SENATE AMENDED
PRIOR PRINTER'S NOS. 3155, 3226, 3655 PRINTER'S NO. 3917
No. 2442 Session of 1992
INTRODUCED BY STUBAN, TIGUE, DeWEESE, EVANS, ITKIN, KUKOVICH,
JOSEPHS, STABACK, STEELMAN, WAMBACH, MUNDY, CAPPABIANCA,
HERMAN, PESCI, VAN HORNE, MARKOSEK, DALEY, KOSINSKI,
BATTISTO, LLOYD, TRELLO, STURLA, FAIRCHILD, HANNA, HAYDEN,
HARPER, LaGROTTA, RUDY, BOWLEY, SCRIMENTI, WILLIAMS, VEON,
GIGLIOTTI, STETLER, McNALLY, TRICH, OLASZ, BISHOP, MELIO,
STISH, RITTER, PETRONE, HALUSKA, BELARDI, CORRIGAN, JAMES,
TELEK AND ROEBUCK, MARCH 9, 1992
SENATOR LOEPER, RULES AND EXECUTIVE NOMINATIONS, IN SENATE, AS
AMENDED, JUNE 30, 1992
AN ACT
1 Amending the act of August 14, 1991 (P.L.342, No.36), entitled
2 "An act providing for the preservation of the State Lottery
3 Fund; further providing for pharmaceutical assistance for the
4 elderly; further providing for transportation assistance to
5 the elderly; providing for pharmaceutical purchasing;
6 conferring powers and duties upon the Department of Aging,
7 the Department of Revenue and the Department of
8 Transportation; imposing penalties; and making repeals,"
9 further providing for responsibilities of the Department of <--
10 Aging, for pharmaceutical purchasing, for legislative intent,
11 for definitions and for rebate agreements; providing for
12 pharmaceutical purchasing discounts and for new best prices;
13 and further providing for prudent pharmaceutical purchasing
14 contracts and expiration. FURTHER PROVIDING, RELATIVE TO <--
15 PHARMACEUTICAL ASSISTANCE FOR THE ELDERLY, FOR DEFINITIONS,
16 FOR RESPONSIBILITIES OF THE DEPARTMENT OF AGING, FOR THE
17 PHARMACEUTICAL ASSISTANCE REVIEW BOARD AND FOR THE
18 PRESCRIPTION DRUG EDUCATION PROGRAM; FURTHER PROVIDING FOR
19 PRUDENT PHARMACEUTICAL PURCHASING; AND DIRECTING THE
20 LEGISLATIVE BUDGET AND FINANCE COMMITTEE TO PERFORM A STUDY.
21 The General Assembly of the Commonwealth of Pennsylvania
22 hereby enacts as follows:
23 Section 1. Section 303(h)(5), (9), (10), (11), (12), (13), <--
1 (14), (15), (16), (17) and (18) of the act of August 14, 1991
2 (P.L.342, No.36), known as the Lottery Fund Preservation Act,
3 are amended and the subsection is amended by adding paragraphs
4 to read:
