HOUSE BILL No. 4019

 

January 27, 2005, Introduced by Rep. Kahn and referred to the Committee on Health Policy.

 

     A bill entering into the midwest pharmaceutical compact; and

 

for related purposes.

 

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

 

     Sec. 1. The midwest pharmaceutical compact is enacted into law

 

and entered into with all jurisdictions legally joining in the

 

compact, in the form substantially as follows:

 

MIDWEST PHARMACEUTICAL COMPACT

 

ARTICLE I. PURPOSE

 

     The purpose of the midwest pharmaceutical compact shall be to

 

provide an enlarged pool for the purchase of pharmaceutical

 

products and services for all medicaid recipients, publicly insured

 

or uninsured health care recipients, and any other persons who the

 


commission deems eligible who reside in the compacting states that

 

are party to this compact. Pharmaceuticals purchased through the

 

compact shall be distributed as determined by the commission to

 

medicaid recipients, publicly insured and uninsured citizens, and

 

any other persons deemed eligible who are served by health care

 

professionals, public hospitals and clinics, nonprofit hospitals

 

and clinics, organized emergency departments, or free clinics

 

within each compacting state.

 

ARTICLE II. DEFINITIONS

 

     As used in this compact:

 

     (a) "Commission" means the midwest pharmaceutical commission

 

established by this compact.

 

     (b) "Compacting state" means any state or province that has

 

enacted the enabling legislation for this compact.

 

     (c) "Compacting state's delegation" means the 5 resident

 

members of the commission from a compacting state.

 

     (d) "Health care professional" means an individual licensed or

 

registered under article 15 of the public health code, 1978 PA 368,

 

MCL 333.16101 to 333.18838, and engaged in the practice of his or

 

her health profession in a proprietorship, partnership,

 

professional corporation, or other business entity. Health care

 

professional does not include a sanitarian or a veterinarian.

 

     (e) "Pharmaceutical" means any medicinal substance,

 

preparation, device, or service recognized by the United States

 

pharmacopoeia and national formulary, or any revision thereof, any

 

substance and preparation dispensed pursuant to a prescription

 

issued by an authorized health care professional and intended for

 


external and internal use in the cure, diagnosis, mitigation,

 

treatment, or prevention of disease in humans, and any substance

 

and preparation other than food intended to affect the structure or

 

any function of the human body. Pharmaceutical includes any drug

 

delivery system, testing kit, or any other supplies dispensed

 

pursuant to a prescription.

 

     (f) "State" means any state of the United States, the District

 

of Columbia, and any other territory of the United States.

 

ARTICLE III. THE COMMISSION

 

     (1) The compacting states hereby create the midwest

 

pharmaceutical commission. The commission shall be a public body

 

corporate of each compacting state. The commission shall serve as

 

the negotiating and purchasing entity for pharmaceutical products

 

for the compacting states. The commission shall have all the

 

responsibilities, powers, and duties as provided under this

 

compact, including the power to sue and be sued, and any additional

 

powers that may be conferred upon it by subsequent action of the

 

respective legislatures of the compacting states in accordance with

 

the terms of this compact.

 

     (2) The commission shall consist of 5 resident members of each

 

compacting state as follows:

 

     (a) The governor or minister or his or her designee who shall

 

serve during the tenure of office of the governor or minister.

 

     (b) One legislator from each chamber who shall serve 2-year

 

terms and be appointed by the appropriate appointing authority in

 

each chamber of the legislature.

 

     (c) One member at large from the health care field who shall

 


be appointed by the governor or minister.

 

     (d) One member at large who shall be a layperson appointed by

 

the governor or minister.

 

     (3) One of the 2 at-large members initially appointed in each

 

state shall serve a 2-year term. The other, and any regularly

 

appointed successor to either at-large member, shall serve a 4-year

 

term unless otherwise established by law in a compacting state. All

 

vacancies shall be filled in the same manner as the original

 

appointment and in accordance with the laws of the appointing

 

state. Any member appointed to fill the vacancy shall serve until

 

the end of the incomplete term.

