093_SB0003enr 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 SB3 Enrolled -2- LRB093 03778 SJM 03813 b 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) SB3 Enrolled -3- LRB093 03778 SJM 03813 b 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 SB3 Enrolled -4- LRB093 03778 SJM 03813 b 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 SB3 Enrolled -5- LRB093 03778 SJM 03813 b 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 SB3 Enrolled -6- LRB093 03778 SJM 03813 b 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. SB3 Enrolled -7- LRB093 03778 SJM 03813 b 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 SB3 Enrolled -8- LRB093 03778 SJM 03813 b 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. SB3 Enrolled -9- LRB093 03778 SJM 03813 b 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. SB3 Enrolled -11- LRB093 03778 SJM 03813 b 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 SB3 Enrolled -12- LRB093 03778 SJM 03813 b 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 SB3 Enrolled -13- LRB093 03778 SJM 03813 b 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.