5 Section 303. Responsibilities of department.
6 SECTION 1. SECTION 302 OF THE ACT OF AUGUST 14, 1991 <--
7 (P.L.342, NO.36), KNOWN AS THE LOTTERY FUND PRESERVATION ACT, IS
8 AMENDED BY ADDING A DEFINITION TO READ:
9 SECTION 302. DEFINITIONS.
10 THE FOLLOWING WORDS AND PHRASES WHEN USED IN THIS CHAPTER
11 SHALL HAVE THE MEANINGS GIVEN TO THEM IN THIS SECTION UNLESS THE
12 CONTEXT CLEARLY INDICATES OTHERWISE:
13 "A-RATED GENERIC THERAPEUTICALLY EQUIVALENT DRUG." A DRUG
14 PRODUCT THAT THE COMMISSIONER OF FOOD AND DRUGS OF THE UNITED
15 STATES FOOD AND DRUG ADMINISTRATION HAS APPROVED AS SAFE AND
16 EFFECTIVE AND HAS DETERMINED TO BE THERAPEUTICALLY EQUIVALENT,
17 AS LISTED IN "THE APPROVED DRUG PRODUCTS WITH THERAPEUTIC
18 EQUIVALENCE EVALUATIONS" (FOOD AND DRUG ADMINISTRATION "ORANGE
19 BOOK"), WITH A SPECIFIC "A" CODE DESIGNATION ONLY.
20 * * *
21 SECTION 2. SECTION 303(C) AND (H)(5), (9), (10), (11), (17)
22 AND (18) OF THE ACT ARE AMENDED AND THE SUBSECTIONS ARE AMENDED
23 BY ADDING PARAGRAPHS TO READ:
24 SECTION 303. RESPONSIBILITIES OF DEPARTMENT.
25 * * *
26 (C) DRUG UTILIZATION REVIEW SYSTEM.--
27 (1) THE DEPARTMENT SHALL ENSURE THAT A STATE-OF-THE-ART
28 THERAPEUTIC DRUG UTILIZATION REVIEW SYSTEM IS ESTABLISHED TO
29 MONITOR AND CORRECT MISUTILIZATION OF DRUG THERAPIES.
30 (2) THE DEPARTMENT SHALL PROMULGATE SPECIFIC REGULATIONS
19920H2442B3917 - 2 -
1 GOVERNING THE DRUG UTILIZATION REVIEW SYSTEM. THE REGULATIONS
2 SHALL INCLUDE, BUT NOT BE LIMITED TO:
3 (I) THE ESTABLISHMENT AND COMPOSITION OF A DRUG
4 UTILIZATION REVIEW COMMITTEE OR OTHER ENTITY CONVENED FOR
5 PURPOSES OF IMPLEMENTING OR OPERATING THE DRUG
6 UTILIZATION REVIEW SYSTEM. THE COMMITTEE OR ENTITY SHALL,
7 AT A MINIMUM, INCLUDE MEMBERS REPRESENTING SENIOR
8 CITIZENS, SOCIAL WORKERS, PHARMACISTS, PHARMACOLOGISTS,
9 PHYSICIANS AND THE PHARMACEUTICAL INDUSTRY. THESE MEMBERS
10 SHALL BE APPOINTED BY THE PUBLIC MEMBERS OF THE BOARD.
11 (II) THE SCOPE OF PHYSICIAN AND PHARMACIST
12 PARTICIPATION AND RESPONSIBILITIES UNDER THE DRUG
13 UTILIZATION REVIEW SYSTEM.
14 (III) SPECIFIC CRITERIA DELINEATING THE STANDARDS
15 AND FACTORS TO BE CONSIDERED IN MAKING DRUG UTILIZATION
16 REVIEW DECISIONS.
17 (3) REGULATIONS UNDER PARAGRAPH (2) SHALL BE SUBJECT TO
18 APPROVAL BY THE BOARD.
19 (4) REGULATIONS UNDER PARAGRAPH (2) SHALL BE PROMULGATED
20 NO LATER THAN JULY 1, 1993. IN THE TIME PERIOD PENDING
21 PROMULGATION OF THE REGULATIONS, THE DEPARTMENT SHALL ISSUE,
22 AS A NOTICE IN THE PENNSYLVANIA BULLETIN, INTERIM GUIDELINES
23 GOVERNING IMPLEMENTATION AND OPERATION OF THE DRUG
24 UTILIZATION REVIEW SYSTEM. THE INTERIM GUIDELINES SHALL
25 EXPIRE JULY 1, 1993.
26 * * *
27 (h) Program criteria.--The program shall include the
28 following criteria:
