093_HB0209
LRB093 04349 SJM 04398 b
1 AN ACT concerning discount prescription drugs for senior
2 citizens and disabled persons.
3 Be it enacted by the People of the State of Illinois,
4 represented in the General Assembly:
5 Section 1. Short title. This Act may be cited as the
6 Senior Citizens and Disabled Persons Prescription Drug
7 Discount Program Act.
8 Section 5. Findings. The General Assembly finds that:
9 (a) Although senior citizens represent 12% of the
10 population, they use on average 37% of prescription drugs
11 that are dispensed.
12 (b) Senior citizens in the United States without
13 prescription drug insurance coverage pay the highest prices
14 in the world for needed medications.
15 (c) High prescription drug prices force many Illinois
16 seniors and disabled persons to go without proper medication
17 or other necessities, thereby affecting their health and
18 safety.
19 (d) Prescription drug prices in the United States are
20 the world's highest, averaging 32% higher than in Canada, 40%
21 higher than in Mexico, and 60% higher than in Great Britain.
22 (e) Prescription drug prices listed on the Federal
23 Supply Schedule that serve the Veterans Administration, the
24 Department of Defense, and the Coast Guard average 52% below
25 the non-federal average manufacturer's price.
26 (f) Regardless of household income, seniors and disabled
27 persons without prescription drug coverage are often just one
28 serious illness away from poverty.
29 (g) Reducing the price of prescription drugs would
30 benefit the health and well-being of all Illinois senior
31 citizens and disabled persons by providing more affordable
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1 access to needed drugs.
2 (h) Drug prices on the Federal Supply Schedule are
3 negotiated by the Department of Veterans Affairs and are the
4 best publicly available indicator of the prices that drug
5 companies charge their favored customers.
6 (i) The State of Illinois is involved in the purchase of
7 prescription drugs in a number of areas: the Department of
8 Central Management Services is involved in the purchase of
9 prescription drugs for the State employees group insurance
10 program, for State-operated mental health and developmental
11 disabilities facilities, and for Department of Veterans'
12 Affairs facilities; the Department of Public Health is
13 involved in the purchase of prescription drugs for ADAP (Aids
14 Drug Assistance Program) and for the STD (Sexually
15 Transmitted Diseases) Program; the Department of Corrections
16 is involved in the purchase of prescription drugs for prison
17 inmates; the Department of Revenue is involved in the
18 purchase of prescription drugs for the "Circuit Breaker"
19 Pharmaceutical Assistance Program; the Department of Children
20 and Family Services is involved in the purchase of
21 prescription drugs for State wards; and the Department of
22 Public Aid is involved in the purchase of prescription drugs
23 for Medicaid recipients; collectively this affords the State
24 of Illinois great bargaining power for the purchase of
25 prescription drugs.
26 Section 10. Purpose. The purpose of this Program is to
27 require the Department of Central Management Services to
28 establish and administer a program that will enable eligible
29 senior citizens and disabled persons to purchase prescription
30 drugs at discounted prices.
31 Section 15. Definitions. As used in this Act:
32 "Authorized pharmacy" means any pharmacy registered in
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1 this State under the Pharmacy Practice Act of 1987 and
2 approved by the Department.
3 "AWP" or "Average wholesale price" means the amount
4 determined from the latest publication of the Blue Book, a
5 universally subscribed pharmacist reference guide annually
6 published by the Hearst Corporation. "AWP" or "Average
7 wholesale price" may also be derived electronically from the
8 drug pricing database synonymous with the latest publication
9 of the Blue Book and furnished in the National Drug Data File
10 (NDDF) by First Data Bank (FDB), a service of the Hearst
11 Corporation.
12 "Department" means the Department of Central Management
13 Services.
14 "Director" means the Director of Central Management
15 Services.
16 "Disabled person" means a person unable to engage in any
17 substantial gainful activity by reason of a medically
18 determinable physical or mental impairment which can be
19 expected to result in death or has lasted or can be expected
20 to last for a continuous period of not less than 12 months.
