SB0003 93rd General Assembly


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 1        AN ACT concerning discount prescription drugs for  senior
 2    citizens.

 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 Citizen Prescription Drug 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)  Prescription  drug  prices  listed  on  the  Federal
21    Supply  Schedule  that serve the Veterans Administration, the
22    Department of Defense, and the Coast Guard average 52%  below
23    the non-federal average manufacturer's price.
24        (f)  Regardless  of  household  income,  seniors  without
25    prescription drug coverage are often just one serious illness
26    away from poverty.
27        (g)  Reducing  the  price  of  prescription  drugs  would
28    benefit  the  health  and  well-being  of all Illinois senior
29    citizens by providing more affordable access to needed drugs.
30        (h)  Drug prices  on  the  Federal  Supply  Schedule  are
31    negotiated  by the Department of Veterans Affairs and are the
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 1    best publicly available indicator of  the  prices  that  drug
 2    companies charge their favored customers.

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

 8        Section 15.  Definitions.  As used in this Act:
 9        "Authorized  pharmacy"  means  any pharmacy registered in
10    this State under  the  Pharmacy  Practice  Act  of  1987  and
11    approved by the Department.
12        "AWP"  or  "Average  wholesale  price"  means  the amount
13    determined from the latest publication of the  Blue  Book,  a
14    universally  subscribed  pharmacist  reference guide annually
15    published by  the  Hearst  Corporation.   "AWP"  or  "Average
16    wholesale  price" may also be derived electronically from the
17    drug  pricing database synonymous with the latest publication
18    of the Blue Book and furnished in the National Drug Data File
19    (NDDF) by First Data Bank (FDB),  a  service  of  the  Hearst
20    Corporation.
21        "Department" means the Department of  Central  Management
22    Services.
23        "Director"  means  the  Director  of  Central  Management
24    Services.
25        "Drug  manufacturer" means any entity (1) that is located
26    within or  outside  Illinois  that  is  engaged  in  (i)  the
27    production,     preparation,     propagation,    compounding,
28    conversion,  or  processing  of  prescription  drug  products
29    covered under the Program, either directly or  indirectly  by
30    extraction  from  substances of natural origin, independently
31    by means of  chemical  synthesis,  or  by  a  combination  of
32    extraction  and  chemical  synthesis  or  (ii) the packaging,
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 1    repackaging,   leveling,   labeling,   or   distribution   of
 2    prescription drug products covered under the Program and  (2)
 3    that  elects to provide prescription drugs either directly or
 4    under contract with any entity  providing  prescription  drug
 5    services   on   behalf  of  the  State  of  Illinois.   "Drug
 6    manufacturer",  however,  does  not   include   a   wholesale
 7    distributor  of  drugs  or  a  retail pharmacy licensed under
 8    Illinois law.
 9        "Eligible senior" means a person who is (i) a resident of
10    Illinois and (ii) 65 years of age or older.
11        "Federal  Supply  Schedule"  or  "FSS"  means   a   price
12    catalogue  containing goods available for purchase by federal
13    agencies.  Drug prices on  the  FSS  are  negotiated  by  the
14    (U.S.)  Department  of  Veterans'  Affairs  and  are the best
15    publicly available indicator of prices drug companies  charge
16    favored customers.
17        "Prescription drug" means any prescribed drug that may be
18    legally dispensed by an authorized pharmacy.
19        "Program"  means  the  Senior  Citizen  Prescription Drug
20    Discount Program created under this Act.
21        "Rules" includes rules adopted and  forms  prescribed  by
22    the Department.

