Illinois General Assembly - Full Text of HB0209
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Full Text of HB0209  93rd General Assembly

HB0209ham001 93rd General Assembly


093_HB0209ham001

 










                                     LRB093 04349 SJM 14459 a

 1                     AMENDMENT TO HOUSE BILL 209

 2        AMENDMENT NO.     .  Amend House Bill  209  by  replacing
 3    everything after the enacting clause with the following:

 4        "Section  1.  Short  title.  This Act may be cited as the
 5    Senior  Citizens  and  Disabled  Persons  Prescription   Drug
 6    Discount Program Act.

 7        Section 5.  Findings. The General Assembly finds that:
 8        (a)  Although   senior  citizens  represent  12%  of  the
 9    population, they use on average  37%  of  prescription  drugs
10    that are dispensed.
11        (b)  Senior   citizens   in  the  United  States  without
12    prescription drug insurance coverage pay the  highest  prices
13    in the world for needed medications.
14        (c)  High  prescription  drug  prices force many Illinois
15    seniors to go without proper medication or other necessities,
16    thereby affecting their health and safety.
17        (d)  Prescription drug prices in the  United  States  are
18    the world's highest, averaging 32% higher than in Canada, 40%
19    higher than in Mexico, and 60% higher than in Great Britain.
20        (e)  Regardless  of  household  income,  seniors  without
21    prescription drug coverage are often just one serious illness
22    away from poverty.
 
                            -2-      LRB093 04349 SJM 14459 a
 1        (f)  Reducing  the  price  of  prescription  drugs  would
 2    benefit  the  health  and  well-being  of all Illinois senior
 3    citizens by providing more affordable access to needed drugs.

 4        Section 10.  Purpose. The purpose of this program  is  to
 5    require  the  Department  of  Central  Management Services to
 6    establish and administer a program that will enable  eligible
 7    senior citizens and disabled persons to purchase prescription
 8    drugs at discounted prices.

 9        Section 15.  Definitions. As used in this Act:
10        "Authorized  pharmacy"  means  any pharmacy registered in
11    this State under  the  Pharmacy  Practice  Act  of  1987  and
12    approved by the Department or its program administrator.
13        "AWP"  or  "average  wholesale  price"  means  the amount
14    determined from the latest publication of  the  Red  Book,  a
15    universally  subscribed  pharmacist  reference guide annually
16    published  by  the  Hearst  Corporation.  "AWP"  or  "average
17    wholesale price" may also be derived electronically from  the
18    drug  pricing database synonymous with the latest publication
19    of the Red Book and furnished in the National Drug Data  File
20    (NDDF)  by  First  Data  Bank  (FDB), a service of the Hearst
21    Corporation.
22        "Department" means the Department of  Central  Management
23    Services.
24        "Director"  means  the  Director  of  Central  Management
25    Services.
26        "Disabled  person" means a person unable to engage in any
27    substantial  gainful  activity  by  reason  of  a   medically
28    determinable  physical  or  mental  impairment  which  can be
29    expected to result in death or has lasted or can be  expected
30    to last for a continuous period of not less than 12 months.
31        "Drug  manufacturer" means any entity (1) that is located
32    within or  outside  Illinois  that  is  engaged  in  (i)  the
 
                            -3-      LRB093 04349 SJM 14459 a
 1    production,     preparation,     propagation,    compounding,
 2    conversion,  or  processing  of  prescription  drug  products
 3    covered under the program, either directly or  indirectly  by
 4    extraction  from  substances of natural origin, independently
 5    by means of  chemical  synthesis,  or  by  a  combination  of
 6    extraction  and  chemical  synthesis  or  (ii) the packaging,
 7    repackaging,   leveling,   labeling,   or   distribution   of
 8    prescription drug products covered under the program and  (2)
 9    that  elects to provide prescription drugs either directly or
10    under contract with any entity  providing  prescription  drug
11    services   on   behalf   of  the  State  of  Illinois.  "Drug
12    manufacturer",  however,  does  not   include   a   wholesale
13    distributor  of  drugs  or  a  retail pharmacy licensed under
14    Illinois law.
15        "Eligible senior" means a person who is (i) a resident of
16    Illinois and (ii) 65 years of age or older.
17        "Prescription drug" means any prescribed drug that may be
18    legally dispensed by an authorized pharmacy.
19        "Program" means the Senior Citizens and Disabled  Persons
20    Prescription Drug Discount Program created under this Act.
21        "Program  administrator"  means the entity that is chosen
22    by the Department to  administer  the  program.  The  program
23    administrator  may,  in  this  case,  be  the  Director  or a
24    Pharmacy Benefits Manager (PBM) chosen  to  subcontract  with
25    the Director.
26        "Rules"  includes  rules  adopted and forms prescribed by
27    the Department.

