Public Act 93-0018
SB3 Enrolled LRB093 03778 SJM 03813 b
AN ACT concerning discount prescription drugs for senior
citizens.
Be it enacted by the People of the State of Illinois,
represented in the General Assembly:
Section 1. Short title. This Act may be cited as the
Senior Citizens and Disabled Persons Prescription Drug
Discount Program Act.
Section 5. Findings. The General Assembly finds that:
(a) Although senior citizens represent 12% of the
population, they use on average 37% of prescription drugs
that are dispensed.
(b) Senior citizens in the United States without
prescription drug insurance coverage pay the highest prices
in the world for needed medications.
(c) High prescription drug prices force many Illinois
seniors to go without proper medication or other necessities,
thereby affecting their health and safety.
(d) Prescription drug prices in the United States are
the world's highest, averaging 32% higher than in Canada, 40%
higher than in Mexico, and 60% higher than in Great Britain.
(e) Regardless of household income, seniors without
prescription drug coverage are often just one serious illness
away from poverty.
(f) Reducing the price of prescription drugs would
benefit the health and well-being of all Illinois senior
citizens by providing more affordable access to needed drugs.
Section 10. Purpose. The purpose of this program is to
require the Department of Central Management Services to
establish and administer a program that will enable eligible
senior citizens and disabled persons to purchase prescription
drugs at discounted prices.
Section 15. Definitions. As used in this Act:
"Authorized pharmacy" means any pharmacy registered in
this State under the Pharmacy Practice Act of 1987 and
approved by the Department or its program administrator.
"AWP" or "average wholesale price" means the amount
determined from the latest publication of the Red Book, a
universally subscribed pharmacist reference guide annually
published by the Hearst Corporation. "AWP" or "average
wholesale price" may also be derived electronically from the
drug pricing database synonymous with the latest publication
of the Red Book and furnished in the National Drug Data File
(NDDF) by First Data Bank (FDB), a service of the Hearst
Corporation.
"Department" means the Department of Central Management
Services.
"Director" means the Director of Central Management
Services.
"Disabled person" means a person unable to engage in any
substantial gainful activity by reason of a medically
determinable physical or mental impairment which can be
expected to result in death or has lasted or can be expected
to last for a continuous period of not less than 12 months.
"Drug manufacturer" means any entity (1) that is located
within or outside Illinois that is engaged in (i) the
production, preparation, propagation, compounding,
conversion, or processing of prescription drug products
covered under the program, either directly or indirectly by
extraction from substances of natural origin, independently
by means of chemical synthesis, or by a combination of
extraction and chemical synthesis or (ii) the packaging,
repackaging, leveling, labeling, or distribution of
prescription drug products covered under the program and (2)
that elects to provide prescription drugs either directly or
under contract with any entity providing prescription drug
services on behalf of the State of Illinois. "Drug
manufacturer", however, does not include a wholesale
distributor of drugs or a retail pharmacy licensed under
Illinois law.
"Eligible senior" means a person who is (i) a resident of
Illinois and (ii) 65 years of age or older.
"Prescription drug" means any prescribed drug that may be
legally dispensed by an authorized pharmacy.
"Program" means the Senior Citizens and Disabled Persons
Prescription Drug Discount Program created under this Act.
"Program administrator" means the entity that is chosen
by the Department to administer the program. The program
administrator may, in this case, be the Director or a
Pharmacy Benefits Manager (PBM) chosen to subcontract with
the Director.
"Rules" includes rules adopted and forms prescribed by
the Department.
Section 17. Determination of disability. Disabled
persons filing applications for participation in the program
shall submit proof of disability in such form and manner as
the Department shall by rule prescribe. Proof that a claimant
is eligible to receive disability benefits under the Federal
Social Security Act shall constitute proof of disability for
purposes of this Act. Issuance of an Illinois Disabled Person
Identification Card stating that the claimant is under a
Class 2 disability, as defined in Section 4A of the Illinois
Identification Card Act, shall constitute proof that the
person named thereon is a disabled person for purposes of
this Act. A disabled person not covered under the Federal
Social Security Act and not presenting a Disabled Person
Identification Card stating that he or she is under a Class 2
disability shall be examined by a physician designated by the
Department, and his or her status as a disabled person
determined using the same standards as used by the Social
Security Administration. The costs of any required
examination shall be borne by the person claiming a
disability.
