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Full Text of SB0003  93rd General Assembly

SB0003sam001 93rd General Assembly



                                     LRB093 03778 SJM 11051 a

 1                     AMENDMENT TO SENATE BILL 3

 2        AMENDMENT NO.     .  Amend Senate  Bill  3  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 the
18    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 03778 SJM 11051 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  Blue  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 Blue 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 03778 SJM 11051 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        "Preferred  drug list" refers to the list of prescription
18    drugs for which the Department or its  Program  administrator
19    has  negotiated a "Manufacturer Rebate Agreement", as defined
20    in Section 30 of this Act.
21        "Prescription drug" means any prescribed drug that may be
22    legally dispensed by an authorized pharmacy.
23        "Program" means the Senior Citizens and Disabled  Persons
24    Prescription Drug Discount Program created under this Act.
25        "Program  administrator"  means the entity that is chosen
26    by the Department to  administer  the  Program.  The  Program
27    administrator  may,  in  this  case,  be  the  Director  or a
28    Pharmacy Benefits Manager (PBM) chosen  to  subcontract  with
29    the Director.
30        "Rules"  includes  rules  adopted and forms prescribed by
31    the Department.

32        Section 17. Determination of disability. Disabled persons
33    filing applications for participation in  the  Program  shall
                            -4-      LRB093 03778 SJM 11051 a
 1    submit  proof  of  disability  in such form and manner as the
 2    Department shall by rule prescribe. Proof that a claimant  is
 3    eligible  to  receive  disability  benefits under the Federal
 4    Social Security Act shall constitute proof of disability  for
 5    purposes of this Act. Issuance of an Illinois Disabled Person
 6    Identification  Card  stating  that  the  claimant is under a
 7    Class 2 disability, as defined in Section 4A of the  Illinois
 8    Identification  Card  Act,  shall  constitute  proof that the
 9    person named thereon is a disabled  person  for  purposes  of
10    this  Act.  A  disabled  person not covered under the Federal
11    Social Security Act and  not  presenting  a  Disabled  Person
12    Identification  Card  stating  that  the he or she is under a
13    Class  2  disability  shall  be  examined  by   a   physician
14    designated  by  the  Department,  and  his or her status as a
15    disabled person determined using the same standards  as  used
16    by  the  Social  Security  Administration.  The  costs of any
17    required examination shall be borne by the person claiming  a
18    disability.

19        Section  20.  The  Senior  Citizens  and Disabled Persons
20    Prescription Drug Discount Program. The Senior  Citizens  and
21    Disabled   Persons  Prescription  Drug  Discount  Program  is
22    established to  protect  the  health  and  safety  of  senior
23    citizens   and   disabled   persons.  The  Program  shall  be
24    administered by the Department. The Department or its Program
25    administrator shall (i) enroll eligible seniors and  disabled
26    persons  into  the  Program to qualify them for a discount on
27    the purchase of prescription drugs at an authorized pharmacy,
28    (ii) enter into rebate agreements  with  drug  manufacturers,
29    and  (iii)  reimburse  pharmacies  for  the cost of providing
30    discounts using the proceeds  from  the  manufacturer  rebate
31    agreements.

32        Section 25. Prescription drug prices.
                            -5-      LRB093 03778 SJM 11051 a
 1        (a) Ninety days after the effective date of this Act, the
 2    Department  must  issue  a  request for proposals for bidders
 3    interested in administering the Program. Bidders must compete
 4    on the basis of the following minimum criteria: (i)  discount
 5    to  seniors  and  disabled  persons  separately for brand and
 6    generic drugs, (ii) administrative fees, (iii) rebates to the
 7    State and (iv) size of the pharmacy network.  Other  criteria
 8    may also be considered.
 9        (b)  Beginning  on  January  1,  2004, the amount paid by
10    eligible seniors and disabled persons enrolled in the Program
11    to authorized  pharmacies  for  prescription  drugs  may  not
12    exceed  prices agreed upon between the Department and Program
13    administrator  (AWP  less  a  percentage  discount   plus   a
14    dispensing  fee).  For  prescription  drugs  that  are  on  a
15    preferred  drug list, the amount paid by eligible seniors and
16    disabled  persons  enrolled  in  the  Program  to  authorized
17    pharmacies may not exceed the AWP less a  greater  percentage
18    discount  plus a dispensing fee agreed upon by the Department
19    and the Program administrator.
20        (c) Subject to  the  requirements  of  the  State  Prompt
21    Payment  Act,  the  Department  shall  compensate  authorized
22    pharmacies  from  the  Senior  Citizens  and Disabled Persons
23    Prescription Drug Discount Program Fund for the difference in
24    the dispensing  fee  between  the  amount  paid  by  eligible
25    seniors and disabled persons for prescription drugs dispensed
26    under  the  Program and the AWP dispensing fee as provided in
27    Section 3.16 of the  Senior  Citizens  and  Disabled  Persons
28    Property Tax Relief and Pharmaceutical Assistance Act.

