Illinois General Assembly - Full Text of SB0003
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Full Text of SB0003  93rd General Assembly

SB0003sam003 93rd General Assembly



                                     LRB093 03778 SJM 14463 a

 1                     AMENDMENT TO SENATE BILL 3

 2        AMENDMENT NO.     .  Amend Senate Bill 3, AS AMENDED,  by
 3    replacing  everything  after  the  enacting  clause  with the
 4    following:

 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
                            -2-      LRB093 03778 SJM 14463 a
 1    away from poverty.
 2        (f)  Reducing  the  price  of  prescription  drugs  would
 3    benefit the health and  well-being  of  all  Illinois  senior
 4    citizens by providing more affordable access to needed drugs.

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

10        Section 15.  Definitions. As used in this Act:
11        "Authorized pharmacy" means any  pharmacy  registered  in
12    this  State  under  the  Pharmacy  Practice  Act  of 1987 and
13    approved by the Department or its program administrator.
14        "AWP" or  "average  wholesale  price"  means  the  amount
15    determined  from  the  latest  publication of the Red Book, a
16    universally subscribed pharmacist  reference  guide  annually
17    published  by  the  Hearst  Corporation.  "AWP"  or  "average
18    wholesale  price" may also be derived electronically from the
19    drug pricing database synonymous with the latest  publication
20    of  the Red Book and furnished in the National Drug Data File
21    (NDDF) by First Data Bank (FDB),  a  service  of  the  Hearst
22    Corporation.
23        "Department"  means  the Department of Central Management
24    Services.
25        "Director"  means  the  Director  of  Central  Management
26    Services.
27        "Disabled person" means a person unable to engage in  any
28    substantial   gainful  activity  by  reason  of  a  medically
29    determinable physical  or  mental  impairment  which  can  be
30    expected  to result in death or has lasted or can be expected
31    to last for a continuous period of not less than 12 months.
32        "Drug manufacturer" means any entity (1) that is  located
                            -3-      LRB093 03778 SJM 14463 a
 1    within  or  outside  Illinois  that  is  engaged  in  (i) the
 2    production,    preparation,     propagation,     compounding,
 3    conversion,  or  processing  of  prescription  drug  products
 4    covered  under  the program, either directly or indirectly by
 5    extraction from substances of natural  origin,  independently
 6    by  means  of  chemical  synthesis,  or  by  a combination of
 7    extraction and chemical  synthesis  or  (ii)  the  packaging,
 8    repackaging,   leveling,   labeling,   or   distribution   of
 9    prescription  drug products covered under the program and (2)
10    that elects to provide prescription drugs either directly  or
11    under  contract  with  any entity providing prescription drug
12    services  on  behalf  of  the  State   of   Illinois.   "Drug
13    manufacturer",   however,   does   not  include  a  wholesale
14    distributor of drugs or  a  retail  pharmacy  licensed  under
15    Illinois law.
16        "Eligible senior" means a person who is (i) a resident of
17    Illinois and (ii) 65 years of age or older.
18        "Prescription drug" means any prescribed drug that may be
19    legally dispensed by an authorized pharmacy.
20        "Program"  means the Senior Citizens and Disabled Persons
21    Prescription Drug Discount Program created under this Act.
22        "Program administrator" means the entity that  is  chosen
23    by  the  Department  to  administer  the program. The program
24    administrator may,  in  this  case,  be  the  Director  or  a
25    Pharmacy  Benefits  Manager  (PBM) chosen to subcontract with
26    the Director.
27        "Rules" includes rules adopted and  forms  prescribed  by
28    the Department.

29        Section   17.  Determination   of   disability.  Disabled
30    persons filing applications for participation in the  program
31    shall  submit  proof of disability in such form and manner as
32    the Department shall by rule prescribe. Proof that a claimant
33    is eligible to receive disability benefits under the  Federal
                            -4-      LRB093 03778 SJM 14463 a
 1    Social  Security Act shall constitute proof of disability for
 2    purposes of this Act. Issuance of an Illinois Disabled Person
 3    Identification Card stating that  the  claimant  is  under  a
 4    Class  2 disability, as defined in Section 4A of the Illinois
 5    Identification Card Act,  shall  constitute  proof  that  the
 6    person  named  thereon  is  a disabled person for purposes of
 7    this Act. A disabled person not  covered  under  the  Federal
 8    Social  Security  Act  and  not  presenting a Disabled Person
 9    Identification Card stating that the he or  she  is  under  a
10    Class   2   disability  shall  be  examined  by  a  physician
11    designated by the Department, and his  or  her  status  as  a
12    disabled  person  determined using the same standards as used
13    by the Social  Security  Administration.  The  costs  of  any
14    required  examination shall be borne by the person claiming a
15    disability.

