Public Act 93-0018

SB3 Enrolled                         LRB093 03778 SJM 03813 b

    AN ACT concerning discount prescription drugs for  senior
citizens.

    Be  it  enacted  by  the People of the State of Illinois,
represented in the General Assembly:

    Section 1.  Short title. This Act may  be  cited  as  the
Senior   Citizens  and  Disabled  Persons  Prescription  Drug
Discount Program Act.

    Section 5.  Findings. The General Assembly finds that:
    (a)  Although  senior  citizens  represent  12%  of   the
population,  they  use  on  average 37% of prescription drugs
that are dispensed.
    (b)  Senior  citizens  in  the  United   States   without
prescription  drug  insurance coverage pay the highest prices
in the world for needed medications.
    (c)  High prescription drug prices  force  many  Illinois
seniors to go without proper medication or other necessities,
thereby affecting their health and safety.
    (d)  Prescription  drug  prices  in the United States are
the world's highest, averaging 32% higher than in Canada, 40%
higher than in Mexico, and 60% higher than in Great Britain.
    (e)  Regardless  of  household  income,  seniors  without
prescription drug coverage are often just one serious illness
away from poverty.
    (f)  Reducing  the  price  of  prescription  drugs  would
benefit the health and  well-being  of  all  Illinois  senior
citizens by providing more affordable access to needed drugs.

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

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

    Section   17.  Determination   of   disability.  Disabled
persons filing applications for participation in the  program
shall  submit  proof of disability in such form and manner as
the Department shall by rule prescribe. Proof that a claimant
is eligible to receive disability benefits under the  Federal
Social  Security Act shall constitute proof of disability for
purposes of this Act. Issuance of an Illinois Disabled Person
Identification Card stating that  the  claimant  is  under  a
Class  2 disability, as defined in Section 4A of the Illinois
Identification Card Act,  shall  constitute  proof  that  the
person  named  thereon  is  a disabled person for purposes of
this Act. A disabled person not  covered  under  the  Federal
Social  Security  Act  and  not  presenting a Disabled Person
Identification Card stating that he or she is under a Class 2
disability shall be examined by a physician designated by the
Department, and his  or  her  status  as  a  disabled  person
determined  using  the  same  standards as used by the Social
Security  Administration.   The   costs   of   any   required
examination   shall   be  borne  by  the  person  claiming  a
disability.