29        Section 30.  Manufacturer rebate agreements.
30        (a)  Taking  into  consideration  the extent to which the
31    State  pays  for  prescription  drugs  under  various   State
32    programs,   the   Department,   its  agent,  or  the  Program
33    administrator  shall  negotiate   and   enter   into   rebate
                            -6-      LRB093 03778 SJM 11051 a
 1    agreements  with  drug manufacturers, as defined in this Act,
 2    to effect  prescription  drug  price  discounts.  The  rebate
 3    agreement  shall  become  effective  the  first  day  of  the
 4    calendar  quarter  that  begins  60  days  after the date the
 5    agreement is entered into.
 6        (b) Rebate payment  procedures.  All  rebates  negotiated
 7    under  agreements  described in this Section shall be paid to
 8    the Department in accordance with  procedures  prescribed  by
 9    the   Department.   All  rebates  must  be  remitted  to  the
10    Department not later than 30 days after receipt of a  request
11    for payment by the Department.
12        (c)  The receipts from the rebates and moneys transferred
13    under Section 33 shall be deposited into the Senior  Citizens
14    and Disabled Persons Prescription Drug Discount Program Fund,
15    a  special  fund  hereby  created  in the State treasury, and
16    shall be used, subject to appropriation, to cover the cost of
17    reimbursing authorized pharmacies under this Act pursuant  to
18    subsection (c) of Section 25.

19        Section  33.  Transfer  to  Senior  Citizens and Disabled
20    Persons Prescription Drug Discount Program Fund.
21        (a) Within 30 days after the effective date of this  Act,
22    the  State  Comptroller  shall direct and the State Treasurer
23    shall transfer $27,000,000 from the General Revenue  Fund  to
24    the  Senior  Citizens  and Disabled Persons Prescription Drug
25    Discount  Program  Fund  to   facilitate   the   payment   of
26    reimbursements   to   authorized   pharmacies.  Repayment  of
27    principal and interest to the General Revenue Fund  shall  be
28    made  so that the balance in the General Revenue Fund will be
29    restored as if  the  transfer  to  the  Senior  Citizens  and
30    Disabled  Persons Prescription Drug Discount Program Fund had
31    not been made. Upon a  certification  by  the  Department  of
32    Revenue  that the obligations under subsection (b) of Section
33    25 are being met, beginning on July 1, 2004, and on  the  1st
                            -7-      LRB093 03778 SJM 11051 a
 1    of   each   month   thereafter  until  the  principal  amount
 2    transferred from the General Revenue Fund plus  interest  has
 3    been repaid, the State Comptroller shall direct and the State
 4    Treasurer shall transfer 1/12th of $27,000,000, or so much of
 5    that  amount  as  is  necessary, from the Senior Citizens and
 6    Disabled Persons Prescription Drug Discount Program  Fund  to
 7    the  General  Revenue Fund plus accrued interest. The balance
 8    of the amount transferred from the General Revenue Fund shall
 9    bear interest at  the  rate  of  3.5%  per  annum  until  the
10    required  transfers  back  into the General Revenue Fund have
11    been completed.

12        Section 35. Program eligibility.
13        (a) Any person may apply to the Department or its Program
14    administrator for participation in the Program  in  the  form
15    and  manner required by the Department. The Department or its
16    Program administrator shall determine the eligibility of each
17    applicant for the Program within 30 days after  the  date  of
18    application. To participate in the Program an eligible senior
19    or  disabled  person whose application has been approved must
20    pay $25 upon enrollment and  annually  thereafter  and  shall
21    receive  a  Program  identification  card.  The  card  may be
22    presented to an authorized pharmacy to assist the pharmacy in
23    verifying eligibility under the Program. The Department shall
24    deposit  the  enrollment  fees  collected  into  the   Senior
25    Citizens  and  Disabled  Persons  Prescription  Drug Discount
26    Program Fund. The monies  collected  by  the  Department  for
27    enrollment  fees  and  deposited into the Senior Citizens and
28    Disabled Persons Prescription Drug Discount Program Fund must
29    be separately accounted for by the Department. If 2  or  more
30    persons  are  eligible for any benefit under this Act and are
31    members of the same household, each  participating  household
32    member shall apply to the Department and pay the fee required
33    for the purpose of obtaining an identification card.
                            -8-      LRB093 03778 SJM 11051 a
 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 or  its  Program  administrator  shall
18    adopt   rules  to  establish  standards  and  procedures  for
19    participation in the Program  and  approve  those  pharmacies
20    that  apply  to  participate  and  meet  the requirements for
21    participation.  Pharmacies  in  the  Program  administrator's
22    network must also comply with the Department's standards  and
23    procedures for participation.
24        (b)   The   Department  shall  establish  procedures  for
25    properly  contracting  for  pharmacy   services,   validating
26    reimbursement  claims,  validating  compliance  of authorized
27    pharmacies with the  conditions  for  participation  required
28    under  this  Act,  and  otherwise providing for the effective
29    administration of this Act.  The  Director,  in  consultation
30    with  pharmacists licensed under the Pharmacy Practice Act of
31    1987, may enter into a written contract with any other  State
32    agency,  instrumentality,  or political subdivision or with a
33    fiscal intermediary for the purpose  of  making  payments  to
                            -9-      LRB093 03778 SJM 11051 a
 1    authorized  pharmacies  pursuant to subsection (c) of Section
 2    25 and coordinating the  Program  with  other  programs  that
 3    provide  payments  for  prescription  drugs covered under the
 4    Program.