21 "Drug manufacturer" means any entity (1) that is located
22 within or outside Illinois that is engaged in (i) the
23 production, preparation, propagation, compounding,
24 conversion, or processing of prescription drug products
25 covered under the Program, either directly or indirectly by
26 extraction from substances of natural origin, independently
27 by means of chemical synthesis, or by a combination of
28 extraction and chemical synthesis or (ii) the packaging,
29 repackaging, leveling, labeling, or distribution of
30 prescription drug products covered under the Program and (2)
31 that elects to provide prescription drugs either directly or
32 under contract with any entity providing prescription drug
33 services on behalf of the State of Illinois. "Drug
34 manufacturer", however, does not include a wholesale
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1 distributor of drugs or a retail pharmacy licensed under
2 Illinois law.
3 "Eligible senior" means a person who is (i) a resident of
4 Illinois and (ii) 65 years of age or older.
5 "Federal Supply Schedule" or "FSS" means a price
6 catalogue containing goods available for purchase by federal
7 agencies. Drug prices on the FSS are negotiated by the
8 (U.S.) Department of Veterans' Affairs and are the best
9 publicly available indicator of prices drug companies charge
10 favored customers.
11 "Prescription drug" means any prescribed drug that may be
12 legally dispensed by an authorized pharmacy.
13 "Program" means the Senior Citizens and Disabled Persons
14 Prescription Drug Discount Program created under this Act.
15 "Rules" includes rules adopted and forms prescribed by
16 the Department.
17 Section 17. Determination of disability. Disabled
18 persons filing applications for participation in the Program
19 shall submit proof of disability in such form and manner as
20 the Department shall by rule prescribe. Proof that a claimant
21 is eligible to receive disability benefits under the Federal
22 Social Security Act shall constitute proof of disability for
23 purposes of this Act. Issuance of an Illinois Disabled Person
24 Identification Card stating that the claimant is under a
25 Class 2 disability, as defined in Section 4A of the Illinois
26 Identification Card Act, shall constitute proof that the
27 person named thereon is a disabled person for purposes of
28 this Act. A disabled person not covered under the Federal
29 Social Security Act and not presenting a Disabled Person
30 Identification Card stating that the he or she is under a
31 Class 2 disability shall be examined by a physician
32 designated by the Department, and his or her status as a
33 disabled person determined using the same standards as used
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1 by the Social Security Administration. The costs of any
2 required examination shall be borne by the person claiming a
3 disability.
4 Section 20. The Senior Citizens and Disabled Persons
5 Prescription Drug Discount Program. The Senior Citizens and
6 Disabled Persons Prescription Drug Discount Program is
7 established to protect the health and safety of senior
8 citizens and disabled persons. The Program shall be
9 administered by the Department. The Department shall (i)
10 enroll eligible seniors and disabled persons into the Program
11 to qualify them for a discount on the purchase of
12 prescription drugs at an authorized pharmacy, (ii) enter into
13 rebate agreements with drug manufacturers, and (iii)
14 reimburse pharmacies for the cost of providing discounts
15 using the proceeds from the manufacturer rebate agreements.
16 Section 25. Prescription drug prices.
17 (a) Beginning on January 1, 2004, the amount paid by
18 eligible seniors and disabled persons enrolled in the Program
19 to authorized pharmacies for prescription drugs may not
20 exceed prices listed on the Federal Supply Schedule plus a
21 dispensing fee calculated as provided in Section 3.16 of the
22 Senior Citizens and Disabled Persons Property Tax Relief and
23 Pharmaceutical Assistance Act. Nothing in this Act precludes
24 any authorized pharmacy from charging less than the listed
25 price on the Federal Supply Schedule. The Department must
26 provide the applicable Federal Supply Schedule to authorized
27 pharmacies. For prescription drugs that are not listed on
28 the Federal Supply Schedule, the amount paid by eligible
29 seniors and disabled persons enrolled in the Program to
30 authorized pharmacies may not exceed the AWP minus 35% plus a
31 dispensing fee calculated as provided in Section 3.16 of the
32 Senior Citizens and Disabled Persons Property Tax Relief and
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1 Pharmaceutical Assistance Act.
2 (b) Subject to the requirements of the State Prompt
3 Payment Act, the Department shall compensate authorized
4 pharmacies from the Senior Citizens and Disabled Persons
5 Prescription Drug Discount Program Fund for the difference
6 between the amount paid by eligible seniors for prescription
7 drugs dispensed under the Program and the AWP minus 10%.