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

    Section 25.  Program administration.
    (a)  The Department is authorized under this  Act  to  be
the  program  administrator.   If  the  Department is not the
program administrator, 90 days after the  effective  date  of
this  Act,  the Department must issue a request for proposals
for bidders interested in administering the program.  Bidders
must compete on the basis of the following minimum criteria:
         (1)  The Director shall solicit and accept proposals
    from  entities to provide for administration of a program
    or  programs  in  accordance  with  rules  adopted  under
    Section 45. Proposals must be submitted not later than  a
    date  established  by  the  Director.  The Director shall
    accept only those proposals that specify the following:
              (A)  The estimated amount of the discount based
         on the entity's  previous  experience  and  how  the
         discount is to be achieved.
              (B)  The  extent that discounts on prescription
         drugs  are   to   be   achieved   through   rebates,
         administrative  fees,  or other fees or discounts in
         prices  that  the  entity   negotiates   with   drug
         manufacturers.    The  proposals  shall  assure that
         rebates  or  discounts  will  be  used  to  do   the
         following:
                   (i)  reduce costs to cardholders;
                   (ii)  achieve  discounts  for cardholders;
              and
                   (iii)  cover costs for  administering  the
              program.
              (C)  Any other benefits offered to cardholders.
              (D)  The   estimated   number   and  geographic
         distribution  of  participating  pharmacies  in  the
         administrator's pharmacy network.
              (E)  The  plan   for   pharmacy   compensation,
         pursuant to subsection (e) of this Section.
              (F)  The   method   used  for  determining  the
         prescription drugs to be  covered  by  the  program,
         including  the criteria and process for establishing
         a preferred drug list, if applicable.
              (G)  How  the  entity   proposes   to   improve
         medication management for cardholders, including any
         program of disease management.
              (H)  How    cardholders    and    participating
         pharmacies  will be informed of the discounted price
         negotiated by the entity.
              (I)  How  the  entity  will  handle  complaints
         about the program's operation.
              (J)  The  entity's   previous   experience   in
         managing similar programs.
              (K)  Any  additional  information  requested by
         the Director.
         (2)  The Director shall contract with  one  or  more
    entities to administer a program or programs on the basis
    of   the   proposals   submitted,   but  may  require  an
    administrator to modify  its  conduct  of  a  program  in
    accordance with rules adopted under Section 45.
         The Director shall adopt rules specifying the period
    for  which a contract will be in effect and may terminate
    a contract if an administrator fails to conduct a program
    in accordance with its proposal or with any modifications
    required by rule.  When  a  contract  period  ends  or  a
    contract  is  terminated, the Director shall enter into a
    new contract in the manner specified in this Section  for
    an original contract. Prior to making a new contract, the
    Director  may  modify the rules for administration of the
    program or programs.
    (b)  As used in this  Section,  "administrator"  includes
the  administrator's parent company and any subsidiary of the
parent company.
         (1)  No administrator  shall  sell  any  information
    concerning   a  person  who  holds  a  prescription  drug
    discount card, other than aggregate information that does
    not identify the  cardholder,  without  the  cardholder's
    written consent.
         (2)  Unless  an  administrator  has the cardholder's
    written  consent,  no   administrator   shall   use   any
    personally   identifiable  information  that  it  obtains
    concerning a cardholder through the program to promote or
    sell a program or product offered  by  the  administrator
    that is not related to the administration of the program.
    This  subsection  (b)  does not prohibit an administrator
    from contacting cardholders concerning  participation  in
    or  administration  of  the  program,  including, but not
    limited to, mailing a list of pharmacies participating in
    the  program's  network  or  participating   in   disease
    management programs.
         (3)  To  the  extent  that  a  discount  is achieved
    through rebates, administrative fees, or any  other  fees
    or  discounts  in prices that an administrator negotiates
    with drug manufacturers, an administrator shall  use  the
    rebates or discounts to do the following:
              (A)  reduce costs to cardholders;
              (B)  achieve discounts for cardholders; and
              (C)  cover  any  administrative  costs  of  the
         program.
         (4)  The  administrator  shall  not  use  any  funds
    generated  from  rebates, discounts, administrative fees,
    or  other  fees  to  promote  its  mail  order   pharmacy
    operation  or  the  mail  order  pharmacy operation of an
    affiliate.  This subdivision (b)(4)  does  not,  however,
    limit  the participation of an Illinois-licensed pharmacy
    under this Act if  that  pharmacy  provides  prescription
    drugs by mail order.
    (c)  Beginning  on  January  1,  2004, the amount paid by
eligible seniors and disabled persons enrolled in the program
to authorized  pharmacies  for  prescription  drugs  may  not
exceed   prices   established  as  a  result  of  the  rebate
agreements  under  Section  30.  The  eligible  seniors   and
disabled persons shall pay the price determined under Section
30  plus a dispensing fee of $3.50 per prescription for brand
name drug products, single-source drug products, and,  for  a
period of 6 months, newly released generic drug products  and
$4.25  per  prescription for all other generic drug products,
except that the total amount paid by the eligible  senior  or
disabled person for each prescription drug under this program
shall  not  exceed  the  usual  and customary charge for such
prescription.
    (d)  The contract between the Department and  a  pharmacy
benefits  manager  must,  at  a minimum, meet the criteria of
subsection (a). The contract must also  require  notification
by  the  pharmacy benefits manager of any proposed or ongoing
activity that involves, directly or indirectly, any  conflict
of interest on the part of the pharmacy benefits manager. The
Department  shall  ensure  that the pharmacy benefits manager
complies with the contract and  shall  adopt  all  procedures
necessary to enforce the contract.
    (e)  The   Department  or  program  administrator  shall,
subject to the funds available under Section 30 of this  Act,
compensate   authorized  pharmacies  for  prescription  drugs
dispensed under the program for the  difference  between  the
amount  paid  by  the  eligible senior or disabled person for
prescription drugs dispensed under the program  and  (i)  the
AWP  minus  12%  for  brand name drug products, single-source
generic drug products, and, for a period of 6  months,  newly
released  generic  drug  products  and (ii) the AWP minus 35%
for all other generic drug  products.  The  Department  shall
compensate  a  pharmacy under this subsection (e) only if the
amount paid by the eligible senior  or  disabled  person  has
been  discounted  to  a  price, including the dispensing fees
stated in subsection (c) of this Section, that is  less  than
(i)   the  AWP  minus  12%  for  brand  name  drug  products,
single-source generic drug products, and, for a period  of  6
months, newly released generic drug products and (ii) the AWP
minus 35% for all other generic drug products.
    (f)  Beginning  on  January  1,  2004,  the Department or
program administrator shall reimburse pharmacies  under  this
Section within 30 days after adjudication of the claim.
    Section 30.  Manufacturer rebate agreements.
    (a)  Taking  into  consideration  the extent to which the
State  pays  for  prescription  drugs  under  various   State
programs  and the provision of assistance to disabled persons
or  eligible  seniors  under  patient  assistance   programs,
prescription drug discount programs, or other offers for free
or   reduced  price  medicine,  clinical  research  projects,
limited  supply  distribution  programs,  compassionate   use
programs,  or programs of research conducted by or for a drug
manufacturer, the  Department,  its  agent,  or  the  program
administrator   shall   negotiate   and   enter  into  rebate
agreements with drug manufacturers, as defined in  this  Act,
to  effect  prescription drug price discounts. The Department
or program administrator may establish a preferred drug  list
as  a  basis  for  determining  the discounts, administrative
fees, or other fees or rebates under this Section.
    (b)  Rebate payment procedures.  All  rebates  negotiated
under  agreements  described in this Section shall be paid in
accordance with procedures prescribed by  the  Department  or
the program administrator.
    (c)  Receipts  from  rebates  shall  be  used  to provide
discounts  for  prescription  drugs  purchased  by   eligible
seniors  and  disabled  persons  and  to  cover  the  cost of
administering the program, including compensation to be  paid
to  participating  pharmacies  by  the  Department or program
administrator  under  subsection  (e)  of  Section  25.   Any
receipts to be allocated to the Department shall be deposited
into  the  Senior  Citizens and Disabled Persons Prescription
Drug Discount Program Fund, a special fund hereby created  in
the State treasury.