 5        Section  43.   Program   administrators.   Pharmaceutical
 6    Benefit  Management companies and other similar entities that
 7    administer or manage prescription coverage  (PBMs)  shall  at
 8    all  times  discharge  their  obligations  to  their clients,
 9    including but not limited to  all  private  employee  benefit
10    plans,   unions,   third   party   administrators,  insurance
11    companies,  and  state  or   federal   governments   (Covered
12    Entities),  and  to all Covered Entities' members, employees,
13    participants and beneficiaries  (Covered  Individuals),  with
14    the  standards of conduct applicable to a fiduciary under the
15    Employee Retirement Income Security Act of 1974 (ERISA),  and
16    under  any State statute establishing a fiduciary duty. In so
17    doing, PBMs shall, without limitation:
18             (1) discharge their duties with respect to  any  and
19        all  Covered  Entities  and Covered Individuals solely in
20        the  interest  of  the  Covered  Entities   and   Covered
21        Individuals  and  for  the exclusive purpose of providing
22        benefits to the Covered Entities and Covered Individuals,
23        and defraying reasonable expenses  of  administering  the
24        Covered Entities and Covered Individuals benefits;
25             (2)  discharge  their  duties  with the care, skill,
26        prudence, and  diligence  under  the  circumstances  then
27        prevailing  that  a  prudent  fiduciary  acting  in  like
28        capacity  and familiar with such matters would use in the
29        conduct of an enterprise of a  like  character  and  with
30        like aims;
31             (3)  discharge  their  duties in accordance with the
32        contract  governing  the  Covered  Entities  prescription
33        coverage, insofar as such contract is consistent with the
                            -10-     LRB093 03778 SJM 11051 a
 1        provisions of this Act and of ERISA;
 2             (4) provide any and  all  information  requested  by
 3        Covered  Entities  so  as to ensure that Covered Entities
 4        are able  to  ascertain  all  material  activities  being
 5        undertaken  on  their  behalf  or  on  behalf  of Covered
 6        Individuals; and
 7             (5)  notify  Covered  Entities  in  writing  of  any
 8        proposed or ongoing activity that involves,  directly  or
 9        indirectly,  any  conflict of interest as contemplated by
10        the standards applicable to a fiduciary under  ERISA  and
11        any  relevant  State statute. The above obligations shall
12        be applicable for all PBMs residing or operating  in,  or
13        providing   prescription   benefit  coverage  to  Covered
14        Entities or Covered Individuals residing or operating  in
15        Illinois.

16        Section  45.  Rules.  The Department shall adopt rules to
17    implement and administer the Program, which shall include the
18    following:
19             (1)  Execution  of  contracts  with  pharmacies   to
20        participate in the Program. The contracts shall stipulate
21        terms  and conditions for the participation of authorized
22        pharmacies and the  rights  of  the  State  to  terminate
23        participation for breach of the contract or for violation
24        of this Act or rules adopted by the Department under this
25        Act.
26             (2)  Establishment  of maximum limits on the size of
27        prescriptions that are eligible for a discount under  the
28        Program,  up  to  a  90-day  supply,  except  as  may  be
29        necessary for utilization control reasons.
30             (3)  Establishment  of liens upon any and all causes
31        of action that accrue to a beneficiary  as  a  result  of
32        injuries  for  which prescription drugs covered under the
33        Program are directly or indirectly required and for which
                            -11-     LRB093 03778 SJM 11051 a
 1        the Director made payment or became liable for under this
 2        Act.
 3             (4) 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        Section  50.  Report  on  administration  of Program. The
 8    Department shall report  to  the  Governor  and  the  General
 9    Assembly  by  March 1st of each year on the administration of
10    the Program under this Act.

11        Section 990. The State Finance Act is amended  by  adding
12    Section 5.595 as follows:

13        (30 ILCS 105/5.595 new)
14        Sec.  5.595.  The  Senior  Citizens  and Disabled Persons
15    Prescription Drug Discount Program Fund.

16        Section 999. Effective date. This  Act  takes  effect  on
17    July 1, 2003.".