29 * * *
30 (5) The system established shall include a participant
19920H2442B3917 - 3 -
1 copayment schedule of $4 for each prescription. The copayment
2 shall increase or decrease on the annual basis by the average
3 percent change of ingredient costs for all prescription drugs
4 plus a differential to raise the copayment to the next
5 highest 25¢ increment. In addition, the department may
6 approve a request for increase or decrease in the level of
7 copayment based upon the financial experience and projections
8 of the program and after consultation with the board. The
9 department is prohibited from approving adjustments to the
10 copayment on more than a semiannual basis. [The department
11 shall evaluate the feasibility of instituting a bifurcated
12 copayment differentiating between noninnovator multiple-
13 source drugs and single-source or innovator multiple-source
14 drugs. The department shall report its findings to the Aging
15 and Youth Committee of the Senate and the Aging and Youth
16 Committee of the House of Representatives by July 1, 1992.
17 The department shall, by July 1, 1992, institute a bifurcated
18 copayment unless the findings demonstrate that a bifurcated
19 copayment is not cost effective. As used in this paragraph,
20 the terms "innovator multiple-source drugs," "noninnovator
21 multiple-source drugs" and "single-source drugs" shall have
22 the meanings given to them in section 502.]
23 * * *
24 [(9) For purposes of this chapter, the eligible claimant <--
25 shall be liable to pay a fixed differential whenever a more
26 expensive brand name drug is requested by the claimant when
27 the physician permitted substitution of a less expensive
28 generically equivalent drug approved under the provisions of
29 the act of November 24, 1976 (P.L.1163, No.259), referred to
30 as the Generic Equivalent Drug Law.
19920H2442B3917 - 4 -
1 (10) The differential will be charged regardless of the
2 availability of a less expensive generic equivalent in the
3 providing pharmacy. In no case will the claimant bear the
4 cost of the differential when the generic equivalent is not
5 available.
6 (11) The department shall establish a pharmacist
7 consultation reimbursement program for a period of not less
8 than six months, following which the department may continue
9 or discontinue the program. This program shall provide an
10 additional $1 supplemental dispensing fee whenever a
11 pharmacy's documented intervention resulted in a physician
12 changing a prescription for a more expensive brand name
13 product to a prescription allowing substitution of a less
14 expensive generically equivalent drug. This supplemental
15 dispensing fee shall provide the only exception to paragraph
16 (8).
17 (12)] (9) Notwithstanding any other statute or
18 regulation, if an approved United States Food and Drug
19 Administration "A"-rated generic therapeutically equivalent
20 drug is available for dispensing to a claimant, the provider
21 shall dispense the generic therapeutically equivalent drug to
22 the claimant. The department shall not reimburse providers
23 for brand name drugs except in the following circumstances:
24 (i) There is no "A"-rated generic therapeutically
25 equivalent drug available on the market. This
26 subparagraph does not apply to the lack of availability
27 of an "A"-rated generic therapeutically equivalent drug
28 in the providing pharmacy.
29 (ii) An "A"-rated generic therapeutically equivalent
30 drug is deemed by the department, in consultation with a
19920H2442B3917 - 5 -
1 utilization review committee, to have a narrow
2 therapeutic index for safe and effective dispensing in
3 the community setting. The department shall notify
4 providing pharmacies of prescription drugs under this
5 subparagraph on a regular basis.
6 (iii) The Department of Health has determined that a
7 drug shall not be recognized as a generic therapeutically
8 equivalent drug for purpose of substitution under section
9 5(b) of the act of November 24, 1976 (P.L.1163, No.259),
10 referred to as the Generic Equivalent Drug Law.
11 (10) If a claimant chooses not to accept the generic
12 therapeutically equivalent drug required by paragraph (9),
13 the claimant shall be liable for the entire cost of the brand
14 name drug and the copayment less the average wholesale cost
15 of the least expensive generic therapeutically equivalent
16 drug present at the providing pharmacy. The average wholesale
17 cost of the least expensive generic therapeutically
18 equivalent drug present at the providing pharmacy shall be
19 reimbursed by the program. If no generic therapeutically
20 equivalent drug is present in the providing pharmacy, no
21 reimbursement shall be provided by the program. This
22 paragraph shall not apply if a prescriber can demonstrate to
23 the department that:
24 (i) The claimant is in danger of an adverse reaction
25 from use of the generic therapeutically equivalent drug
26 required by paragraph (9).
27 (ii) Use of the prescribed brand name drug would
28 eliminate the danger of the adverse reaction.
29 (11) (12) Prescription benefits for any single
30 prescription shall be limited to a 30-day supply of the
19920H2442B3917 - 6 -
1 prescription drug or 100 units, whichever is less, except
2 that, in the case of diagnosis for acute conditions, the
3 limitation shall be a 15-day supply.
