HB0648 94TH GENERAL ASSEMBLY

LRB094 04076 DRJ 34096 b

94TH GENERAL ASSEMBLY
State of Illinois
2005 and 2006
HB0648

Introduced 1/28/2005, by Rep. Jack D. Franks

SYNOPSIS AS INTRODUCED:

30 ILCS 105/5.595
320 ILCS 55/Act title
320 ILCS 55/1
320 ILCS 55/10
320 ILCS 55/15
320 ILCS 55/20
320 ILCS 55/25
320 ILCS 55/30
320 ILCS 55/35
320 ILCS 55/50
320 ILCS 55/17 rep.

Amends the State Finance Act and the Senior Citizens and Disabled Persons Prescription Drug Discount Program Act. Changes the name of the Senior Citizens and Disabled Persons Prescription Drug Discount Program Fund to the Prescription Drug Discount Program Fund. Changes the short title of the Senior Citizens and Disabled Persons Prescription Drug Discount Program Act to the Prescription Drug Discount Program Act. Provides that all Illinois residents (instead of only senior citizens and disabled persons) are eligible to participate in the prescription drug discount program.

FISCAL NOTE ACT MAY APPLY

A BILL FOR

AN ACT concerning aging.

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

Section 5. The State Finance Act is amended by changing Section 5.595 as follows:

(30 ILCS 105/5.595)

Sec. 5.595. The Senior Citizens and Disabled Persons Prescription Drug Discount Program Fund.

(Source: P.A. 93-18, eff. 7-1-03.)

Section 10. The Senior Citizens and Disabled Persons Prescription Drug Discount Program Act is amended by changing the title of the Act and Sections 1, 10, 15, 20, 25, 30, 35, and 50 as follows:

(320 ILCS 55/Act title)

An Act concerning discount prescription drugs for Illinois residents senior citizens.

(320 ILCS 55/1)

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

(Source: P.A. 93-18, eff. 7-1-03.)

(320 ILCS 55/10)

Sec. 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 Illinois residents eligible senior citizens and disabled persons to purchase prescription drugs at discounted prices.

(Source: P.A. 93-18, eff. 7-1-03.)

(320 ILCS 55/15)

Sec. 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.

(Source: P.A. 93-18, eff. 7-1-03.)

(320 ILCS 55/20)

Sec. 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 Illinois residents senior citizens and disabled persons. The program shall be administered by the Department. The Department or its program administrator shall (i) enroll Illinois residents 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.

(Source: P.A. 93-18, eff. 7-1-03.)

(320 ILCS 55/25)

Sec. 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, 2006 2004, the amount paid by Illinois residents 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 Illinois residents 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 Illinois resident 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 Illinois resident 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 Illinois resident 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.

(Source: P.A. 93-18, eff. 7-1-03.)

(320 ILCS 55/30)

Sec. 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, senior citizens, or other Illinois residents 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 Illinois residents 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.

(Source: P.A. 93-18, eff. 7-1-03.)

(320 ILCS 55/35)

Sec. 35. Program eligibility.

(a) Any resident of Illinois is eligible to participate in the program and 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 Illinois resident 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 Prescription Drug Discount Program Fund or, before January 1, 2006, 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.

(Source: P.A. 93-18, eff. 7-1-03.)

(320 ILCS 55/50)

Sec. 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) for periods before January 1, 2006, the number of disabled persons and seniors eligible and enrolled in the program, by county; and, for periods after December 31, 2005, the number of Illinois residents enrolled in the program;

(2) the activities undertaken by the State to inform disabled persons and seniors (for periods before January 1, 2006) and all Illinois residents (for periods after December 31, 2005) 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.

(Source: P.A. 93-18, eff. 7-1-03.)

(320 ILCS 55/17 rep.)

Section 15. The Senior Citizens and Disabled Persons Prescription Drug Discount Program Act is amended by repealing Section 17.