28        Section  17.  Determination   of   disability.   Disabled
29    persons  filing applications for participation in the program
30    shall submit proof of disability in such form and  manner  as
31    the Department shall by rule prescribe. Proof that a claimant
32    is  eligible to receive disability benefits under the Federal
33    Social Security Act shall constitute proof of disability  for
 
                            -4-      LRB093 04349 SJM 14459 a
 1    purposes of this Act. Issuance of an Illinois Disabled Person
 2    Identification  Card  stating  that  the  claimant is under a
 3    Class 2 disability, as defined in Section 4A of the  Illinois
 4    Identification  Card  Act,  shall  constitute  proof that the
 5    person named thereon is a disabled  person  for  purposes  of
 6    this  Act.  A  disabled  person not covered under the Federal
 7    Social Security Act and  not  presenting  a  Disabled  Person
 8    Identification  Card  stating  that  the he or she is under a
 9    Class  2  disability  shall  be  examined  by   a   physician
10    designated  by  the  Department,  and  his or her status as a
11    disabled person determined using the same standards  as  used
12    by  the  Social  Security  Administration.  The  costs of any
13    required examination shall be borne by the person claiming  a
14    disability.

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

30        Section 25.  Program administration.
31        (a)  The  Department  is  authorized under this Act to be
32    the program administrator.  If  the  Department  is  not  the
 
                            -5-      LRB093 04349 SJM 14459 a
 1    program  administrator,  90  days after the effective date of
 2    this Act, the Department must issue a request  for  proposals
 3    for  bidders interested in administering the program. Bidders
 4    must compete on the basis of the following minimum criteria:
 5             (1)  The Director shall solicit and accept proposals
 6        from entities to provide for administration of a  program
 7        or  programs  in  accordance  with  rules  adopted  under
 8        Section  45. Proposals must be submitted not later than a
 9        date established by  the  Director.  The  Director  shall
10        accept only those proposals that specify the following:
11                  (A)  The estimated amount of the discount based
12             on  the  entity's  previous  experience  and how the
13             discount is to be achieved.
14                  (B)  The extent that discounts on  prescription
15             drugs   are   to   be   achieved   through  rebates,
16             administrative fees, or other fees or  discounts  in
17             prices   that   the   entity  negotiates  with  drug
18             manufacturers.   The  proposals  shall  assure  that
19             rebates   or  discounts  will  be  used  to  do  the
20             following:
21                       (i)  reduce costs to cardholders;
22                       (ii)  achieve discounts  for  cardholders;
23                  and
24                       (iii)  cover  costs  for administering the
25                  program.
26                  (C)  Any other benefits offered to cardholders.
27                  (D)  The  estimated   number   and   geographic
28             distribution  of  participating  pharmacies  in  the
29             administrator's pharmacy network.
30                  (E)  The   plan   for   pharmacy  compensation,
31             pursuant to subsection (e) of this Section.
32                  (F)  The  method  used  for   determining   the
33             prescription  drugs  to  be  covered by the program,
34             including the criteria and process for  establishing
 