Section 20. The Senior Citizens and Disabled Persons
Prescription Drug Discount Program. The Senior Citizens and
Disabled Persons Prescription Drug Discount Program is
established to protect the health and safety of senior
citizens and disabled persons. The program shall be
administered by the Department. The Department or its program
administrator shall (i) enroll eligible seniors and disabled
persons into the program, as provided in Section 35 of this
Act, to qualify them for a discount on the purchase of
prescription drugs at an authorized pharmacy, (ii) enter into
rebate agreements with drug manufacturers, as provided under
Section 30 of this Act, and (iii) subject to the provisions
of Section 47 of this Act, compensate pharmacies
participating in the program as provided under Section 25 of
this Act.
Section 25. Program administration.
(a) The Department is authorized under this Act to be
the program administrator. If the Department is not the
program administrator, 90 days after the effective date of
this Act, the Department must issue a request for proposals
for bidders interested in administering the program. Bidders
must compete on the basis of the following minimum criteria:
(1) The Director shall solicit and accept proposals
from entities to provide for administration of a program
or programs in accordance with rules adopted under
Section 45. Proposals must be submitted not later than a
date established by the Director. The Director shall
accept only those proposals that specify the following:
(A) The estimated amount of the discount based
on the entity's previous experience and how the
discount is to be achieved.
(B) The extent that discounts on prescription
drugs are to be achieved through rebates,
administrative fees, or other fees or discounts in
prices that the entity negotiates with drug
manufacturers. The proposals shall assure that
rebates or discounts will be used to do the
following:
(i) reduce costs to cardholders;
(ii) achieve discounts for cardholders;
and
(iii) cover costs for administering the
program.
(C) Any other benefits offered to cardholders.
(D) The estimated number and geographic
distribution of participating pharmacies in the
administrator's pharmacy network.
(E) The plan for pharmacy compensation,
pursuant to subsection (e) of this Section.
(F) The method used for determining the
prescription drugs to be covered by the program,
including the criteria and process for establishing
a preferred drug list, if applicable.
(G) How the entity proposes to improve
medication management for cardholders, including any
program of disease management.
(H) How cardholders and participating
pharmacies will be informed of the discounted price
negotiated by the entity.
(I) How the entity will handle complaints
about the program's operation.
(J) The entity's previous experience in
managing similar programs.
(K) Any additional information requested by
the Director.
(2) The Director shall contract with one or more
entities to administer a program or programs on the basis
of the proposals submitted, but may require an
administrator to modify its conduct of a program in
accordance with rules adopted under Section 45.
The Director shall adopt rules specifying the period
for which a contract will be in effect and may terminate
a contract if an administrator fails to conduct a program
in accordance with its proposal or with any modifications
required by rule. When a contract period ends or a
contract is terminated, the Director shall enter into a
new contract in the manner specified in this Section for
an original contract. Prior to making a new contract, the
Director may modify the rules for administration of the
program or programs.
(b) As used in this Section, "administrator" includes
the administrator's parent company and any subsidiary of the
parent company.
(1) No administrator shall sell any information
concerning a person who holds a prescription drug
discount card, other than aggregate information that does
not identify the cardholder, without the cardholder's
written consent.
(2) Unless an administrator has the cardholder's
written consent, no administrator shall use any
personally identifiable information that it obtains
concerning a cardholder through the program to promote or
sell a program or product offered by the administrator
that is not related to the administration of the program.
This subsection (b) does not prohibit an administrator
from contacting cardholders concerning participation in
or administration of the program, including, but not
limited to, mailing a list of pharmacies participating in
the program's network or participating in disease
management programs.
(3) To the extent that a discount is achieved
through rebates, administrative fees, or any other fees
or discounts in prices that an administrator negotiates
with drug manufacturers, an administrator shall use the
rebates or discounts to do the following:
(A) reduce costs to cardholders;
(B) achieve discounts for cardholders; and
(C) cover any administrative costs of the
program.
(4) The administrator shall not use any funds
generated from rebates, discounts, administrative fees,
or other fees to promote its mail order pharmacy
operation or the mail order pharmacy operation of an
affiliate. This subdivision (b)(4) does not, however,
limit the participation of an Illinois-licensed pharmacy
under this Act if that pharmacy provides prescription
drugs by mail order.
