093_HB0209enr

 
HB0209 Enrolled                      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 to go without proper medication or other necessities,
17    thereby affecting their health and safety.
18        (d)  Prescription drug prices in the  United  States  are
19    the world's highest, averaging 32% higher than in Canada, 40%
20    higher than in Mexico, and 60% higher than in Great Britain.
21        (e)  Regardless  of  household  income,  seniors  without
22    prescription drug coverage are often just one serious illness
23    away from poverty.
24        (f)  Reducing  the  price  of  prescription  drugs  would
25    benefit  the  health  and  well-being  of all Illinois senior
26    citizens by providing more affordable access to needed drugs.

27        Section 10.  Purpose. The purpose of this program  is  to
28    require  the  Department  of  Central  Management Services to
29    establish and administer a program that will enable  eligible
30    senior citizens and disabled persons to purchase prescription
 
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 1    drugs at discounted prices.

 2        Section 15.  Definitions. As used in this Act:
 3        "Authorized  pharmacy"  means  any pharmacy registered in
 4    this State under  the  Pharmacy  Practice  Act  of  1987  and
 5    approved by the Department or its program administrator.
 6        "AWP"  or  "average  wholesale  price"  means  the amount
 7    determined from the latest publication of  the  Red  Book,  a
 8    universally  subscribed  pharmacist  reference guide annually
 9    published  by  the  Hearst  Corporation.  "AWP"  or  "average
10    wholesale price" may also be derived electronically from  the
11    drug  pricing database synonymous with the latest publication
12    of the Red Book and furnished in the National Drug Data  File
13    (NDDF)  by  First  Data  Bank  (FDB), a service of the Hearst
14    Corporation.
15        "Department" means the Department of  Central  Management
16    Services.
17        "Director"  means  the  Director  of  Central  Management
18    Services.
19        "Disabled  person" means a person unable to engage in any
20    substantial  gainful  activity  by  reason  of  a   medically
21    determinable  physical  or  mental  impairment  which  can be
22    expected to result in death or has lasted or can be  expected
23    to last for a continuous period of not less than 12 months.
24        "Drug  manufacturer" means any entity (1) that is located
25    within or  outside  Illinois  that  is  engaged  in  (i)  the
26    production,     preparation,     propagation,    compounding,
27    conversion,  or  processing  of  prescription  drug  products
28    covered under the program, either directly or  indirectly  by
29    extraction  from  substances of natural origin, independently
30    by means of  chemical  synthesis,  or  by  a  combination  of
31    extraction  and  chemical  synthesis  or  (ii) the packaging,
32    repackaging,   leveling,   labeling,   or   distribution   of
33    prescription drug products covered under the program and  (2)
 
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 1    that  elects to provide prescription drugs either directly or
 2    under contract with any entity  providing  prescription  drug
 3    services   on   behalf   of  the  State  of  Illinois.  "Drug
 4    manufacturer",  however,  does  not   include   a   wholesale
 5    distributor  of  drugs  or  a  retail pharmacy licensed under
 6    Illinois law.
 7        "Eligible senior" means a person who is (i) a resident of
 8    Illinois and (ii) 65 years of age or older.
 9        "Prescription drug" means any prescribed drug that may be
10    legally dispensed by an authorized pharmacy.
11        "Program" means the Senior Citizens and Disabled  Persons
12    Prescription Drug Discount Program created under this Act.
13        "Program  administrator"  means the entity that is chosen
14    by the Department to  administer  the  program.  The  program
15    administrator  may,  in  this  case,  be  the  Director  or a
16    Pharmacy Benefits Manager (PBM) chosen  to  subcontract  with
17    the Director.
18        "Rules"  includes  rules  adopted and forms prescribed by
19    the Department.

20        Section  17.  Determination   of   disability.   Disabled
21    persons  filing applications for participation in the program
22    shall submit proof of disability in such form and  manner  as
23    the Department shall by rule prescribe. Proof that a claimant
24    is  eligible to receive disability benefits under the Federal
25    Social Security Act shall constitute proof of disability  for
26    purposes of this Act. Issuance of an Illinois Disabled Person
27    Identification  Card  stating  that  the  claimant is under a
28    Class 2 disability, as defined in Section 4A of the  Illinois
29    Identification  Card  Act,  shall  constitute  proof that the
30    person named thereon is a disabled  person  for  purposes  of
31    this  Act.  A  disabled  person not covered under the Federal
32    Social Security Act and  not  presenting  a  Disabled  Person
33    Identification Card stating that he or she is under a Class 2
 
HB0209 Enrolled             -4-      LRB093 04349 SJM 04398 b
 1    disability shall be examined by a physician designated by the
 2    Department,  and  his  or  her  status  as  a disabled person
 3    determined using the same standards as  used  by  the  Social
 4    Security   Administration.   The   costs   of   any  required
 5    examination  shall  be  borne  by  the  person   claiming   a
 6    disability.

