Opinion ID: 2710262
Heading Depth: 3
Heading Rank: 1

Heading: interpretation of mcl 333.17755(2).

Text: Whether relief is sought for violation of § 17755(2) itself, or through violations of the HCFCA and the MFCA, § 17755(2) is the basis from which all of plaintiffs’ claims derive. In order to properly evaluate whether plaintiffs’ allegations pass muster to survive summary disposition, we must first construe § 17755(2) to determine what a plaintiff must allege to sufficiently state a violation. Section 17755 is a provision in Part 177 of the Public Health Code.22 Before the enactment of § 17755, a pharmacist was required to dispense a prescription as written and was prohibited from substituting a less expensive generically equivalent drug.23 After 19 Gurganus, unpub op at 6-7. 20 Office Planning Group, Inc v Baraga-Houghton-Keweenaw Child Dev Bd, 472 Mich 479, 488; 697 NW2d 871 (2005). 21 Id. 22 MCL 333.17701 et seq. 23 Legislative Notes, Improving Michigan’s Generic Drug Law, 9 Mich J L Reform 394, 394 (1976). 10 enactment, pharmacies are generally permitted to substitute generic drugs for their brandname equivalents. Section 17755 states in pertinent part: (1) When a pharmacist receives a prescription for a brand name drug product, the pharmacist may, or when a purchaser requests a lower cost generically equivalent drug product, the pharmacist shall dispense a lower cost but not higher cost generically equivalent drug product if available in the pharmacy, except as provided in subsection (3). If a drug is dispensed which is not the prescribed brand, the purchaser shall be notified and the prescription label shall indicate both the name of the brand prescribed and the name of the brand dispensed and designate each respectively. If the dispensed drug does not have a brand name, the prescription label shall indicate the generic name of the drug dispensed, except as otherwise provided in [MCL 333.17756]. (2) If a pharmacist dispenses a generically equivalent drug product, the pharmacist shall pass on the savings in cost to the purchaser or to the third party payment source if the prescription purchase is covered by a third party pay contract. The savings in cost is the difference between the wholesale cost to the pharmacist of the 2 drug products.[24] The proper interpretation of Subsection (2) is disputed in the instant case. First, the parties disagree whether Subsection (2) applies to all transactions in which a generic drug is dispensed or only in situations in which a generic drug is substituted for its brandname equivalent. Second, the parties disagree about what it means to “pass on the savings in cost.” The goal of statutory interpretation “is to give effect to the Legislature’s intent, focusing first on the statute’s plain language.”25 Individual words and phrases are not 24 MCL 333.17755(1) and (2). 25 Malpass v Dep’t of Treasury, 494 Mich 237, 247-248; 833 NW2d 272 (2013) (quotation marks and citation omitted). 11 read in a vacuum; “we examine the statute as a whole, reading individual words and phrases in the context of the entire legislative scheme.”26 Subsection (1) states, “When a pharmacist receives a prescription for a brand name drug product, the pharmacist may [or, upon request, shall] dispense a lower cost [generic drug] . . . .”27 This introductory provision provides the context in which to read the rest of § 17755, i.e., transactions in which a pharmacist substitutes a generic drug for a brand-name drug. Subsection (2) then begins, “If a pharmacist dispenses a generically equivalent drug product, the pharmacist shall pass on the savings in cost . . . .”28 This introductory phrase, which immediately follows Subsection (1) governing transactions in which generic drugs are dispensed in lieu of brand-name drugs, indicates that the text that follows is only triggered if the pharmacist is operating under Subsection (1). In other words, Subsection (2) only applies when the pharmacist is engaged in a substitution transaction described in Subsection (1). Surely, it would be counterintuitive for the Legislature to have inserted this provision governing all generic drug transactions immediately after a specific provision referring only to substitution transactions. The first subsection gives meaning to the one that follows. Other textual support only strengthens this interpretation. Subsection (2) itself refers to a “generically equivalent drug product.”29 The use of the term “equivalent” 26 Id. at 248. 