8 Section 30. Manufacturer rebate agreements.
9 (a) Taking into consideration the extent to which the
10 State pays for prescription drugs under various State
11 programs, the Department or its agent shall negotiate and
12 enter into rebate agreements with drug manufacturers, as
13 defined in this Act, to effect prescription drug price
14 discounts. Persons eligible for benefits under this Program
15 shall be entitled to purchase prescription drugs at the
16 negotiated discount price. The rebate agreement shall be
17 equal to the cost to the Department for reimbursing
18 authorized pharmacies under this Act pursuant to subsection
19 (b) of Section 25. The rebate agreement shall become
20 effective the first day of the calendar quarter that begins
21 60 days after the date the agreement is entered into.
22 (b) The Department shall develop a model rebate
23 agreement for prescription drugs dispensed on and after the
24 effective date of this Act.
25 (c) Rebate payment procedures. All rebates negotiated
26 under agreements described in this Section shall be paid to
27 the Department in accordance with procedures prescribed by
28 the Department. All rebates must be remitted to the
29 Department not later than 30 days after receipt of a request
30 for payment by the Department.
31 (d) The receipts from the rebates and moneys transferred
32 under Section 33 shall be deposited into the Senior Citizens
33 and Disabled Persons Prescription Drug Discount Program Fund,
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1 a special fund hereby created in the State treasury, and
2 shall be used, subject to appropriation, to cover the cost of
3 reimbursing authorized pharmacies under this Act pursuant to
4 subsection (b) of Section 25.
5 Section 33. Transfer to Senior Citizens and Disabled
6 Persons Prescription Drug Discount Program Fund.
7 (a) Within 30 days after the effective date of this Act,
8 the State Comptroller shall direct and the State Treasurer
9 shall transfer $27,000,000 from the General Revenue Fund to
10 the Senior Citizens and Disabled Persons Prescription Drug
11 Discount Program Fund to facilitate the payment of
12 reimbursements to authorized pharmacies. Repayment of
13 principal and interest to the General Revenue Fund shall be
14 made so that the balance in the General Revenue Fund will be
15 restored as if the transfer to the Senior Citizens and
16 Disabled Persons Prescription Drug Discount Program Fund had
17 not been made. Upon a certification by the Department of
18 Revenue that the obligations under subsection (b) of Section
19 25 are being met, beginning on July 1, 2004, and on the 1st
20 of each month thereafter until the principal amount
21 transferred from the General Revenue Fund plus interest has
22 been repaid, the State Comptroller shall direct and the State
23 Treasurer shall transfer 1/12th of $27,000,000, or so much of
24 that amount as is necessary, from the Senior Citizens and
25 Disabled Persons Prescription Drug Discount Program Fund to
26 the General Revenue Fund plus accrued interest. The balance
27 of the amount transferred from the General Revenue Fund shall
28 bear interest at the rate of 7.5% per annum until the
29 required transfers back into the General Revenue Fund have
30 been completed.
31 Section 35. Program eligibility.
32 (a) Any person may apply to the Department for
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1 participation in the Program in the form and manner required
2 by the Department. The Department shall determine the
3 eligibility of each applicant for the Program within 30 days
4 after the date of application. To participate in the Program
5 an eligible senior whose application has been approved by the
6 Department must pay $25 upon enrollment and annually
7 thereafter and shall receive a Program identification card.
8 The card may be presented to an authorized pharmacy to assist
9 the pharmacy in verifying eligibility under the Program. The
10 Department shall deposit the enrollment fees collected into
11 the Senior Citizens and Disabled Persons Prescription Drug
12 Discount Program Fund. The monies collected by the
13 Department for enrollment fees and deposited into the Senior
14 Citizens and Disabled Persons Prescription Drug Discount
15 Program Fund must be separately accounted for by the
16 Department. If 2 or more persons are eligible for any benefit
17 under this Act and are members of the same household, each
18 participating household member shall apply to the Department
19 and pay the fee required for the purpose of obtaining an
20 identification card.