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

31        Section 25.  Program administration.
32        (a)  The Department is authorized under this  Act  to  be
                            -5-      LRB093 03778 SJM 14463 a
 1    the  program  administrator.   If  the  Department is not the
 2    program administrator, 90 days after the  effective  date  of
 3    this  Act,  the Department must issue a request for proposals
 4    for bidders interested in administering the program.  Bidders
 5    must compete on the basis of the following minimum criteria:
 6             (1)  The Director shall solicit and accept proposals
 7        from  entities to provide for administration of a program
 8        or  programs  in  accordance  with  rules  adopted  under
 9        Section 45. Proposals must be submitted not later than  a
10        date  established  by  the  Director.  The Director shall
11        accept only those proposals that specify the following:
12                  (A)  The estimated amount of the discount based
13             on the entity's  previous  experience  and  how  the
14             discount is to be achieved.
15                  (B)  The  extent that discounts on prescription
16             drugs  are   to   be   achieved   through   rebates,
17             administrative  fees,  or other fees or discounts in
18             prices  that  the  entity   negotiates   with   drug
19             manufacturers.    The  proposals  shall  assure that
20             rebates  or  discounts  will  be  used  to  do   the
21             following:
22                       (i)  reduce costs to cardholders;
23                       (ii)  achieve  discounts  for cardholders;
24                  and
25                       (iii)  cover costs for  administering  the
26                  program.
27                  (C)  Any other benefits offered to cardholders.
28                  (D)  The   estimated   number   and  geographic
29             distribution  of  participating  pharmacies  in  the
30             administrator's pharmacy network.
31                  (E)  The  plan   for   pharmacy   compensation,
32             pursuant to subsection (e) of this Section.
33                  (F)  The   method   used  for  determining  the
34             prescription drugs to be  covered  by  the  program,
                            -6-      LRB093 03778 SJM 14463 a
 1             including  the criteria and process for establishing
 2             a preferred drug list, if applicable.
 3                  (G)  How  the  entity   proposes   to   improve
 4             medication management for cardholders, including any
 5             program of disease management.
 6                  (H)  How    cardholders    and    participating
 7             pharmacies  will be informed of the discounted price
 8             negotiated by the entity.
 9                  (I)  How  the  entity  will  handle  complaints
10             about the program's operation.
11                  (J)  The  entity's   previous   experience   in
12             managing similar programs.
13                  (K)  Any  additional  information  requested by
14             the Director.
15             (2)  The Director shall contract with  one  or  more
16        entities to administer a program or programs on the basis
17        of   the   proposals   submitted,   but  may  require  an
18        administrator to modify  its  conduct  of  a  program  in
19        accordance with rules adopted under Section 45.
20             The Director shall adopt rules specifying the period
21        for  which a contract will be in effect and may terminate
22        a contract if an administrator fails to conduct a program
23        in accordance with its proposal or with any modifications
24        required by rule.  When  a  contract  period  ends  or  a
25        contract  is  terminated, the Director shall enter into a
26        new contract in the manner specified in this Section  for
27        an original contract. Prior to making a new contract, the
28        Director  may  modify the rules for administration of the
29        program or programs.
30        (b)  As used in this  Section,  "administrator"  includes
31    the  administrator's parent company and any subsidiary of the
32    parent company.
33             (1)  No administrator  shall  sell  any  information
34        concerning   a  person  who  holds  a  prescription  drug
                            -7-      LRB093 03778 SJM 14463 a
 1        discount card, other than aggregate information that does
 2        not identify the  cardholder,  without  the  cardholder's
 3        written consent.
 4             (2)  Unless  an  administrator  has the cardholder's
 5        written  consent,  no   administrator   shall   use   any
 6        personally   identifiable  information  that  it  obtains
 7        concerning a cardholder through the program to promote or
 8        sell a program or product offered  by  the  administrator
 9        that is not related to the administration of the program.
10        This  subsection  (b)  does not prohibit an administrator
11        from contacting cardholders concerning  participation  in
12        or  administration  of  the  program,  including, but not
13        limited to, mailing a list of pharmacies participating in
14        the  program's  network  or  participating   in   disease
15        management programs.
16             (3)  To  the  extent  that  a  discount  is achieved
17        through rebates, administrative fees, or any  other  fees
18        or  discounts  in prices that an administrator negotiates
19        with drug manufacturers, an administrator shall  use  the
20        rebates or discounts to do the following:
21                  (A)  reduce costs to cardholders;
22                  (B)  achieve discounts for cardholders; and
23                  (C)  cover  any  administrative  costs  of  the
24             program.
25             (4)  The  administrator  shall  not  use  any  funds
26        generated  from  rebates, discounts, administrative fees,
27        or  other  fees  to  promote  its  mail  order   pharmacy
28        operation  or  the  mail  order  pharmacy operation of an
29        affiliate.
30        (c)  Beginning on January 1, 2004,  the  amount  paid  by
31    eligible seniors and disabled persons enrolled in the program
32    to  authorized  pharmacies  for  prescription  drugs  may not
33    exceed  prices  established  as  a  result  of   the   rebate
34    agreements   under  Section  30.  The  eligible  seniors  and
                            -8-      LRB093 03778 SJM 14463 a
 1    disabled persons shall pay the price determined under Section
 2    30 plus a dispensing fee of $3.50 per prescription for  brand
 3    name  drug  products, single-source drug products, and, for a
 4    period of 6 months, newly-released generic drug products  and
 5    $4.25 per prescription for all other generic  drug  products,
 6    except  that  the total amount paid by the eligible senior or
 7    disabled person for each prescription drug under this program
 8    shall not exceed the usual  and  customary  charge  for  such
 9    prescription.
10        (d)  The  contract  between the Department and a pharmacy
11    benefits manager must, at a minimum,  meet  the  criteria  of
12    subsection  (a).  The contract must also require notification
13    by the pharmacy benefits manager of any proposed  or  ongoing
14    activity  that involves, directly or indirectly, any conflict
15    of interest on the part of the pharmacy benefits manager. The
16    Department shall ensure that the  pharmacy  benefits  manager
17    complies  with  the  contract  and shall adopt all procedures
18    necessary to enforce the contract.
19        (e)  The  Department  or  program  administrator   shall,
20    subject  to the funds available under Section 30 of this Act,
21    compensate  authorized  pharmacies  for  prescription   drugs
22    dispensed  under  the  program for the difference between the
23    amount paid by the eligible senior  or  disabled  person  for
24    prescription  drugs  dispensed  under the program and (i) the
25    AWP minus 12% for brand  name  drug  products,  single-source
26    generic  drug  products,  and,  for  a  period  of  6 months,
27    newly-released generic drug products  and (ii) the AWP  minus
28    35% for all other generic drug products. The Department shall
29    compensate  a  pharmacy under this subsection (e) only if the
30    amount paid by the eligible senior  or  disabled  person  has
31    been  discounted  to  a  price, including the dispensing fees
32    stated in subsection (c) of this Section, that is  less  than
33    (i)   the  AWP  minus  12%  for  brand  name  drug  products,
34    single-source generic drug products, and, for a period  of  6
                            -9-      LRB093 03778 SJM 14463 a
 1    months, newly-released generic drug products and (ii) the AWP
 2    minus 35% for all other generic drug products.
 3        (f)  Beginning  on  January  1,  2004,  the Department or
 4    program administrator shall reimburse pharmacies  under  this
 5    Section within 30 days after adjudication of the claim.

