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92_HB2236eng HB2236 Engrossed LRB9203760SMdv 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 HB2236 Engrossed -2- LRB9203760SMdv 1 best publicly available indicator of the prices that drug 2 companies charge their favored customers. 3 (i) The State of Illinois is involved in the purchase of 4 prescription drugs in a number of areas: the Department of 5 Central Management Services is involved in the purchase of 6 prescription drugs for the State employees group insurance 7 program, for State-operated mental health and developmental 8 disabilities facilities, and for Department of Veterans' 9 Affairs facilities; the Department of Public Health is 10 involved in the purchase of prescription drugs for ADAP (Aids 11 Drug Assistance Program) and for the STD (Sexually 12 Transmitted Diseases) Program; the Department of Corrections 13 is involved in the purchase of prescription drugs for prison 14 inmates; the Department of Revenue is involved in the 15 purchase of prescription drugs for the "Circuit Breaker" 16 Pharmaceutical Assistance Program; the Department of Children 17 and Family Services is involved in the purchase of 18 prescription drugs for State wards; and the Department of 19 Public Aid is involved in the purchase of prescription drugs 20 for Medicaid recipients; collectively this affords the State 21 of Illinois great bargaining power for the purchase of 22 prescription drugs. 23 Section 10. Purpose. The purpose of this Program is to 24 require the Department of Central Management Services to 25 establish and administer a program that will enable eligible 26 senior citizens to purchase prescription drugs at discounted 27 prices. 28 Section 15. Definitions. As used in this Act: 29 "Authorized pharmacy" means any pharmacy registered in 30 this State under the Pharmacy Practice Act of 1987 and 31 approved by the Department. 32 "AWP" or "Average wholesale price" means the amount HB2236 Engrossed -3- LRB9203760SMdv 1 determined from the latest publication of the Blue Book, a 2 universally subscribed pharmacist reference guide annually 3 published by the Hearst Corporation. "AWP" or "Average 4 wholesale price" may also be derived electronically from the 5 drug pricing database synonymous with the latest publication 6 of the Blue Book and furnished in the National Drug Data File 7 (NDDF) by First Data Bank (FDB), a service of the Hearst 8 Corporation. 9 "Department" means the Department of Central Management 10 Services. 11 "Director" means the Director of Central Management 12 Services. 13 "Drug manufacturer" means any entity (1) that is located 14 within or outside Illinois that is engaged in (i) the 15 production, preparation, propagation, compounding, 16 conversion, or processing of prescription drug products 17 covered under the Program, either directly or indirectly by 18 extraction from substances of natural origin, independently 19 by means of chemical synthesis, or by a combination of 20 extraction and chemical synthesis or (ii) the packaging, 21 repackaging, leveling, labeling, or distribution of 22 prescription drug products covered under the Program and (2) 23 that elects to provide prescription drugs either directly or 24 under contract with any entity providing prescription drug 25 services on behalf of the State of Illinois. "Drug 26 manufacturer", however, does not include a wholesale 27 distributor of drugs or a retail pharmacy licensed under 28 Illinois law. 29 "Eligible senior" means a person who is (i) a resident of 30 Illinois and (ii) 65 years of age or older. 31 "Federal Supply Schedule" or "FSS" means a price 32 catalogue containing goods available for purchase by federal 33 agencies. Drug prices on the FSS are negotiated by the 34 (U.S.) Department of Veterans' Affairs and are the best HB2236 Engrossed -4- LRB9203760SMdv 1 publicly available indicator of prices drug companies charge 2 favored customers. 3 "Prescription drug" means any prescribed drug that may be 4 legally dispensed by an authorized pharmacy. 5 "Program" means the Senior Citizen Prescription Drug 6 Discount Program created under this Act. 7 "Rules" includes rules adopted and forms prescribed by 8 the Department. 9 Section 20. The Senior Citizen Prescription Drug Discount 10 Program. The Senior Citizen Prescription Drug Discount 11 Program is established to protect the health and safety of 12 senior citizens. The Program shall be administered by the 13 Department. The Department shall (i) enroll eligible seniors 14 into the Program to qualify them for a discount on the 15 purchase of prescription drugs at an authorized pharmacy, 16 (ii) enter into rebate agreements with drug manufacturers, 17 and (iii) reimburse pharmacies for the cost of providing 18 discounts using the proceeds from the manufacturer rebate 19 agreements. 20 Section 25. Prescription drug prices. 21 (a) Beginning on January 1, 2002, the amount paid by 22 eligible seniors enrolled in the Program to authorized 23 pharmacies for prescription drugs may not exceed prices 24 listed on the Federal Supply Schedule plus a dispensing fee 25 calculated as provided in Section 3.16 of the Senior Citizens 26 and Disabled Persons Property Tax Relief and Pharmaceutical 27 Assistance Act. Nothing in this Act precludes any authorized 28 pharmacy from charging less than the listed price on the 29 Federal Supply Schedule. The Department must provide the 30 applicable Federal Supply Schedule to authorized pharmacies. 