 7        Section  20.  The  Senior  Citizens  and Disabled Persons
 8    Prescription Drug Discount Program. The Senior  Citizens  and
 9    Disabled   Persons  Prescription  Drug  Discount  Program  is
10    established to  protect  the  health  and  safety  of  senior
11    citizens   and   disabled   persons.  The  program  shall  be
12    administered by the Department. The Department or its program
13    administrator shall (i) enroll eligible seniors and  disabled
14    persons  into  the program, as provided in Section 35 of this
15    Act, to qualify them  for  a  discount  on  the  purchase  of
16    prescription drugs at an authorized pharmacy, (ii) enter into
17    rebate  agreements with drug manufacturers, as provided under
18    Section 30 of this Act, and (iii) subject to  the  provisions
19    of   Section   47   of   this   Act,   compensate  pharmacies
20    participating in the program as provided under Section 25  of
21    this Act.

22        Section 25.  Program administration.
23        (a)  The  Department  is  authorized under this Act to be
24    the program administrator.  If  the  Department  is  not  the
25    program  administrator,  90  days after the effective date of
26    this Act, the Department must issue a request  for  proposals
27    for  bidders interested in administering the program. Bidders
28    must compete on the basis of the following minimum criteria:
29             (1)  The Director shall solicit and accept proposals
30        from entities to provide for administration of a  program
31        or  programs  in  accordance  with  rules  adopted  under
32        Section  45. Proposals must be submitted not later than a
 
HB0209 Enrolled             -5-      LRB093 04349 SJM 04398 b
 1        date established by  the  Director.  The  Director  shall
 2        accept only those proposals that specify the following:
 3                  (A)  The estimated amount of the discount based
 4             on  the  entity's  previous  experience  and how the
 5             discount is to be achieved.
 6                  (B)  The extent that discounts on  prescription
 7             drugs   are   to   be   achieved   through  rebates,
 8             administrative fees, or other fees or  discounts  in
 9             prices   that   the   entity  negotiates  with  drug
10             manufacturers.   The  proposals  shall  assure  that
11             rebates   or  discounts  will  be  used  to  do  the
12             following:
13                       (i)  reduce costs to cardholders;
14                       (ii)  achieve discounts  for  cardholders;
15                  and
16                       (iii)  cover  costs  for administering the
17                  program.
18                  (C)  Any other benefits offered to cardholders.
19                  (D)  The  estimated   number   and   geographic
20             distribution  of  participating  pharmacies  in  the
21             administrator's pharmacy network.
22                  (E)  The   plan   for   pharmacy  compensation,
23             pursuant to subsection (e) of this Section.
24                  (F)  The  method  used  for   determining   the
25             prescription  drugs  to  be  covered by the program,
26             including the criteria and process for  establishing
27             a preferred drug list, if applicable.
28                  (G)  How   the   entity   proposes  to  improve
29             medication management for cardholders, including any
30             program of disease management.
31                  (H)  How    cardholders    and    participating
32             pharmacies will be informed of the discounted  price
33             negotiated by the entity.
34                  (I)  How  the  entity  will  handle  complaints
 
HB0209 Enrolled             -6-      LRB093 04349 SJM 04398 b
 1             about the program's operation.
 2                  (J)  The   entity's   previous   experience  in
 3             managing similar programs.
 4                  (K)  Any additional  information  requested  by
 5             the Director.
 6             (2)  The  Director  shall  contract with one or more
 7        entities to administer a program or programs on the basis
 8        of  the  proposals  submitted,   but   may   require   an
 9        administrator  to  modify  its  conduct  of  a program in
10        accordance with rules adopted under Section 45.
11             The Director shall adopt rules specifying the period
12        for which a contract will be in effect and may  terminate
13        a contract if an administrator fails to conduct a program
14        in accordance with its proposal or with any modifications
15        required  by  rule.  When  a  contract  period  ends or a
16        contract is terminated, the Director shall enter  into  a
17        new  contract in the manner specified in this Section for
18        an original contract. Prior to making a new contract, the
19        Director may modify the rules for administration  of  the
20        program or programs.
21        (b)  As  used  in  this Section, "administrator" includes
22    the administrator's parent company and any subsidiary of  the
23    parent company.
24             (1)  No  administrator  shall  sell  any information
25        concerning  a  person  who  holds  a  prescription   drug
26        discount card, other than aggregate information that does
27        not  identify  the  cardholder,  without the cardholder's
28        written consent.
29             (2)  Unless an administrator  has  the  cardholder's
30        written   consent,   no   administrator   shall  use  any
31        personally  identifiable  information  that  it   obtains
32        concerning a cardholder through the program to promote or
33        sell  a  program  or product offered by the administrator
34        that is not related to the administration of the program.
 
