practitioner has indicated that a substitution is prohibited using one or more of
81 the following methods:
82 (A) by oral communication to the pharmacist; or
83 (B) by including the handwritten words "Dispense as Written" on a prescription that is
84 given to the pharmacist, or in the case of an electronically transmitted prescription, including
85 faxed prescriptions, the practitioner expressly indicates to the pharmacist that the brand name
86 drug prescribed is medically necessary by indicating "Dispense as Written"; or
87 (ii) without the prescriber's authorization on trade name drug product prescriptions

88 unless the product is currently categorized in the approved drug products with therapeutic
89 equivalence evaluations prepared by the Center for Drug Evaluation and Research of the
90 Federal Food and Drug Administration as a drug product considered to be therapeutically
91 equivalent to another drug product.
92 (d) Subsections (6)(c)(i) and (ii) does not apply to prescriptions paid for by the
93 Department of Health pursuant to Subsection (4).
94 (e) The provisions of this section also apply to a prescription issued to a person by a
95 practitioner from outside this state if the practitioner has not indicated, by a method set forth in
96 Subsection (6)(c), that a substitution is prohibited or the practitioner has indicated that a
97 specific alternative product is medically necessary.
98 (f) The provisions of this Subsection (6) do not apply to:
99 (i) a prescription drug that is dispensed to any inpatient of a hospital by an inpatient
100 pharmacy which is associated with that hospital; or
101 (ii) a prescription drug that is dispensed to any person by a pharmacist if the
102 substitution:
103 (A) would violate the terms of a health care plan that maintains a mandatory, exclusive,
104 or closed formulary for its coverage for prescription drugs; or
105 (B) would otherwise make the transaction ineligible for reimbursement by a third party.
106 Section 2. Coordinating H.B. 69 with S.B. 114.
107 If this H.B. 69 and S.B. 114, Amendments to Prescribing, Preparation, and Dispensing
108 of Prescription Drugs, both pass, it is the intent of the Legislature that:
109 (1) Section 58-17a-605.1 in H.B. 69 is repealed; and
110 (2) Section 58-17b-605 in S.B. 114 shall be amended to read:
111 " 58-17b-605. Drug product equivalents.
112 (1) A pharmacist or pharmacy intern dispensing a prescription order for a specific drug
113 by brand or proprietary name:
114 (a) shall substitute another therapeutically equivalent generic drug if:
115 (i) the therapeutically equivalent generic drug is less expensive than the drug
116 prescribed by brand name;
117 (ii) the pharmacist, pharmacy intern, or pharmacy technician advises the person who
118 presents the prescription that:

119 (A) the pharmacist intends to dispense a drug in substitution; and
120 (B) if the person refuses to accept the drug that the pharmacist intends to dispense in
121 substitution, the pharmacist shall dispense the drug prescribed by brand name, unless the
122 pharmacist is being paid for the drug by a governmental agency, in which case the pharmacist
123 shall dispense the drug as provided in Subsection 59-17b-606 (4); and
124 (iii) the requirements of Subsection (1)(b)(ii) through (vi) are met; and
125 (b) may substitute another drug product equivalent if the provisions of Subsection
126 (1)(a)(i) do no apply, and if:
127 (i) the purchaser specifically requests or consents to the substitution of the drug
128 product;
129 (ii) the substituted drug is of the same generic type and is designated a therapeutic
130 equivalent in the approved drug products with therapeutic equivalence evaluations prepared by
131 the Center for Drug Evaluation and Research of the Federal Food and Drug Administration;
132 (iii) the substituted drug product is permitted to move in interstate commerce;
133 (iv) the pharmacist or pharmacy intern counsels the patient on the use and the expected
134 response to the prescribed drug, whether a substitute or not, and the substitution is not
135 otherwise prohibited by this chapter;
136 (v) the prescribing practitioner has not indicated that an equivalent drug product is not
137 to be substituted as provided in Subsection (5); and
138 (vi) the substitution is not otherwise prohibited by law.
139 (2) (a) Each out-of-state mail service pharmacy dispensing a substituted drug product
140 into this state shall notify the patient of substitution either by telephone or in writing.
141 (b) Each out-of-state mail service pharmacy shall comply with the requirements of this
142 chapter with respect to drugs which may be substituted, including labeling and record keeping,
143 when dispensing substituted drug products.
144 (3) Pharmacists or pharmacy interns may not substitute without the prescriber's
145 authorization on trade name drug product prescriptions unless the product is currently
146 categorized in the approved drug products with therapeutic equivalence evaluations prepared
147 by the Center for Drug Evaluation and Research of the Federal Food and Drug Administration
148 as a drug product considered to be therapeutically equivalent to another drug product.
149 (4) A pharmacist or pharmacy intern who dispenses a prescription with a drug product

150 equivalent under this section assumes no greater liability than would be incurred had the
151 pharmacist or pharmacy intern dispensed the prescription with the drug product prescribed.
152 (5) (a) If, in the opinion of the practitioner, it is in the best interest of the patient that an
153 equivalent drug product not be substituted, the practitioner may indicate a prohibition on
154 substitution by writing "dispense as written" or in the case of an electronically transmitted
155 prescription, the practitioner expressly indicates to the pharmacist that the brand name drug
156 prescribed is medically necessary by indicating "dispense as written."
157 (b) If the prescription is communicated orally by the practitioner to the pharmacist or
158 pharmacy intern, the practitioner shall indicate the prohibition on substitution and that
159 indication shall be noted in writing by the pharmacist or pharmacy intern with the name of the
160 practitioner and the words "orally by" and the initials of the pharmacy practitioner written after
161 it.
162 (6) The substitution, if any, shall be communicated to the purchaser. The container
163 shall be labeled with the name of the drug dispensed and the pharmacist, pharmacy intern, or
164 pharmacy technician shall indicate on the file copy of the prescription both the name of the
165 prescribed drug and the name of the drug dispensed in its place.
166 (7) Failure of a licensed medical practitioner to specify that no substitution is
167 authorized does not constitute evidence of negligence.
168 (8) The requirements of Subsection (1)(a) do not apply to:
169 (a) a prescription drug that is dispensed to any inpatient of a hospital by an inpatient
170 pharmacy which is associated with that hospital; or
171 (b) a prescription drug that is dispensed to any person by a pharmacist if the
172 substitution:
173 (i) would violate the terms of a health care plan that maintains a mandatory, exclusive,
174 or closed formulary for its coverage for prescription drugs; or
175 (ii) should otherwise make the transaction ineligible for reimbursement by a third
176 party."