 

     (4) The commission shall select annually, from among its

 

members, a chairperson, a vice-chairperson, and a treasurer.

 

     (5) The commission shall appoint an executive director who

 

shall serve at its pleasure and who shall act as secretary to the

 

commission. The treasurer, the executive director, and other

 

personnel that the commission may determine shall be bonded in any

 

amount required by the commission.

 

     (6) The commission shall meet at least once each calendar

 

year. The chairperson may call additional meetings and, upon the

 

request of a majority of the commission members of the compacting

 

states, shall call additional meetings. Public notice shall be

 

given of all meetings and meetings shall be open to the public.

 

     (7) Each compacting state represented at any meeting of the

 

commission is entitled to 1 vote. Each compacting state's

 

delegation shall appoint 1 member of the delegation as its voting

 

member with the authority to vote on behalf of that compacting

 


state and represent the position of that compacting state in all

 

matters before the commission. A majority of the voting members

 

from the compacting states shall constitute a quorum for the

 

transaction of business, unless a larger quorum is required by the

 

bylaws of the commission. Within each compacting state, a proxy may

 

be assigned to another member of that compacting state's

 

delegation.

 

ARTICLE IV. POWERS AND DUTIES OF THE COMMISSION

 

     (1) The commission shall adopt a seal and suitable bylaws

 

governing its management and operations.

 

     (2) Irrespective of the civil service, personnel, or other

 

merit system laws of any of the compacting states, the commission

 

in its bylaws shall provide for the personnel policies and programs

 

of the compact.

 

     (3) The commission shall submit a budget to the governor and

 

legislature of each compacting state as may be required by each

 

compacting state. The budget shall contain specific recommendations

 

of the amount or amounts to be appropriated by each of the

 

compacting states.

 

     (4) The commission shall report annually to the governor and

 

legislature of each compacting state concerning the activities of

 

the commission during the preceding year. The reports shall include

 

any recommendations that may have been adopted by the commission.

 

     (5) The commission may borrow, accept, or contract for the

 

services of personnel from any state, province, the United States,

 

Canada or any subdivision or agency thereof, any interstate agency,

 

or any institution, foundation, person, firm, or corporation.

 


     (6) The commission may accept for any of its purposes and

 

functions under the compact any donations, grants, or both, of

 

money, equipment, supplies, materials, and services from any state,

 

province, the United States, Canada, or any subdivision or agency

 

thereof, any interstate agency, or any institution, foundation,

 

person, firm, or corporation and may receive, utilize, and dispose

 

of the same.

 

     (7) The commission may establish and maintain offices that are

 

located within 1 or more of the compacting states.

 

     (8) The commission may establish committees and hire staff as

 

necessary to carry out its functions.

 

     (9) The commission may provide for actual and necessary

 

expenses for attendance of its members at official meetings of the

 

commission or its designated committees.

 

ARTICLE V. ACTIVITIES OF THE COMMISSION

 

     (1) The commission shall determine the pharmaceutical needs of

 

each compacting state. The commission shall negotiate

 

pharmaceutical prices from each pharmaceutical company that seeks

 

to provide pharmaceuticals for the formularies for all states and

 

provinces in the compact. The prices negotiated shall be at least

 

as low to all compacting states as the lowest price to the

 

individual state or province entering the compact.

 

     (2) The commission shall be empowered to establish an open

 

formulary for all of the compacting states or to designate which,

 

if any, pharmaceuticals shall be preauthorized for use within the

 

compact. The commission shall not exclude from its formulary any

 

product of any pharmaceutical company that has entered into

 


agreement with the commission.

 

     (3) The commission may enter into agreements with any of the

 

compacting states to provide pharmaceutical supplies and services

 

to any of the other compacting states, provided that the price is

 

less than that negotiated by the commission.

 

     (4) The commission shall, after negotiations with interested

 

parties and the compacting states, determine the costs of providing

 

pharmaceuticals for use in its agreements. The compacting states

 

shall contribute appropriated funds not otherwise provided, as

 

determined by the commission, for carrying out the agreements. The

 

commission may also serve as the administrative and fiscal agent in

 

carrying out agreements for pharmaceutical services.