23        Section 20. The Senior Citizen Prescription Drug Discount
24    Program.   The  Senior  Citizen  Prescription  Drug  Discount
25    Program is established to protect the health  and  safety  of
26    senior  citizens.   The  Program shall be administered by the
27    Department.  The Department shall (i) enroll eligible seniors
28    into the Program to  qualify  them  for  a  discount  on  the
29    purchase  of  prescription  drugs  at an authorized pharmacy,
30    (ii) enter into rebate agreements  with  drug  manufacturers,
31    and  (iii)  reimburse  pharmacies  for  the cost of providing
32    discounts using the proceeds  from  the  manufacturer  rebate
33    agreements.
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 1        Section 25.  Prescription drug prices.
 2        (a)  Beginning  on  January  1,  2004, the amount paid by
 3    eligible  seniors  enrolled  in  the  Program  to  authorized
 4    pharmacies for  prescription  drugs  may  not  exceed  prices
 5    listed  on  the Federal Supply Schedule plus a dispensing fee
 6    calculated as provided in Section 3.16 of the Senior Citizens
 7    and Disabled Persons Property Tax Relief  and  Pharmaceutical
 8    Assistance  Act. Nothing in this Act precludes any authorized
 9    pharmacy from charging less than  the  listed  price  on  the
10    Federal  Supply  Schedule.  The  Department  must provide the
11    applicable Federal Supply Schedule to authorized  pharmacies.
12    For  prescription  drugs  that  are not listed on the Federal
13    Supply Schedule, the amount paid by eligible seniors enrolled
14    in the Program to authorized pharmacies may  not  exceed  the
15    AWP minus 35% plus a dispensing fee calculated as provided in
16    Section  3.16  of  the  Senior  Citizens and Disabled Persons
17    Property Tax Relief and Pharmaceutical Assistance Act.
18        (b)  Subject to the  requirements  of  the  State  Prompt
19    Payment  Act,  the  Department  shall  compensate  authorized
20    pharmacies from the Senior Citizen Prescription Drug Discount
21    Program  Fund  for  the difference between the amount paid by
22    eligible seniors for prescription drugs dispensed  under  the
23    Program and the AWP minus 10%.

24        Section 30.  Manufacturer rebate agreements.
25        (a)  Taking  into  consideration  the extent to which the
26    State  pays  for  prescription  drugs  under  various   State
27    programs,  the  Department  or  its agent shall negotiate and
28    enter into rebate  agreements  with  drug  manufacturers,  as
29    defined  in  this  Act,  to  effect  prescription  drug price
30    discounts.  Persons eligible for benefits under this  Program
31    shall  be  entitled  to  purchase  prescription  drugs at the
32    negotiated discount price.  The  rebate  agreement  shall  be
33    equal   to   the  cost  to  the  Department  for  reimbursing
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 1    authorized pharmacies under this Act pursuant  to  subsection
 2    (b)  of  Section  25.   The  rebate  agreement  shall  become
 3    effective  the  first day of the calendar quarter that begins
 4    60 days after the date the agreement is entered into.
 5        (b)  The  Department  shall  develop   a   model   rebate
 6    agreement  for  prescription drugs dispensed on and after the
 7    effective date of this Act.
 8        (c)  Rebate payment procedures.  All  rebates  negotiated
 9    under  agreements  described in this Section shall be paid to
10    the Department in accordance with  procedures  prescribed  by
11    the   Department.   All  rebates  must  be  remitted  to  the
12    Department not later than 30 days after receipt of a  request
13    for payment by the Department.
14        (d)  The receipts from the rebates and moneys transferred
15    under  Section  33 shall be deposited into the Senior Citizen
16    Prescription Drug  Discount  Program  Fund,  a  special  fund
17    hereby  created  in  the  State  treasury, and shall be used,
18    subject to appropriation, to cover the  cost  of  reimbursing
19    authorized  pharmacies  under this Act pursuant to subsection
20    (b) of Section 25.

