093_SB0003sam003
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
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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
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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
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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
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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,
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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
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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
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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
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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
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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
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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
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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.
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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:
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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.".