HB0209 Enrolled             -7-      LRB093 04349 SJM 04398 b
 1        This subsection (b) does not  prohibit  an  administrator
 2        from  contacting  cardholders concerning participation in
 3        or administration of  the  program,  including,  but  not
 4        limited to, mailing a list of pharmacies participating in
 5        the   program's   network  or  participating  in  disease
 6        management programs.
 7             (3)  To the  extent  that  a  discount  is  achieved
 8        through  rebates,  administrative fees, or any other fees
 9        or discounts in prices that an  administrator  negotiates
10        with  drug  manufacturers, an administrator shall use the
11        rebates or discounts to do the following:
12                  (A)  reduce costs to cardholders;
13                  (B)  achieve discounts for cardholders; and
14                  (C)  cover  any  administrative  costs  of  the
15             program.
16             (4)  The  administrator  shall  not  use  any  funds
17        generated from rebates, discounts,  administrative  fees,
18        or   other  fees  to  promote  its  mail  order  pharmacy
19        operation or the mail  order  pharmacy  operation  of  an
20        affiliate.  This  subdivision  (b)(4)  does not, however,
21        limit the participation of an Illinois-licensed  pharmacy
22        under  this  Act  if  that pharmacy provides prescription
23        drugs by mail order.
24        (c)  Beginning on January 1, 2004,  the  amount  paid  by
25    eligible seniors and disabled persons enrolled in the program
26    to  authorized  pharmacies  for  prescription  drugs  may not
27    exceed  prices  established  as  a  result  of   the   rebate
28    agreements   under  Section  30.  The  eligible  seniors  and
29    disabled persons shall pay the price determined under Section
30    30 plus a dispensing fee of $3.50 per prescription for  brand
31    name  drug  products, single-source drug products, and, for a
32    period of 6 months, newly-released generic drug products  and
33    $4.25 per prescription for all other generic  drug  products,
34    except  that  the total amount paid by the eligible senior or
 
HB0209 Enrolled             -8-      LRB093 04349 SJM 04398 b
 1    disabled person for each prescription drug under this program
 2    shall not exceed the usual  and  customary  charge  for  such
 3    prescription.
 4        (d)  The  contract  between the Department and a pharmacy
 5    benefits manager must, at a minimum,  meet  the  criteria  of
 6    subsection  (a).  The contract must also require notification
 7    by the pharmacy benefits manager of any proposed  or  ongoing
 8    activity  that involves, directly or indirectly, any conflict
 9    of interest on the part of the pharmacy benefits manager. The
10    Department shall ensure that the  pharmacy  benefits  manager
11    complies  with  the  contract  and shall adopt all procedures
12    necessary to enforce the contract.
13        (e)  The  Department  or  program  administrator   shall,
14    subject  to the funds available under Section 30 of this Act,
15    compensate  authorized  pharmacies  for  prescription   drugs
16    dispensed  under  the  program for the difference between the
17    amount paid by the eligible senior  or  disabled  person  for
18    prescription  drugs  dispensed  under the program and (i) the
19    AWP minus 12% for brand  name  drug  products,  single-source
20    generic  drug  products,  and,  for  a  period  of  6 months,
21    newly-released generic drug products  and (ii) the AWP  minus
22    35% for all other generic drug products. The Department shall
23    compensate  a  pharmacy under this subsection (e) only if the
24    amount paid by the eligible senior  or  disabled  person  has
25    been  discounted  to  a  price, including the dispensing fees
26    stated in subsection (c) of this Section, that is  less  than
27    (i)   the  AWP  minus  12%  for  brand  name  drug  products,
28    single-source generic drug products, and, for a period  of  6
29    months, newly-released generic drug products and (ii) the AWP
30    minus 35% for all other generic drug products.
31        (f)  Beginning  on  January  1,  2004,  the Department or
32    program administrator shall reimburse pharmacies  under  this
33    Section within 30 days after adjudication of the claim.
 