31 For prescription drugs that are not listed on the Federal 32 Supply Schedule, the amount paid by eligible seniors enrolled HB2236 Engrossed -5- LRB9203760SMdv 1 in the Program to authorized pharmacies may not exceed the 2 AWP minus 35% plus a dispensing fee calculated as provided in 3 Section 3.16 of the Senior Citizens and Disabled Persons 4 Property Tax Relief and Pharmaceutical Assistance Act. 5 (b) Subject to the requirements of the State Prompt 6 Payment Act, the Department shall compensate authorized 7 pharmacies from the Senior Citizen Prescription Drug Discount 8 Program Fund for the difference between the amount paid by 9 eligible seniors for prescription drugs dispensed under the 10 Program and the AWP minus 10%. 11 Section 30. Manufacturer rebate agreements. 12 (a) Taking into consideration the extent to which the 13 State pays for prescription drugs under various State 14 programs, the Department or its agent shall negotiate and 15 enter into rebate agreements with drug manufacturers, as 16 defined in this Act, to effect prescription drug price 17 discounts. Persons eligible for benefits under this Program 18 shall be entitled to purchase prescription drugs at the 19 negotiated discount price. The rebate agreement shall be 20 equal to the cost to the Department for reimbursing 21 authorized pharmacies under this Act pursuant to subsection 22 (b) of Section 25. The rebate agreement shall become 23 effective the first day of the calendar quarter that begins 24 60 days after the date the agreement is entered into. 25 (b) The Department shall develop a model rebate 26 agreement for prescription drugs dispensed on and after the 27 effective date of this Act. 28 (c) Rebate payment procedures. All rebates negotiated 29 under agreements described in this Section shall be paid to 30 the Department in accordance with procedures prescribed by 31 the Department. All rebates must be remitted to the 32 Department not later than 30 days after receipt of a request 33 for payment by the Department. HB2236 Engrossed -6- LRB9203760SMdv 1 (d) The receipts from the rebates and moneys transferred 2 under Section 33 shall be deposited into the Senior Citizen 3 Prescription Drug Discount Program Fund, a special fund 4 hereby created in the State treasury, and shall be used, 5 subject to appropriation, to cover the cost of reimbursing 6 authorized pharmacies under this Act pursuant to subsection 7 (b) of Section 25. 8 Section 33. Transfer to Senior Citizen Prescription Drug 9 Discount Program Fund. 10 (a) Within 30 days after the effective date of this 11 amendatory Act of the 92nd General Assembly, the State 12 Comptroller shall direct and the State Treasurer shall 13 transfer $27,000,000 from the General Revenue Fund to the 14 Senior Citizen Prescription Drug Discount Program Fund to 15 facilitate the payment of reimbursements to authorized 16 pharmacies. Repayment of principal and interest to the 17 General Revenue Fund shall be made so that the balance in the 18 General Revenue Fund will be restored as if the transfer to 19 the Senior Citizen Prescription Drug Discount Program Fund 20 had not been made. Upon a certification by the Department of 21 Revenue that the obligations under subsection (b) of Section 22 25 are being met, beginning on July 1, 2002, and on the 1st 23 of each month thereafter until the principal amount 24 transferred from the General Revenue Fund plus interest has 25 been repaid, the State Comptroller shall direct and the State 26 Treasurer shall transfer 1/12th of $27,000,000, or so much of 27 that amount as is necessary, from the Senior Citizen 28 Prescription Drug Discount Program Fund to the General 29 Revenue Fund plus accrued interest. The balance of the 30 amount transferred from the General Revenue Fund shall bear 31 interest at the rate of 7.5% per annum until the required 32 transfers back into the General Revenue Fund have been 33 completed. HB2236 Engrossed -7- LRB9203760SMdv 1 Section 35. Program eligibility. 2 (a) Any person may apply to the Department for 3 participation in the Program in the form and manner required 4 by the Department. The Department shall determine the 5 eligibility of each applicant for the Program within 30 days 6 after the date of application. To participate in the Program 7 an eligible senior whose application has been approved by the 8 Department must pay $25 upon enrollment and annually 9 thereafter and shall receive a Program identification card. 10 The card may be presented to an authorized pharmacy to assist 11 the pharmacy in verifying eligibility under the Program. The 12 Department shall deposit the enrollment fees collected into 13 the Senior Citizen Prescription Drug Discount Program Fund. 14 The monies collected by the Department for enrollment fees 15 and deposited into the Senior Citizen Prescription Drug 16 Discount Program Fund must be separately accounted for by the 17 Department. If 2 or more persons are eligible for any benefit 18 under this Act and are members of the same household, each 19 participating household member shall apply to the Department 20 and pay the fee required for the purpose of obtaining an 21 identification card. 22 (b) Proceeds from annual enrollment fees, subject to 23 appropriation, shall be used by the Department to offset the 24 administrative cost of this Act. The Department may reduce 25 the annual enrollment fee by rule if the revenue from the 26 enrollment fees is in excess of the costs to carry out the 27 Program. 