(c) Beginning on January 1, 2004, the amount paid by
eligible seniors and disabled persons enrolled in the program
to authorized pharmacies for prescription drugs may not
exceed prices established as a result of the rebate
agreements under Section 30. The eligible seniors and
disabled persons shall pay the price determined under Section
30 plus a dispensing fee of $3.50 per prescription for brand
name drug products, single-source drug products, and, for a
period of 6 months, newly released generic drug products and
$4.25 per prescription for all other generic drug products,
except that the total amount paid by the eligible senior or
disabled person for each prescription drug under this program
shall not exceed the usual and customary charge for such
prescription.
(d) The contract between the Department and a pharmacy
benefits manager must, at a minimum, meet the criteria of
subsection (a). The contract must also require notification
by the pharmacy benefits manager of any proposed or ongoing
activity that involves, directly or indirectly, any conflict
of interest on the part of the pharmacy benefits manager. The
Department shall ensure that the pharmacy benefits manager
complies with the contract and shall adopt all procedures
necessary to enforce the contract.
(e) The Department or program administrator shall,
subject to the funds available under Section 30 of this Act,
compensate authorized pharmacies for prescription drugs
dispensed under the program for the difference between the
amount paid by the eligible senior or disabled person for
prescription drugs dispensed under the program and (i) the
AWP minus 12% for brand name drug products, single-source
generic drug products, and, for a period of 6 months, newly
released generic drug products and (ii) the AWP minus 35%
for all other generic drug products. The Department shall
compensate a pharmacy under this subsection (e) only if the
amount paid by the eligible senior or disabled person has
been discounted to a price, including the dispensing fees
stated in subsection (c) of this Section, that is less than
(i) the AWP minus 12% for brand name drug products,
single-source generic drug products, and, for a period of 6
months, newly released generic drug products and (ii) the AWP
minus 35% for all other generic drug products.
(f) Beginning on January 1, 2004, the Department or
program administrator shall reimburse pharmacies under this
Section within 30 days after adjudication of the claim.
Section 30. Manufacturer rebate agreements.
(a) Taking into consideration the extent to which the
State pays for prescription drugs under various State
programs and the provision of assistance to disabled persons
or eligible seniors under patient assistance programs,
prescription drug discount programs, or other offers for free
or reduced price medicine, clinical research projects,
limited supply distribution programs, compassionate use
programs, or programs of research conducted by or for a drug
manufacturer, the Department, its agent, or the program
administrator shall negotiate and enter into rebate
agreements with drug manufacturers, as defined in this Act,
to effect prescription drug price discounts. The Department
or program administrator may establish a preferred drug list
as a basis for determining the discounts, administrative
fees, or other fees or rebates under this Section.
(b) Rebate payment procedures. All rebates negotiated
under agreements described in this Section shall be paid in
accordance with procedures prescribed by the Department or
the program administrator.
(c) Receipts from rebates shall be used to provide
discounts for prescription drugs purchased by eligible
seniors and disabled persons and to cover the cost of
administering the program, including compensation to be paid
to participating pharmacies by the Department or program
administrator under subsection (e) of Section 25. Any
receipts to be allocated to the Department shall be deposited
into the Senior Citizens and Disabled Persons Prescription
Drug Discount Program Fund, a special fund hereby created in
the State treasury.
Section 35. Program eligibility.
(a) Any person may apply to the Department or its
program administrator for participation in the program in the
form and manner required by the Department. The Department or
its program administrator shall determine the eligibility of
each applicant for the program within 30 days after the date
of application. To participate in the program an eligible
senior or disabled person whose application has been approved
must pay $25 upon enrollment and annually thereafter and
shall receive a program identification card. The card may be
presented to an authorized pharmacy to assist the pharmacy in
verifying eligibility under the program. The Department shall
deposit the enrollment fees collected into the Senior
Citizens and Disabled Persons Prescription Drug Discount
Program Fund. The moneys collected by the Department for
enrollment fees and deposited into the Senior Citizens and
Disabled Persons Prescription Drug Discount Program Fund must
be separately accounted for by the Department. If 2 or more
persons are eligible for any benefit under this Act and are
members of the same household, each participating household
member shall apply to the Department and pay the fee required
for the purpose of obtaining an identification card.