 6        Section 30.  Manufacturer rebate agreements.
 7        (a)  Taking  into  consideration  the extent to which the
 8    State  pays  for  prescription  drugs  under  various   State
 9    programs  and the provision of assistance to disabled persons
10    or  eligible  seniors  under  patient  assistance   programs,
11    prescription drug discount programs, or other offers for free
12    or   reduced  price  medicine,  clinical  research  projects,
13    limited  supply  distribution  programs,  compassionate   use
14    programs,  or programs of research conducted by or for a drug
15    manufacturer, the  Department,  its  agent,  or  the  program
16    administrator   shall   negotiate   and   enter  into  rebate
17    agreements with drug manufacturers, as defined in  this  Act,
18    to  effect  prescription drug price discounts. The Department
19    or program administrator may establish a preferred drug  list
20    as  a  basis  for  determining  the discounts, administrative
21    fees, or other fees or rebates under this Section.
22        (b)  Rebate payment procedures.  All  rebates  negotiated
23    under  agreements  described in this Section shall be paid in
24    accordance with procedures prescribed by  the  Department  or
25    the program administrator.
26        (c)  Receipts  from  rebates  shall  be  used  to provide
27    discounts  for  prescription  drugs  purchased  by   eligible
28    seniors  and  disabled  persons  and  to  cover  the  cost of
29    administering the program, including compensation to be  paid
30    to  participating  pharmacies  by  the  Department or program
31    administrator  under  subsection  (e)  of  Section  25.   Any
32    receipts to be allocated to the Department shall be deposited
33    into  the  Senior  Citizens and Disabled Persons Prescription
                            -10-     LRB093 03778 SJM 14463 a
 1    Drug Discount Program Fund, a special fund hereby created  in
 2    the State treasury.