                            -6-      LRB093 04349 SJM 14459 a
 1             a preferred drug list, if applicable.
 2                  (G)  How   the   entity   proposes  to  improve
 3             medication management for cardholders, including any
 4             program of disease management.
 5                  (H)  How    cardholders    and    participating
 6             pharmacies will be informed of the discounted  price
 7             negotiated by the entity.
 8                  (I)  How  the  entity  will  handle  complaints
 9             about the program's operation.
10                  (J)  The   entity's   previous   experience  in
11             managing similar programs.
12                  (K)  Any additional  information  requested  by
13             the Director.
14             (2)  The  Director  shall  contract with one or more
15        entities to administer a program or programs on the basis
16        of  the  proposals  submitted,   but   may   require   an
17        administrator  to  modify  its  conduct  of  a program in
18        accordance with rules adopted under Section 45.
19             The Director shall adopt rules specifying the period
20        for which a contract will be in effect and may  terminate
21        a contract if an administrator fails to conduct a program
22        in accordance with its proposal or with any modifications
23        required  by  rule.  When  a  contract  period  ends or a
24        contract is terminated, the Director shall enter  into  a
25        new  contract in the manner specified in this Section for
26        an original contract. Prior to making a new contract, the
27        Director may modify the rules for administration  of  the
28        program or programs.
29        (b)  As  used  in  this Section, "administrator" includes
30    the administrator's parent company and any subsidiary of  the
31    parent company.
32             (1)  No  administrator  shall  sell  any information
33        concerning  a  person  who  holds  a  prescription   drug
34        discount card, other than aggregate information that does
 
                            -7-      LRB093 04349 SJM 14459 a
 1        not  identify  the  cardholder,  without the cardholder's
 2        written consent.
 3             (2)  Unless an administrator  has  the  cardholder's
 4        written   consent,   no   administrator   shall  use  any
 5        personally  identifiable  information  that  it   obtains
 6        concerning a cardholder through the program to promote or
 7        sell  a  program  or product offered by the administrator
 8        that is not related to the administration of the program.
 9        This subsection (b) does not  prohibit  an  administrator
10        from  contacting  cardholders concerning participation in
11        or administration of  the  program,  including,  but  not
12        limited to, mailing a list of pharmacies participating in
13        the   program's   network  or  participating  in  disease
14        management programs.
15             (3)  To the  extent  that  a  discount  is  achieved
16        through  rebates,  administrative fees, or any other fees
17        or discounts in prices that an  administrator  negotiates
18        with  drug  manufacturers, an administrator shall use the
19        rebates or discounts to do the following:
20                  (A)  reduce costs to cardholders;
21                  (B)  achieve discounts for cardholders; and
22                  (C)  cover  any  administrative  costs  of  the
23             program.
24             (4)  The  administrator  shall  not  use  any  funds
25        generated from rebates, discounts,  administrative  fees,
26        or   other  fees  to  promote  its  mail  order  pharmacy
27        operation or the mail  order  pharmacy  operation  of  an
28        affiliate.
29        (c)  Beginning  on  January  1,  2004, the amount paid by
30    eligible seniors and disabled persons enrolled in the program
31    to authorized  pharmacies  for  prescription  drugs  may  not
32    exceed   prices   established  as  a  result  of  the  rebate
33    agreements  under  Section  30.  The  eligible  seniors   and
34    disabled persons shall pay the price determined under Section
 
                            -8-      LRB093 04349 SJM 14459 a
 1    30  plus a dispensing fee of $3.50 per prescription for brand
 2    name drug products, single-source drug products, and,  for  a
 3    period of 6 months, newly-released generic drug products  and
 4    $4.25  per  prescription for all other generic drug products,
 5    except that the total amount paid by the eligible  senior  or
 6    disabled person for each prescription drug under this program
 7    shall  not  exceed  the  usual  and customary charge for such
 8    prescription.
 9        (d)  The contract between the Department and  a  pharmacy
10    benefits  manager  must,  at  a minimum, meet the criteria of
11    subsection (a). The contract must also  require  notification
12    by  the  pharmacy benefits manager of any proposed or ongoing
13    activity that involves, directly or indirectly, any  conflict
14    of interest on the part of the pharmacy benefits manager. The
15    Department  shall  ensure  that the pharmacy benefits manager
16    complies with the contract and  shall  adopt  all  procedures
17    necessary to enforce the contract.
18        (e)  The   Department  or  program  administrator  shall,
19    subject to the funds available under Section 30 of this  Act,
20    compensate   authorized  pharmacies  for  prescription  drugs
21    dispensed under the program for the  difference  between  the
22    amount  paid  by  the  eligible senior or disabled person for
23    prescription drugs dispensed under the program  and  (i)  the
24    AWP  minus  12%  for  brand name drug products, single-source
25    generic drug  products,  and,  for  a  period  of  6  months,
26    newly-released  generic drug products  and (ii) the AWP minus
27    35% for all other generic drug products. The Department shall
28    compensate a pharmacy under this subsection (e) only  if  the
29    amount  paid  by  the  eligible senior or disabled person has
30    been discounted to a price,  including  the  dispensing  fees
31    stated  in  subsection (c) of this Section, that is less than
32    (i)  the  AWP  minus  12%  for  brand  name  drug   products,
33    single-source  generic  drug products, and, for a period of 6
34    months, newly-released generic drug products and (ii) the AWP
 