27 MCL 333.17755(1). 28 MCL 333.17755(2). 29 Id. (emphasis added). 12 evidences a Legislative intent to compare two different drug products. If, as the Court of Appeals concluded, Subsection (2) applies to all transactions in which generic drugs are dispensed, including transactions in which no brand-name drug was prescribed, then the term “equivalent” is effectively written out of the statute because there is no referent to which the generic drug product is equivalent.30 Similarly, the definition of “savings in cost” in Subsection (2) refers to the difference between “the 2 drug products.”31 Without a prescribed brand-name drug that is equivalent to the generic, there is only a single drug product. These textual clues belie the Court of Appeals’ conclusion that nothing in the language of the statute limits the scope of Subsection (2) to only substitution transactions. Plaintiffs improperly read the first clause of Subsection (2)—which reads, “[i]f a pharmacist dispenses a generically equivalent drug product”—as detached from the remainder of the subsection in order to come to their preferred interpretation that Subsection (2) applies to all transactions in which a generic drug is dispensed. In doing so, they ignore the remainder of Subsection (2). Viewing an excerpt of a subsection with a magnifying glass to the exclusion of its relevant context eschews this Court’s dictate that “we must consider both the plain meaning of the critical word or phrase as well as its placement and purpose in the statutory scheme.”32 When read properly, it is clear that the 30 In re MCI Telecom Complaint, 460 Mich 396, 414; 596 NW2d 164 (1999) (“[A] court should avoid a construction that would render any part of the statute surplusage or nugatory.”). 31 MCL 333.17755(2). 32 Herman v Berrien Co, 481 Mich 352, 366; 750 NW2d 570 (2008) (quotation marks and citations omitted). 13 Legislature intended that Subsection (2) apply only to transactions in which a generic drug is dispensed in place of its brand-name equivalent. Plaintiffs’ construction also ignores the fact that, before enactment of this statute, a pharmacist had to fill the prescription as the physician wrote it. We now turn to the proper interpretation of the phrase “savings in cost.” Subsection (2) states that a “pharmacist shall pass on the savings in cost to the purchaser” in a substitution transaction.33 As provided in MCL 333.17755(2), “savings in cost” means “the difference between the wholesale cost to the pharmacist of the 2 drug products.” Defendants argue that the statute only requires pharmacists to sell the substituted generic drug at the same price that a purchaser would pay had the generic been prescribed in the first instance. In other words, pharmacists are prohibited from increasing the customer’s cost of the substituted generic drug. However, this reading ignores the definition in the statute: The amount that a pharmacist must pass on to a purchaser or third-party payer is the difference between the wholesale cost of the two drugs. In other words, “savings in cost” equals the brand-name wholesale cost minus the generic wholesale cost.34 As a practical matter, Subsection (2) provides a maximum allowable 33 MCL 333.17755(2). 34 Defendants seem to suggest that interpreting the statute by its plain terms recognizes an outmoded method of how pharmacies actually set their drug prices and that interpreting the statute by its terms would be impractical in light of these realities. If this is the case, it is a concern more properly addressed to the Legislature, whose purview is the enactment of legislation, as compared to the interpretation of that legislation, which is the province of the courts. See People v Kirby, 440 Mich 485, 493-494; 487 NW2d 404 (1992) (“[A]rguments that a statute is unwise or results in bad policy should be addressed 14 profit regardless of whether the pharmacist dispenses a generic drug or a brand-name drug—he cannot make more from dispensing a generic drug than he could from a brandname drug. Furthermore, a 2013 article in Pharmacy & Therapeutics explained that “patients have taken the same drug prescribed or dispensed under more than one trademark” and provided examples of generic drugs that have multiple brand-name drugs associated with them.35 This confirms the requirement in § 17755(2) that an actual substitution transaction must occur; otherwise, there is no basis for determining which brand-name wholesale cost to use when calculating the savings in cost.