(a) Each drug discount agreement shall do all of the following:

(1) Specify which of the manufacturer’s drugs are included in the agreement.

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(2) Permit the department to remove a drug from the agreement if there is a dispute over the drug’s utilization.

(3) Permit a manufacturer to audit claims for the drugs the manufacturer provides under the program. Claims information provided to manufacturers shall comply with all federal and state privacy laws that protect a program participant’s health information.

(b) In addition to the requirements of subdivision (a), each drug discount agreement with a single-source manufacturer shall do all of the following:

(1) Require the manufacturer to make a rebate payment to the department for each drug described in paragraph (1) of subdivision (a) dispensed to a program participant.

(2) Require the manufacturer to make the rebate payments to the department on at least a quarterly basis.

(3) Require the manufacturer to provide, upon request, documentation to validate the rebate.

(c) The department may collect prospective rebates from single-source manufacturers for payment to pharmacies. The amount of the prospective discount shall be specified in the drug rebate agreements.

(d) (1) Manufacturers shall calculate and pay interest on late or unpaid rebates. The interest shall not apply to any prior period adjustments of unit rebate amounts or department utilization adjustments.

(2) For rebate payments to the program, manufacturers shall calculate and pay interest on late or unpaid rebates for quarters that begin on or after January 1, 2007.

(e) Interest required by subdivision (d) shall begin accruing 38 calendar days from the date of mailing of the invoice, including supporting utilization data sent to the manufacturer. Interest shall continue to accrue until the date of mailing of the manufacturer’s payment. Interest rates and calculations for purposes of this section shall be at 10 percent.

(f) A participating manufacturer shall clearly identify all rebates, interest, and other payments, and payment transmittal forms for the program, in a manner designated by the department.

(Added by Stats. 2006, Ch. 619, Sec. 2. Effective January 1, 2007. Provisions operative and implemented on or after July 1, 2010, as prescribed in Section 130500. Conditionally inoperative on February 1, 2015. Repealed conditionally on January 1, 2016, pursuant to Section 130500.)