                            -9-      LRB093 04349 SJM 14459 a
 1    minus 35% for all other generic drug products.
 2        (f)  Beginning on January  1,  2004,  the  Department  or
 3    program  administrator  shall reimburse pharmacies under this
 4    Section within 30 days after adjudication of the claim.

 5        Section 30.  Manufacturer rebate agreements.
 6        (a)  Taking into consideration the extent  to  which  the
 7    State   pays  for  prescription  drugs  under  various  State
 8    programs and the provision of assistance to disabled  persons
 9    or   eligible  seniors  under  patient  assistance  programs,
10    prescription drug discount programs, or other offers for free
11    or  reduced  price  medicine,  clinical  research   projects,
12    limited   supply  distribution  programs,  compassionate  use
13    programs, or programs of research conducted by or for a  drug
14    manufacturer,  the  Department,  its  agent,  or  the program
15    administrator  shall  negotiate   and   enter   into   rebate
16    agreements  with  drug manufacturers, as defined in this Act,
17    to effect prescription drug price discounts.  The  Department
18    or  program administrator may establish a preferred drug list
19    as a basis  for  determining  the  discounts,  administrative
20    fees, or other fees or rebates under this Section.
21        (b)  Rebate  payment  procedures.  All rebates negotiated
22    under agreements described in this Section shall be  paid  in
23    accordance  with  procedures  prescribed by the Department or
24    the program administrator.
25        (c)  Receipts from  rebates  shall  be  used  to  provide
26    discounts   for  prescription  drugs  purchased  by  eligible
27    seniors and  disabled  persons  and  to  cover  the  cost  of
28    administering  the program, including compensation to be paid
29    to participating pharmacies  by  the  Department  or  program
30    administrator   under  subsection  (e)  of  Section  25.  Any
31    receipts to be allocated to the Department shall be deposited
32    into the Senior Citizens and  Disabled  Persons  Prescription
33    Drug  Discount Program Fund, a special fund hereby created in
 
                            -10-     LRB093 04349 SJM 14459 a
 1    the State treasury.

 2        Section 35.  Program eligibility.
 3        (a)  Any person  may  apply  to  the  Department  or  its
 4    program administrator for participation in the program in the
 5    form and manner required by the Department. The Department or
 6    its  program administrator shall determine the eligibility of
 7    each applicant for the program within 30 days after the  date
 8    of  application.  To  participate  in the program an eligible
 9    senior or disabled person whose application has been approved
10    must pay $25 upon  enrollment  and  annually  thereafter  and
11    shall  receive a program identification card. The card may be
12    presented to an authorized pharmacy to assist the pharmacy in
13    verifying eligibility under the program. The Department shall
14    deposit  the  enrollment  fees  collected  into  the   Senior
15    Citizens  and  Disabled  Persons  Prescription  Drug Discount
16    Program Fund. The moneys  collected  by  the  Department  for
17    enrollment  fees  and  deposited into the Senior Citizens and
18    Disabled Persons Prescription Drug Discount Program Fund must
19    be separately accounted for by the Department. If 2  or  more
20    persons  are  eligible for any benefit under this Act and are
21    members of the same household, each  participating  household
22    member shall apply to the Department and pay the fee required
23    for the purpose of obtaining an identification card.
24        (b)  Proceeds  from  annual enrollment fees shall be used
25    by the Department to offset the administrative cost  of  this
26    Act.  The  Department may reduce the annual enrollment fee by
27    rule if the revenue from the enrollment fees is in excess  of
28    the costs to carry out the program.
29        (c)  Any   person  who  is  eligible  for  pharmaceutical
30    assistance under the Senior  Citizens  and  Disabled  Persons
31    Property  Tax  Relief  and  Pharmaceutical  Assistance Act is
32    presumed to be eligible for this program. The enrollment  fee
33    under  this Act is not required for such persons. That person
 
                            -11-     LRB093 04349 SJM 14459 a
 1    may purchase prescription drugs under this program  that  are
 2    not  covered  by  the pharmaceutical assistance program under
 3    the Senior Citizens and Disabled Persons Property Tax  Relief
 4    and Pharmaceutical Assistance Act by using the identification
 5    card issued under the pharmaceutical assistance program.