4 [(13)] (12) The department may establish a restricted
5 formulary of the drugs which will not be reimbursed by the
6 program. This formulary shall include only experimental drugs
7 and drugs on the Drug Efficacy Study Implementation List
8 prepared by the Health Care Finance Administration. A medical
9 exception may be permitted by the department for
10 reimbursement of a drug on the Drug Efficacy Study
11 Implementation List upon declaration of its necessity on the
12 prescription by the treating physician; except that, for DESI
13 drugs for which the FDA has issued a Notice for Opportunity
14 Hearing (NOOH) for the purpose of withdrawing the New Drug
15 Application approved for that drug, reimbursement coverage
16 shall be discontinued under the provisions of this chapter.
17 [(14)] (13) The department may not enter into a contract
18 with a private contractor for an exclusive mail-order system
19 for the delivery of prescription drugs under this program.
20 Only mail-order pharmacy services provided by pharmacies
21 which are licensed by the Commonwealth and which have their
22 principal place of business within this Commonwealth may
23 participate as providers under the program. The department
24 shall develop and promulgate specific regulations governing
25 the practice of mail-order pharmacy and other enrolled
26 providers to include the following minimum standards of
27 practice to ensure the health, safety and welfare of program
28 participants:
29 (i) The appropriate method or methods by which such
30 pharmacies shall verify the identity of the program
19920H2442B3917 - 7 -
1 recipient and the authenticity of prescriptions received.
2 (ii) The appropriate method or methods by which such
3 pharmacies shall mail or deliver prescription drugs to
4 program recipients ensuring, to the maximum extent
5 possible, that the intended program recipient is the
6 actual ultimate recipient of any prescription dispensed
7 by such pharmacies.
8 (iii) The appropriate method or methods by which
9 such pharmacies shall communicate with program
10 participants in emergency situations.
11 [(15)] (14) The program must be in place and operational
12 within 90 days of the effective date of the contract.
13 [(16)] (15) For-profit third party insurers and not-for-
14 profit prescription plans shall reimburse the department for
15 any payments made to a providing pharmacy on behalf of a
16 claimant covered by such a third party.
17 [(9) FOR PURPOSES OF THIS CHAPTER, THE ELIGIBLE CLAIMANT <--
18 SHALL BE LIABLE TO PAY A FIXED DIFFERENTIAL WHENEVER A MORE
19 EXPENSIVE BRAND NAME DRUG IS REQUESTED BY THE CLAIMANT WHEN
20 THE PHYSICIAN PERMITTED SUBSTITUTION OF A LESS EXPENSIVE
21 GENERICALLY EQUIVALENT DRUG APPROVED UNDER THE PROVISIONS OF
22 THE ACT OF NOVEMBER 24, 1976 (P.L.1163, NO.259), REFERRED TO
23 AS THE GENERIC EQUIVALENT DRUG LAW.
24 (10) THE DIFFERENTIAL WILL BE CHARGED REGARDLESS OF THE
25 AVAILABILITY OF A LESS EXPENSIVE GENERIC EQUIVALENT IN THE
26 PROVIDING PHARMACY. IN NO CASE WILL THE CLAIMANT BEAR THE
27 COST OF THE DIFFERENTIAL WHEN THE GENERIC EQUIVALENT IS NOT
28 AVAILABLE.
29 (11) THE DEPARTMENT SHALL ESTABLISH A PHARMACIST
30 CONSULTATION REIMBURSEMENT PROGRAM FOR A PERIOD OF NOT LESS
19920H2442B3917 - 8 -
1 THAN SIX MONTHS, FOLLOWING WHICH THE DEPARTMENT MAY CONTINUE
2 OR DISCONTINUE THE PROGRAM. THIS PROGRAM SHALL PROVIDE AN
3 ADDITIONAL $1 SUPPLEMENTAL DISPENSING FEE WHENEVER A
4 PHARMACY'S DOCUMENTED INTERVENTION RESULTED IN A PHYSICIAN
5 CHANGING A PRESCRIPTION FOR A MORE EXPENSIVE BRAND NAME
6 PRODUCT TO A PRESCRIPTION ALLOWING SUBSTITUTION OF A LESS
7 EXPENSIVE GENERICALLY EQUIVALENT DRUG. THIS SUPPLEMENTAL
8 DISPENSING FEE SHALL PROVIDE THE ONLY EXCEPTION TO PARAGRAPH
9 (8).]