21        Section 33.  Transfer to Senior Citizen Prescription Drug
22    Discount Program Fund.
23        (a)  Within 30 days after the effective date of this Act,
24    the State Comptroller shall direct and  the  State  Treasurer
25    shall  transfer  $27,000,000 from the General Revenue Fund to
26    the Senior Citizen Prescription Drug Discount Program Fund to
27    facilitate  the  payment  of  reimbursements  to   authorized
28    pharmacies.  Repayment  of  principal  and  interest  to  the
29    General Revenue Fund shall be made so that the balance in the
30    General  Revenue  Fund will be restored as if the transfer to
31    the Senior Citizen Prescription Drug  Discount  Program  Fund
32    had  not been made. Upon a certification by the Department of
33    Revenue that the obligations under subsection (b) of  Section
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 1    25  are  being met, beginning on July 1, 2004, and on the 1st
 2    of  each  month  thereafter  until   the   principal   amount
 3    transferred  from  the General Revenue Fund plus interest has
 4    been repaid, the State Comptroller shall direct and the State
 5    Treasurer shall transfer 1/12th of $27,000,000, or so much of
 6    that  amount  as  is  necessary,  from  the  Senior   Citizen
 7    Prescription  Drug  Discount  Program  Fund  to  the  General
 8    Revenue  Fund  plus  accrued  interest.    The balance of the
 9    amount transferred from the General Revenue Fund  shall  bear
10    interest  at  the  rate  of 7.5% per annum until the required
11    transfers back  into  the  General  Revenue  Fund  have  been
12    completed.

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

16        Section 40.  Eligible pharmacies.
17        (a)  The   Department  shall  adopt  rules  to  establish
18    standards and procedures for participation in the Program and
19    approve those pharmacies that apply to participate  and  meet
20    the  requirements  for  participation.   The  Department  may
21    remove the authorization of a pharmacy to participate in this
22    Program  for failure to meet the standards and procedures for
23    participation established by  the  Department  by  rule.  Any
24    pharmacy  that  has been removed as an authorized pharmacy by
25    the Department may apply for reinstatement as  an  authorized
26    pharmacy   in   accordance   with  standards  and  procedures
27    established by the Department by rule.
28        (b)  The Department shall annually review the eligibility
29    of pharmacies to participate in the Program.
30        (c)  The  Department  shall  establish   procedures   for
31    properly   contracting   for  pharmacy  services,  validating
32    reimbursement claims,  validating  compliance  of  authorized
33    pharmacies  with  the  conditions  for participation required
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 1    under this Act, and otherwise  providing  for  the  effective
 2    administration  of  this  Act.  The Director, in consultation
 3    with pharmacists licensed under the Pharmacy Practice Act  of
 4    1987,  may enter into a written contract with any other State
 5    agency, instrumentality, or political subdivision or  with  a
 6    fiscal  intermediary  for  the  purpose of making payments to
 7    authorized pharmacies pursuant to subsection (b)  of  Section
 8    25  and  coordinating  the  Program  with other programs that
 9    provide payments for prescription  drugs  covered  under  the
10    Program.

11        Section  45.   Rules. The Department shall adopt rules to
12    implement and administer the Program, which shall include the
13    following:
14             (1)  Execution  of  contracts  with  pharmacies   to
15        participate   in   the   Program.   The  contracts  shall
16        stipulate terms and conditions for the  participation  of
17        authorized  pharmacies  and  the  rights  of the State to
18        terminate participation for breach of the contract or for
19        violation of this Act or rules adopted by the  Department
20        under this Act.
21             (2)  Establishment  of maximum limits on the size of
22        prescriptions that are eligible for a discount under  the
23        Program,  up  to  a  90-day  supply,  except  as  may  be
24        necessary for utilization control reasons.
25             (3)  Establishment  of liens upon any and all causes
26        of action that accrue to a beneficiary  as  a  result  of
27        injuries  for  which prescription drugs covered under the
28        Program are directly or indirectly required and for which
29        the Director made payment or became liable for under this
30        Act.
31             (4)  Inspection of appropriate records and audits of
32        participating authorized pharmacies  to  ensure  contract
33        compliance  and  to determine any fraudulent transactions
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 1        or practices under 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.

 6        Section  990.  The State Finance Act is amended by adding
 7    Section 5.595 as follows:

 8        (30 ILCS 105/5.595 new)
 9        Sec.  5.595.   The  Senior  Citizen   Prescription   Drug
10    Discount Program Fund.

11        Section 999.  Effective date.  This Act takes effect July
12    1, 2003.