HB0209 Enrolled             -9-      LRB093 04349 SJM 04398 b
 1        Section 30.  Manufacturer rebate agreements.
 2        (a)  Taking  into  consideration  the extent to which the
 3    State  pays  for  prescription  drugs  under  various   State
 4    programs  and the provision of assistance to disabled persons
 5    or  eligible  seniors  under  patient  assistance   programs,
 6    prescription drug discount programs, or other offers for free
 7    or   reduced  price  medicine,  clinical  research  projects,
 8    limited  supply  distribution  programs,  compassionate   use
 9    programs,  or programs of research conducted by or for a drug
10    manufacturer, the  Department,  its  agent,  or  the  program
11    administrator   shall   negotiate   and   enter  into  rebate
12    agreements with drug manufacturers, as defined in  this  Act,
13    to  effect  prescription drug price discounts. The Department
14    or program administrator may establish a preferred drug  list
15    as  a  basis  for  determining  the discounts, administrative
16    fees, or other fees or rebates under this Section.
17        (b)  Rebate payment procedures.  All  rebates  negotiated
18    under  agreements  described in this Section shall be paid in
19    accordance with procedures prescribed by  the  Department  or
20    the program administrator.
21        (c)  Receipts  from  rebates  shall  be  used  to provide
22    discounts  for  prescription  drugs  purchased  by   eligible
23    seniors  and  disabled  persons  and  to  cover  the  cost of
24    administering the program, including compensation to be  paid
25    to  participating  pharmacies  by  the  Department or program
26    administrator  under  subsection  (e)  of  Section  25.   Any
27    receipts to be allocated to the Department shall be deposited
28    into  the  Senior  Citizens and Disabled Persons Prescription
29    Drug Discount Program Fund, a special fund hereby created  in
30    the State treasury.

31        Section 35.  Program eligibility.
32        (a)  Any  person  may  apply  to  the  Department  or its
33    program administrator for participation in the program in the
 
HB0209 Enrolled             -10-     LRB093 04349 SJM 04398 b
 1    form and manner required by the Department. The Department or
 2    its program administrator shall determine the eligibility  of
 3    each  applicant for the program within 30 days after the date
 4    of application. To participate in  the  program  an  eligible
 5    senior or disabled person whose application has been approved
 6    must  pay  $25  upon  enrollment  and annually thereafter and
 7    shall receive a program identification card. The card may  be
 8    presented to an authorized pharmacy to assist the pharmacy in
 9    verifying eligibility under the program. The Department shall
10    deposit   the  enrollment  fees  collected  into  the  Senior
11    Citizens and  Disabled  Persons  Prescription  Drug  Discount
12    Program  Fund.  The  moneys  collected  by the Department for
13    enrollment fees and deposited into the  Senior  Citizens  and
14    Disabled Persons Prescription Drug Discount Program Fund must
15    be  separately  accounted for by the Department. If 2 or more
16    persons are eligible for any benefit under this Act  and  are
17    members  of  the same household, each participating household
18    member shall apply to the Department and pay the fee required
19    for the purpose of obtaining an identification card.
20        (b)  Proceeds from annual enrollment fees shall  be  used
21    by  the  Department to offset the administrative cost of this
22    Act. The Department may reduce the annual enrollment  fee  by
23    rule  if the revenue from the enrollment fees is in excess of
24    the costs to carry out the program.
25        (c)  Any  person  who  is  eligible  for   pharmaceutical
26    assistance  under  the  Senior  Citizens and Disabled Persons
27    Property Tax Relief  and  Pharmaceutical  Assistance  Act  is
28    presumed  to be eligible for this program. The enrollment fee
29    under this Act is not required for such persons. That  person
30    may  purchase  prescription drugs under this program that are
31    not covered by the pharmaceutical  assistance  program  under
32    the  Senior Citizens and Disabled Persons Property Tax Relief
33    and Pharmaceutical Assistance Act by using the identification
34    card issued under the pharmaceutical assistance program.
 
