SB0003enr 93rd General Assembly


SB3 Enrolled                         LRB093 03778 SJM 03813 b

 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   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
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 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
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 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
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 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.
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 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
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 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,  newly
21    released  generic  drug  products  and (ii) the AWP minus 35%
22    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.
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 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
SB3 Enrolled                -10-     LRB093 03778 SJM 03813 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.
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 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
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 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
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 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.