 6        Section 40.  Eligible pharmacies.
 7        (a)  The  Department  or  its program administrator shall
 8    adopt  rules  to  establish  standards  and  procedures   for
 9    participation  in  the  program  and approve those pharmacies
10    that apply to  participate  and  meet  the  requirements  for
11    participation.  Pharmacies  in  the  program  administrator's
12    network  must also comply with the Department's standards and
13    procedures for participation.
14        (b)  The  Department  shall  establish   procedures   for
15    properly   contracting   for  pharmacy  services,  validating
16    reimbursement claims,  validating  compliance  of  authorized
17    pharmacies  with  the  conditions  for participation required
18    under this Act, and otherwise  providing  for  the  effective
19    administration  of  this  Act.  The Director, in consultation
20    with pharmacists licensed under the Pharmacy Practice Act  of
21    1987,  may enter into a written contract with any other State
22    agency, instrumentality, or political subdivision or  with  a
23    fiscal  intermediary  for  the  purpose of making payments to
24    authorized pharmacies and coordinating the program with other
25    programs that provide payments for prescription drugs covered
26    under the program.

27        Section 45.  Rules. The Department shall adopt  rules  to
28    implement and administer the program, which shall include the
29    following:
30             (1)  Execution   of  contracts  with  pharmacies  to
31        participate in the program. The contracts shall stipulate
32        terms and conditions for the participation of  authorized
 
                            -12-     LRB093 04349 SJM 14459 a
 1        pharmacies  and  the  rights  of  the  State to terminate
 2        participation for breach of the contract or for violation
 3        of this Act or rules adopted by the Department under this
 4        Act.
 5             (2)  Establishment of maximum limits on the size  of
 6        prescriptions  that are eligible for a discount under the
 7        program,  up  to  a  90-day  supply,  except  as  may  be
 8        necessary for utilization control reasons.
 9             (3)  Inspection of appropriate records and audits of
10        participating authorized pharmacies  to  ensure  contract
11        compliance  and  to determine any fraudulent transactions
12        or practices under this Act.
13             (4)  Specify how a resident may apply to participate
14        in the program.
15             (5)  Specify  the  circumstances  under  which   the
16        Director  may  require  an  administrator  to  modify its
17        conduct of the program.
18             (6)  Specify the duration of a contract.
19             (7)  Require  that  an  administrator   permit   any
20        Illinois-licensed  pharmacy  willing  to  comply with the
21        requirements of this Act and  terms  and  conditions  for
22        participation  in the program's network to participate in
23        any network used by the administrator for its program.
24             (8)  Permit an administrator to negotiate  with  one
25        or  more  drug manufacturers for discounts in drug prices
26        or rebates.
27             (9)  Permit an administrator to receive  any  rebate
28        payments from drug manufacturers.
29             (10)  Permit    an    administrator    to   develop,
30        administer, and promote a program of  disease  management
31        pursuant  to written agreements between the administrator
32        and   pharmacies   participating   under   the    program
33        established by this Act.
 
                            -13-     LRB093 04349 SJM 14459 a
 1        Section  47.  Limit  on  State's  obligation  for cost of
 2    administration. The State of Illinois is  obligated  for  the
 3    cost  of administering this program only to the extent of the
 4    amount of money collected as enrollment fees under Section 35
 5    of this Act, rebates collected under Section 30 of this  Act,
 6    and  funds  appropriated  by  the  General  Assembly  for the
 7    purpose of this Act.

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

30        Section  990.  The State Finance Act is amended by adding
31    Section 5.595 as follows:
 
                            -14-     LRB093 04349 SJM 14459 a
 1        (30 ILCS 105/5.595 new)
 2        Sec. 5.595.  The Senior  Citizens  and  Disabled  Persons
 3    Prescription Drug Discount Program Fund.

 4        Section  99.  Effective  date.  This  Act takes effect on
 5    July 1, 2003.".