 3        Section 35.  Program eligibility.
 4        (a)  Any  person  may  apply  to  the  Department  or its
 5    program administrator for participation in the program in the
 6    form and manner required by the Department. The Department or
 7    its program administrator shall determine the eligibility  of
 8    each  applicant for the program within 30 days after the date
 9    of application. To participate in  the  program  an  eligible
10    senior or disabled person whose application has been approved
11    must  pay  $25  upon  enrollment  and annually thereafter and
12    shall receive a program identification card. The card may  be
13    presented to an authorized pharmacy to assist the pharmacy in
14    verifying eligibility under the program. The Department shall
15    deposit   the  enrollment  fees  collected  into  the  Senior
16    Citizens and  Disabled  Persons  Prescription  Drug  Discount
17    Program  Fund.  The  moneys  collected  by the Department for
18    enrollment fees and deposited into the  Senior  Citizens  and
19    Disabled Persons Prescription Drug Discount Program Fund must
20    be  separately  accounted for by the Department. If 2 or more
21    persons are eligible for any benefit under this Act  and  are
22    members  of  the same household, each participating household
23    member shall apply to the Department and pay the fee required
24    for the purpose of obtaining an identification card.
25        (b)  Proceeds from annual enrollment fees shall  be  used
26    by  the  Department to offset the administrative cost of this
27    Act. The Department may reduce the annual enrollment  fee  by
28    rule  if the revenue from the enrollment fees is in excess of
29    the costs to carry out the program.
30        (c)  Any  person  who  is  eligible  for   pharmaceutical
31    assistance  under  the  Senior  Citizens and Disabled Persons
32    Property Tax Relief  and  Pharmaceutical  Assistance  Act  is
33    presumed  to be eligible for this program. The enrollment fee
                            -11-     LRB093 03778 SJM 14463 a
 1    under this Act is not required for such persons. That  person
 2    may  purchase  prescription drugs under this program that are
 3    not covered by the pharmaceutical  assistance  program  under
 4    the  Senior Citizens and Disabled Persons Property Tax Relief
 5    and Pharmaceutical Assistance Act by using the identification
 6    card issued under the pharmaceutical assistance program.

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

28        Section  45.  Rules.  The Department shall adopt rules to
29    implement and administer the program, which shall include the
30    following:
31             (1)  Execution  of  contracts  with  pharmacies   to
32        participate in the program. The contracts shall stipulate
                            -12-     LRB093 03778 SJM 14463 a
 1        terms  and conditions for the participation of authorized
 2        pharmacies and the  rights  of  the  State  to  terminate
 3        participation for breach of the contract or for violation
 4        of this Act or rules adopted by the Department under this
 5        Act.
 6             (2)  Establishment  of maximum limits on the size of
 7        prescriptions that are eligible for a discount under  the
 8        program,  up  to  a  90-day  supply,  except  as  may  be
 9        necessary for utilization control reasons.
10             (3)  Inspection of appropriate records and audits of
11        participating  authorized  pharmacies  to ensure contract
12        compliance and to determine any  fraudulent  transactions
13        or practices under this Act.
14             (4)  Specify how a resident may apply to participate
15        in the program.
16             (5)  Specify   the  circumstances  under  which  the
17        Director may  require  an  administrator  to  modify  its
18        conduct of the program.
19             (6)  Specify the duration of a contract.
20             (7)  Require   that   an  administrator  permit  any
21        Illinois-licensed pharmacy willing  to  comply  with  the
22        requirements  of  this  Act  and terms and conditions for
23        participation in the program's network to participate  in
24        any network used by the administrator for its program.
25             (8)  Permit  an  administrator to negotiate with one
26        or more drug manufacturers for discounts in  drug  prices
27        or rebates.
28             (9)  Permit  an  administrator to receive any rebate
29        payments from drug manufacturers.
30             (10)  Permit   an    administrator    to    develop,
31        administer,  and  promote a program of disease management
32        pursuant to written agreements between the  administrator
33        and    pharmacies   participating   under   the   program
34        established by this Act.
                            -13-     LRB093 03778 SJM 14463 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 03778 SJM 14463 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.".