28 (c) Any person who is eligible for pharmaceutical 29 assistance under the Senior Citizens and Disabled Persons 30 Property Tax Relief and Pharmaceutical Assistance Act is 31 presumed to be eligible for this Program. That person may 32 purchase prescription drugs under this Program that are not 33 covered by the pharmaceutical assistance program under the 34 Senior Citizens and Disabled Persons Property Tax Relief and HB2236 Engrossed -8- LRB9203760SMdv 1 Pharmaceutical Assistance Act by using the identification 2 card issued under the pharmaceutical assistance program. 3 Section 40. Eligible pharmacies. 4 (a) The Department shall adopt rules to establish 5 standards and procedures for participation in the Program and 6 approve those pharmacies that apply to participate and meet 7 the requirements for participation. The Department may 8 remove the authorization of a pharmacy to participate in this 9 Program for failure to meet the standards and procedures for 10 participation established by the Department by rule. Any 11 pharmacy that has been removed as an authorized pharmacy by 12 the Department may apply for reinstatement as an authorized 13 pharmacy in accordance with standards and procedures 14 established by the Department by rule. 15 (b) The Department shall annually review the eligibility 16 of pharmacies to participate in the Program. 17 (c) The Department shall establish procedures for 18 properly contracting for pharmacy services, validating 19 reimbursement claims, validating compliance of authorized 20 pharmacies with the conditions for participation required 21 under this Act, and otherwise providing for the effective 22 administration of this Act. The Director, in consultation 23 with pharmacists licensed under the Pharmacy Practice Act of 24 1987, may enter into a written contract with any other State 25 agency, instrumentality, or political subdivision or with a 26 fiscal intermediary for the purpose of making payments to 27 authorized pharmacies pursuant to subsection (b) of Section 28 25 and coordinating the Program with other programs that 29 provide payments for prescription drugs covered under the 30 Program. 31 Section 45. Rules. The Department shall adopt rules to 32 implement and administer the Program, which shall include the HB2236 Engrossed -9- LRB9203760SMdv 1 following: 2 (1) Execution of contracts with pharmacies to 3 participate in the Program. The contracts shall 4 stipulate terms and conditions for the participation of 5 authorized pharmacies and the rights of the State to 6 terminate participation for breach of the contract or for 7 violation of this Act or rules adopted by the Department 8 under this Act. 9 (2) Establishment of maximum limits on the size of 10 prescriptions that are eligible for a discount under the 11 Program, up to a 90-day supply, except as may be 12 necessary for utilization control reasons. 13 (3) Establishment of liens upon any and all causes 14 of action that accrue to a beneficiary as a result of 15 injuries for which prescription drugs covered under the 16 Program are directly or indirectly required and for which 17 the Director made payment or became liable for under this 18 Act. 19 (4) Inspection of appropriate records and audits of 20 participating authorized pharmacies to ensure contract 21 compliance and to determine any fraudulent transactions 22 or practices under this Act. 23 Section 50. Report on administration of Program. The 24 Department shall report to the Governor and the General 25 Assembly by March 1st of each year on the administration of 26 the Program under this Act. 27 Section 905. The Department of Central Management 28 Services Law of the Civil Administrative Code of Illinois is 29 amended by adding Section 405-195 as follows: 30 (20 ILCS 405/405-195 new) 31 Sec. 405-195. Prescription Drug Purchasing Policy HB2236 Engrossed -10- LRB9203760SMdv 1 Office. The Department shall establish a Prescription Drug 2 Purchasing Policy Office. The Office shall determine and 3 implement strategies for best price purchasing practices for 4 State agencies that pay for prescription drugs by direct 5 purchase or by other arrangements. This may include 6 establishing a central State purchasing policy, entering into 7 cooperative agreements with other states or other public or 8 private entities that may enable the State to reduce its 9 prescription drug costs, and establishing any other State 10 agency policies and practices that may enable the State to 11 reduce its costs. 12 Section 990. The State Finance Act is amended by adding 13 Section 5.545 as follows: 14 (30 ILCS 105/5.545 new) 15 Sec. 5.545. The Senior Citizen Prescription Drug 16 Discount Program Fund. 17 Section 999. Effective date. This Act takes effect July 18 1, 2001.
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