    Section 35.  Program eligibility.
    (a)  Any  person  may  apply  to  the  Department  or its
program administrator for participation in the program in the
form and manner required by the Department. The Department or
its program administrator shall determine the eligibility  of
each  applicant for the program within 30 days after the date
of application. To participate in  the  program  an  eligible
senior or disabled person whose application has been approved
must  pay  $25  upon  enrollment  and annually thereafter and
shall receive a program identification card. The card may  be
presented to an authorized pharmacy to assist the pharmacy in
verifying eligibility under the program. The Department shall
deposit   the  enrollment  fees  collected  into  the  Senior
Citizens and  Disabled  Persons  Prescription  Drug  Discount
Program  Fund.  The  moneys  collected  by the Department for
enrollment fees and deposited into the  Senior  Citizens  and
Disabled Persons Prescription Drug Discount Program Fund must
be  separately  accounted for by the Department. If 2 or more
persons are eligible for any benefit under this Act  and  are
members  of  the same household, each participating household
member shall apply to the Department and pay the fee required
for the purpose of obtaining an identification card.
    (b)  Proceeds from annual enrollment fees shall  be  used
by  the  Department to offset the administrative cost of this
Act. The Department may reduce the annual enrollment  fee  by
rule  if the revenue from the enrollment fees is in excess of
the costs to carry out the program.
    (c)  Any  person  who  is  eligible  for   pharmaceutical
assistance  under  the  Senior  Citizens and Disabled Persons
Property Tax Relief  and  Pharmaceutical  Assistance  Act  is
presumed  to be eligible for this program. The enrollment fee
under this Act is not required for such persons. That  person
may  purchase  prescription drugs under this program that are
not covered by the pharmaceutical  assistance  program  under
the  Senior Citizens and Disabled Persons Property Tax Relief
and Pharmaceutical Assistance Act by using the identification
card issued under the pharmaceutical assistance program.
    Section 40.  Eligible pharmacies.
    (a)  The Department or its  program  administrator  shall
adopt   rules  to  establish  standards  and  procedures  for
participation in the program  and  approve  those  pharmacies
that  apply  to  participate  and  meet  the requirements for
participation.  Pharmacies  in  the  program  administrator's
network must also comply with the Department's standards  and
procedures for participation.
    (b)  The   Department   shall  establish  procedures  for
properly  contracting  for  pharmacy   services,   validating
reimbursement  claims,  validating  compliance  of authorized
pharmacies with the  conditions  for  participation  required
under  this  Act,  and  otherwise providing for the effective
administration of this Act.  The  Director,  in  consultation
with  pharmacists licensed under the Pharmacy Practice Act of
1987, may enter into a written contract with any other  State
agency,  instrumentality,  or political subdivision or with a
fiscal intermediary for the purpose  of  making  payments  to
authorized pharmacies and coordinating the program with other
programs that provide payments for prescription drugs covered
under the program.

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

    Section 47.  Limit on  State's  obligation  for  cost  of
administration.  The  State  of Illinois is obligated for the
cost of administering this program only to the extent of  the
amount of money collected as enrollment fees under Section 35
of  this Act, rebates collected under Section 30 of this Act,
and funds  appropriated  by  the  General  Assembly  for  the



purpose of this Act.

    Section  50.  Report  on  administration  of program. The
Department shall report  to  the  Governor  and  the  General
Assembly  by  March 1st of each year on the administration of
the program under this Act. The report shall include but  not
be limited to the following:
    (1)  the  number of disabled persons and seniors eligible
and enrolled in the program, by county;
    (2)  the activities undertaken by  the  State  to  inform
disabled persons and seniors about the program;
    (3)  the number of prescriptions filled under the program
for enrollees, and the estimated savings for enrollees;
    (4)  a   listing  of  the  manufacturers  and  pharmacies
participating in the program;
    (5)  the amount of enrollment fees and rebates  collected
under the program, and any additional funds or resources made
available to cover the cost of the program;
    (6)  the   itemized  annual  cost  of  administering  the
program; and
    (7)  findings and recommendations regarding problems  and
solutions related to the program, together with proposals for
changes  in  the  rules,  regulations,  or  laws necessary to
improve the administration of the program.

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

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

    Section 99.  Effective date. This  Act  takes  effect  on
July 1, 2003.