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
 
                            -4-      LRB093 04349 SJM 04398 b
 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
 
                            -6-      LRB093 04349 SJM 04398 b
 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,
 
                            -7-      LRB093 04349 SJM 04398 b
 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
 
                            -8-      LRB093 04349 SJM 04398 b
 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
 
                            -9-      LRB093 04349 SJM 04398 b
 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:
 
                            -10-     LRB093 04349 SJM 04398 b
 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
 
                            -11-     LRB093 04349 SJM 04398 b
 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.