21 (b) Proceeds from annual enrollment fees, subject to
22 appropriation, shall be used by the Department to offset the
23 administrative cost of this Act. The Department may reduce
24 the annual enrollment fee by rule if the revenue from the
25 enrollment fees is in excess of the costs to carry out the
26 Program.
27 (c) Any person who is eligible for pharmaceutical
28 assistance under the Senior Citizens and Disabled Persons
29 Property Tax Relief and Pharmaceutical Assistance Act is
30 presumed to be eligible for this Program. That person may
31 purchase prescription drugs under this Program that are not
32 covered by the pharmaceutical assistance program under the
33 Senior Citizens and Disabled Persons Property Tax Relief and
34 Pharmaceutical Assistance Act by using the identification
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1 card issued under the pharmaceutical assistance program.
2 Section 40. Eligible pharmacies.
3 (a) The Department shall adopt rules to establish
4 standards and procedures for participation in the Program and
5 approve those pharmacies that apply to participate and meet
6 the requirements for participation. The Department may
7 remove the authorization of a pharmacy to participate in this
8 Program for failure to meet the standards and procedures for
9 participation established by the Department by rule. Any
10 pharmacy that has been removed as an authorized pharmacy by
11 the Department may apply for reinstatement as an authorized
12 pharmacy in accordance with standards and procedures
13 established by the Department by rule.
14 (b) The Department shall annually review the eligibility
15 of pharmacies to participate in the Program.
16 (c) The Department shall establish procedures for
17 properly contracting for pharmacy services, validating
18 reimbursement claims, validating compliance of authorized
19 pharmacies with the conditions for participation required
20 under this Act, and otherwise providing for the effective
21 administration of this Act. The Director, in consultation
22 with pharmacists licensed under the Pharmacy Practice Act of
23 1987, may enter into a written contract with any other State
24 agency, instrumentality, or political subdivision or with a
25 fiscal intermediary for the purpose of making payments to
26 authorized pharmacies pursuant to subsection (b) of Section
27 25 and coordinating the Program with other programs that
28 provide payments for prescription drugs covered under the
29 Program.
30 Section 45. Rules. The Department shall adopt rules to
31 implement and administer the Program, which shall include the
32 following:
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1 (1) Execution of contracts with pharmacies to
2 participate in the Program. The contracts shall
3 stipulate terms and conditions for the participation of
4 authorized pharmacies and the rights of the State to
5 terminate participation for breach of the contract or for
6 violation of this Act or rules adopted by the Department
7 under this Act.
8 (2) Establishment of maximum limits on the size of
9 prescriptions that are eligible for a discount under the
10 Program, up to a 90-day supply, except as may be
11 necessary for utilization control reasons.
12 (3) Establishment of liens upon any and all causes
13 of action that accrue to a beneficiary as a result of
14 injuries for which prescription drugs covered under the
15 Program are directly or indirectly required and for which
16 the Director made payment or became liable for under this
17 Act.
18 (4) Inspection of appropriate records and audits of
19 participating authorized pharmacies to ensure contract
20 compliance and to determine any fraudulent transactions
21 or practices under this Act.
22 Section 50. Report on administration of Program. The
23 Department shall report to the Governor and the General
24 Assembly by March 1st of each year on the administration of
25 the Program under this Act.
26 Section 905. The Department of Central Management
27 Services Law of the Civil Administrative Code of Illinois is
28 amended by adding Section 405-195 as follows:
29 (20 ILCS 405/405-195 new)
30 Sec. 405-195. Prescription Drug Purchasing Policy
31 Office. The Department shall establish a Prescription Drug
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1 Purchasing Policy Office. The Office shall determine and
2 implement strategies for best price purchasing practices for
3 State agencies that pay for prescription drugs by direct
4 purchase or by other arrangements. This may include
5 establishing a central State purchasing policy, entering into
6 cooperative agreements with other states or other public or
7 private entities that may enable the State to reduce its
8 prescription drug costs, and establishing any other State
9 agency policies and practices that may enable the State to
10 reduce its costs.
11 Section 990. The State Finance Act is amended by adding
12 Section 5.595 as follows:
13 (30 ILCS 105/5.595 new)
14 Sec. 5.595. The Senior Citizens and Disabled Persons
15 Prescription Drug Discount Program Fund.
16 Section 999. Effective date. This Act takes effect July
17 1, 2003.