 

ARTICLE VI. FINANCE

 

     (1) Each compacting state shall be individually responsible

 

for the purchase of the pharmaceuticals necessary to meet the

 

demand of its state.

 

     (2) The monies necessary to finance the general operation of

 

the commission not otherwise provided for in carrying forth its

 

duties, responsibilities, and powers as stated in this compact

 

shall be appropriated to the commission by the compacting states,

 

when authorized by the respective legislatures, by equal

 

apportionment among the compacting states.

 

     (3) The commission shall keep accurate accounts of all

 

receipts and disbursements. The receipts and disbursements of the

 

commission shall be subject to the audit and accounting procedures

 

established under its bylaws. The receipts and disbursements of the

 

commission shall also be subject to audit by the official

 


legislative auditor general or similar entity of any compacting

 

state. However, all receipts and disbursements of funds handled by

 

the commission shall be audited annually by a certified or licensed

 

public accountant and the report of the audit shall be included in

 

and become part of the annual report of the commission.

 

     (4) The accounts of the commission shall be open at any

 

reasonable time for inspection by duly authorized representatives

 

of the compacting states and persons authorized by the commission.

 

ARTICLE VII. ELIGIBLE PARTIES AND ENTRY INTO COMPACT

 

     (1) The states of Illinois, Indiana, Kansas, Minnesota,

 

Michigan, Missouri, Nebraska, North Dakota, Ohio, and Wisconsin and

 

the Province of Ontario, Canada, are eligible to become party to

 

this compact. Additional states will be eligible if approved by a

 

majority of the compacting states.

 

     (2) As to any eligible state or province, this compact shall

 

become effective when its legislature enacts the same into law.

 

However, the compact is not effective unless enacted into law by 3

 

states prior to December 31, 2005.

 

     (3) Amendments to the compact are effective upon their

 

enactment by the legislature of each compacting state.

 

ARTICLE VIII. WITHDRAWAL, DEFAULT, AND TERMINATION

 

     (1) Any compacting state may withdraw from this compact by

 

repealing the compact. A withdrawing state or province is liable

 

for any obligations that it may have incurred on account of its

 

party status up to the effective date of withdrawal, except that if

 

the withdrawing state has specifically undertaken or committed

 

itself to any performance of an obligation extending beyond the

 


effective date of withdrawal, it shall remain liable to the extent

 

of the obligation.

 

     (2) If any compacting state shall default in the performance

 

of its obligations, assumed or imposed, in accordance with the

 

provisions of this compact, all rights, privileges, and benefits

 

conferred by this compact or agreements under this compact are

 

suspended from the effective date of the default as fixed by the

 

commission. The commission shall stipulate the conditions and

 

maximum time for compliance under which the defaulting state or

 

province may resume its regular status. Unless the default is

 

remedied under the stipulations and within the time period set

 

forth by the commission, this compact may be terminated with

 

respect to the defaulting state or province by affirmative vote of

 

a majority of the other members to the compact. Any defaulting

 

state may be reinstated by performing all acts and obligations as

 

stipulated by the commission.

 

ARTICLE IX. SEVERABILITY AND CONSTRUCTION

 

     The provisions of the compact entered into under this act are

 

severable and if any phrase, clause, sentence, or provision of the

 

compact is declared to be contrary to the constitution of any

 

compacting state or province or of the United States or Canada or

 

the applicability thereof to any government, agency, person, or

 

circumstance is held invalid, the validity of the remainder of this

 

compact and the applicability of the compact to any government,

 

agency, person, or circumstance is not affected. If the compact

 

entered into under this act is held contrary to the constitution of

 

any compacting state or province, the compact shall remain in full

 


force and effect as to the remaining compacting states and in full

 

force and effect as to the compacting state affected as to all

 

severable matters. The provisions of this compact shall be

 

liberally construed to effectuate the purposes of this act.