(b) Proceeds from annual enrollment fees shall be used
by the Department to offset the administrative cost of this
Act. The Department may reduce the annual enrollment fee by
rule if the revenue from the enrollment fees is in excess of
the costs to carry out the program.
(c) Any person who is eligible for pharmaceutical
assistance under the Senior Citizens and Disabled Persons
Property Tax Relief and Pharmaceutical Assistance Act is
presumed to be eligible for this program. The enrollment fee
under this Act is not required for such persons. That person
may purchase prescription drugs under this program that are
not covered by the pharmaceutical assistance program under
the Senior Citizens and Disabled Persons Property Tax Relief
and Pharmaceutical Assistance Act by using the identification
card issued under the pharmaceutical assistance program.
Section 40. Eligible pharmacies.
(a) The Department or its program administrator shall
adopt rules to establish standards and procedures for
participation in the program and approve those pharmacies
that apply to participate and meet the requirements for
participation. Pharmacies in the program administrator's
network must also comply with the Department's standards and
procedures for participation.
(b) The Department shall establish procedures for
properly contracting for pharmacy services, validating
reimbursement claims, validating compliance of authorized
pharmacies with the conditions for participation required
under this Act, and otherwise providing for the effective
administration of this Act. The Director, in consultation
with pharmacists licensed under the Pharmacy Practice Act of
1987, may enter into a written contract with any other State
agency, instrumentality, or political subdivision or with a
fiscal intermediary for the purpose of making payments to
authorized pharmacies and coordinating the program with other
programs that provide payments for prescription drugs covered
under the program.
Section 45. Rules. The Department shall adopt rules to
implement and administer the program, which shall include the
following:
(1) Execution of contracts with pharmacies to
participate in the program. The contracts shall stipulate
terms and conditions for the participation of authorized
pharmacies and the rights of the State to terminate
participation for breach of the contract or for violation
of this Act or rules adopted by the Department under this
Act.
(2) Establishment of maximum limits on the size of
prescriptions that are eligible for a discount under the
program, up to a 90-day supply, except as may be
necessary for utilization control reasons.
(3) Inspection of appropriate records and audits of
participating authorized pharmacies to ensure contract
compliance and to determine any fraudulent transactions
or practices under this Act.
(4) Specify how a resident may apply to participate
in the program.
(5) Specify the circumstances under which the
Director may require an administrator to modify its
conduct of the program.
(6) Specify the duration of a contract.
(7) Require that an administrator permit any
Illinois-licensed pharmacy willing to comply with the
requirements of this Act and terms and conditions for
participation in the program's network to participate in
any network used by the administrator for its program.
(8) Permit an administrator to negotiate with one
or more drug manufacturers for discounts in drug prices
or rebates.
(9) Permit an administrator to receive any rebate
payments from drug manufacturers.
(10) Permit an administrator to develop,
administer, and promote a program of disease management
pursuant to written agreements between the administrator
and pharmacies participating under the program
established by this Act.
Section 47. Limit on State's obligation for cost of
administration. The State of Illinois is obligated for the
cost of administering this program only to the extent of the
amount of money collected as enrollment fees under Section 35
of this Act, rebates collected under Section 30 of this Act,
and funds appropriated by the General Assembly for the
purpose of this Act.
Section 50. Report on administration of program. The
Department shall report to the Governor and the General
Assembly by March 1st of each year on the administration of
the program under this Act. The report shall include but not
be limited to the following:
(1) the number of disabled persons and seniors eligible
and enrolled in the program, by county;
(2) the activities undertaken by the State to inform
disabled persons and seniors about the program;
(3) the number of prescriptions filled under the program
for enrollees, and the estimated savings for enrollees;
(4) a listing of the manufacturers and pharmacies
participating in the program;
(5) the amount of enrollment fees and rebates collected
under the program, and any additional funds or resources made
available to cover the cost of the program;
(6) the itemized annual cost of administering the
program; and
(7) findings and recommendations regarding problems and
solutions related to the program, together with proposals for
changes in the rules, regulations, or laws necessary to
improve the administration of the program.
Section 990. The State Finance Act is amended by adding
Section 5.595 as follows:
(30 ILCS 105/5.595 new)
Sec. 5.595. The Senior Citizens and Disabled Persons
Prescription Drug Discount Program Fund.
Section 99. Effective date. This Act takes effect on
July 1, 2003.