HB0209 Enrolled             -11-     LRB093 04349 SJM 04398 b
 1        Section 40.  Eligible pharmacies.
 2        (a)  The Department or its  program  administrator  shall
 3    adopt   rules  to  establish  standards  and  procedures  for
 4    participation in the program  and  approve  those  pharmacies
 5    that  apply  to  participate  and  meet  the requirements for
 6    participation.  Pharmacies  in  the  program  administrator's
 7    network must also comply with the Department's standards  and
 8    procedures for participation.
 9        (b)  The   Department   shall  establish  procedures  for
10    properly  contracting  for  pharmacy   services,   validating
11    reimbursement  claims,  validating  compliance  of authorized
12    pharmacies with the  conditions  for  participation  required
13    under  this  Act,  and  otherwise providing for the effective
14    administration of this Act.  The  Director,  in  consultation
15    with  pharmacists licensed under the Pharmacy Practice Act of
16    1987, may enter into a written contract with any other  State
17    agency,  instrumentality,  or political subdivision or with a
18    fiscal intermediary for the purpose  of  making  payments  to
19    authorized pharmacies and coordinating the program with other
20    programs that provide payments for prescription drugs covered
21    under the program.

22        Section  45.  Rules.  The Department shall adopt rules to
23    implement and administer the program, which shall include the
24    following:
25             (1)  Execution  of  contracts  with  pharmacies   to
26        participate in the program. The contracts shall stipulate
27        terms  and conditions for the participation of authorized
28        pharmacies and the  rights  of  the  State  to  terminate
29        participation for breach of the contract or for violation
30        of this Act or rules adopted by the Department under this
31        Act.
32             (2)  Establishment  of maximum limits on the size of
33        prescriptions that are eligible for a discount under  the
 
HB0209 Enrolled             -12-     LRB093 04349 SJM 04398 b
 1        program,  up  to  a  90-day  supply,  except  as  may  be
 2        necessary for utilization control reasons.
 3             (3)  Inspection of appropriate records and audits of
 4        participating  authorized  pharmacies  to ensure contract
 5        compliance and to determine any  fraudulent  transactions
 6        or practices under this Act.
 7             (4)  Specify how a resident may apply to participate
 8        in the program.
 9             (5)  Specify   the  circumstances  under  which  the
10        Director may  require  an  administrator  to  modify  its
11        conduct of the program.
12             (6)  Specify the duration of a contract.
13             (7)  Require   that   an  administrator  permit  any
14        Illinois-licensed pharmacy willing  to  comply  with  the
15        requirements  of  this  Act  and terms and conditions for
16        participation in the program's network to participate  in
17        any network used by the administrator for its program.
18             (8)  Permit  an  administrator to negotiate with one
19        or more drug manufacturers for discounts in  drug  prices
20        or rebates.
21             (9)  Permit  an  administrator to receive any rebate
22        payments from drug manufacturers.
23             (10)  Permit   an    administrator    to    develop,
24        administer,  and  promote a program of disease management
25        pursuant to written agreements between the  administrator
26        and    pharmacies   participating   under   the   program
27        established by this Act.

28        Section 47.  Limit on  State's  obligation  for  cost  of
29    administration.  The  State  of Illinois is obligated for the
30    cost of administering this program only to the extent of  the
31    amount of money collected as enrollment fees under Section 35
32    of  this Act, rebates collected under Section 30 of this Act,
33    and funds  appropriated  by  the  General  Assembly  for  the
 
HB0209 Enrolled             -13-     LRB093 04349 SJM 04398 b
 1    purpose of this Act.

 2        Section  50.  Report  on  administration  of program. The
 3    Department shall report  to  the  Governor  and  the  General
 4    Assembly  by  March 1st of each year on the administration of
 5    the program under this Act. The report shall include but  not
 6    be limited to the following:
 7        (1)  the  number of disabled persons and seniors eligible
 8    and enrolled in the program, by county;
 9        (2)  the activities undertaken by  the  State  to  inform
10    disabled persons and seniors about the program;
11        (3)  the number of prescriptions filled under the program
12    for enrollees, and the estimated savings for enrollees;
13        (4)  a   listing  of  the  manufacturers  and  pharmacies
14    participating in the program;
15        (5)  the amount of enrollment fees and rebates  collected
16    under the program, and any additional funds or resources made
17    available to cover the cost of the program;
18        (6)  the   itemized  annual  cost  of  administering  the
19    program; and
20        (7)  findings and recommendations regarding problems  and
21    solutions related to the program, together with proposals for
22    changes  in  the  rules,  regulations,  or  laws necessary to
23    improve the administration of the program.

24        Section 990.  The State Finance Act is amended by  adding
25    Section 5.595 as follows:

26        (30 ILCS 105/5.595 new)
27        Sec.  5.595.  The  Senior  Citizens  and Disabled Persons
28    Prescription Drug Discount Program Fund.

29        Section 99.  Effective date. This  Act  takes  effect  on
30    July 1, 2003.