Title: Section 1004.15 - Pricing

Effective Date

04/15/2015

1004.15 Pricing.

(a) Definitions. For purposes of this section, the following terms have the following meanings:

(1) “Cost analysis” shall mean the review and evaluation of the separate cost elements and profit of a proposed price and the application of judgment to determine how well the proposed costs represent what the price per unit for approved medical marihuana products should be, assuming reasonable economy and efficiency.

(2) “Price” shall mean the cost to manufacture, market and distribute approved medical marihuana products plus a reasonable profit.

(b) Department Approval Required. A registered organization shall only charge a price for an approved medical marihuana product that has been approved by the department.

(c) Determination of Price. The department shall set the per unit price of each form of approved medical marihuana product sold by any registered organization, as follows:

(1) Registered organizations shall submit a proposed price per unit for each form of medical marihuana indicated in its registration. Registered organizations shall submit such information and documentation, in a manner and format determined by the department, sufficient for the department to perform a cost analysis of the proposed price. In particular, the registered organization shall, in a manner and format determined by the department, provide a detailed breakdown of, and submit information and documentation concerning, all costs it factored to arrive at its proposed price, including but not limited to its fixed and variable costs such as materials and services; direct labor; and indirect costs.

(2) The registered organization shall provide cost or pricing data that is accurate and reliable, and shall certify, at the time of submission of its price proposal, that to the best of its knowledge and belief, the cost or pricing data were accurate, complete, and current as of the date of submission.

(3) The department shall determine the reasonableness of the proposed costs. In making this determination, the department may consider whether the costs represent inefficient and uneconomical practices; are not costs appropriately attributable to the price; and/or are costs unsupported by sufficient documentation or information to justify their inclusion in the proposed price. If the registered organization has been granted a renewal of its registration, any relevant historical price, cost and/or sales data of the registered organization; and any other information the commissioner deems appropriate.

(4) The department may approve the proposed price, refuse approval of a proposed price, or modify or reduce the proposed price.

(d) Examination of Records for Determination of Price. The registered organization shall grant the department or the department’s authorized representative the right to examine records that formed the basis for the proposed price, including the registered organization’s books, records, documents and other types of factual information that will permit an adequate evaluation of the proposed price.

(e) Correction of Insufficient Price Data. If the registered organization or department determines that the cost or pricing data submitted is inaccurate, incomplete or noncurrent prior to the department’s approval of the price, the registered organization shall submit new data to correct the deficiency, or consider the inaccuracy, incompleteness, or noncurrency of the data.

(f) Duration of Price Determination. The department’s approved price shall be in effect for the entire period of the registered organization’s registration; provided, however, that at the conclusion of the first year of the registration period, or prior to that time based upon documented exceptional circumstances, the registered organization may request that the price be modified based upon a material change in the registered organization’s costs. The registered organization shall fully support its request with sufficient information and documentation, in a manner and format determined by the department, to justify its request. If the department denies such request, the registered organization shall only charge prices previously approved by the department.

(g) Adjustments to determined price. If the department has approved a price, the registered organization shall immediately notify the department of any cost or pricing data submitted that it determines was inaccurate, incomplete, or noncurrent as of the date of the department’s approval of the price. If the registered organization provides such notice, or if the department independently learns of such inaccurate, incomplete or noncurrent data, the department may require the registered organization to provide new data to correct the deficiency, or consider the inaccuracy, incompleteness, or noncurrency of the data. The department may adjust the price per dose if the defective data significantly increased the price approved by the department.

(h) Audits. The department may perform audits, which may include site visits. The registered organization shall provide reasonable access to the department of its facilities, books and records.

Volume

VOLUME E (Title 10)

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