10 (10) NOTWITHSTANDING ANY OTHER STATUTE OR REGULATION, IF
11 AN A-RATED GENERIC THERAPEUTICALLY EQUIVALENT DRUG IS
12 AVAILABLE FOR DISPENSING TO A CLAIMANT, THE PROVIDER SHALL
13 DISPENSE THE A-RATED GENERIC THERAPEUTICALLY EQUIVALENT DRUG
14 TO THE CLAIMANT. THE DEPARTMENT SHALL NOT REIMBURSE PROVIDERS
15 FOR BRAND NAME PRODUCTS EXCEPT IN THE FOLLOWING
16 CIRCUMSTANCES:
17 (I) THERE IS NO A-RATED GENERIC THERAPEUTICALLY
18 EQUIVALENT DRUG AVAILABLE ON THE MARKET. THIS
19 SUBPARAGRAPH DOES NOT APPLY TO THE LACK OF AVAILABILITY
20 OF AN A-RATED GENERIC THERAPEUTICALLY EQUIVALENT DRUG IN
21 THE PROVIDING PHARMACY, UNLESS IT CAN BE SHOWN TO THE
22 DEPARTMENT THAT THE PROVIDER MADE REASONABLE ATTEMPTS TO
23 OBTAIN THE A-RATED GENERIC THERAPEUTICALLY EQUIVALENT
24 DRUG OR THAT THERE WAS AN UNFORESEEABLE DEMAND AND
25 DEPLETION OF THE SUPPLY OF THE A-RATED GENERIC
26 THERAPEUTICALLY EQUIVALENT DRUG. IN EITHER CASE, THE
27 DEPARTMENT SHALL REIMBURSE THE PROVIDER FOR THE AVERAGE
28 WHOLESALE COST PLUS A DISPENSING FEE BASED ON THE A-RATED
29 THERAPEUTICALLY EQUIVALENT DRUG FOR THE BRAND DRUG
30 DISPENSED.
19920H2442B3917 - 9 -
1 (II) AN A-RATED GENERIC THERAPEUTICALLY EQUIVALENT
2 DRUG IS DEEMED BY THE DEPARTMENT, IN CONSULTATION WITH A
3 UTILIZATION REVIEW COMMITTEE, TO HAVE TOO NARROW A
4 THERAPEUTIC INDEX FOR SAFE AND EFFECTIVE DISPENSING IN
5 THE COMMUNITY SETTING. THE DEPARTMENT SHALL NOTIFY
6 PROVIDING PHARMACIES OF A-RATED GENERIC THERAPEUTICALLY
7 EQUIVALENT DRUGS THAT ARE IDENTIFIED PURSUANT TO THIS
8 SUBPARAGRAPH ON A REGULAR BASIS.
9 (III) THE DEPARTMENT OF HEALTH HAS DETERMINED THAT A
10 DRUG SHALL NOT BE RECOGNIZED AS AN A-RATED GENERIC
11 THERAPEUTICALLY EQUIVALENT DRUG FOR PURPOSE OF
12 SUBSTITUTION UNDER SECTION 5(B) OF THE ACT OF NOVEMBER
13 24, 1976 (P.L.1163, NO.259), REFERRED TO AS THE GENERIC
14 EQUIVALENT DRUG LAW.
15 (IV) THE BRAND NAME DRUG DISPENSED IS BILLED TO THE
16 PROGRAM BY THE PROVIDER AT A USUAL AND CUSTOMARY CHARGE
17 WHICH IS EQUAL TO OR LESS THAN THE LEAST EXPENSIVE USUAL
18 AND CUSTOMARY CHARGE OF ANY A-RATED GENERIC
19 THERAPEUTICALLY EQUIVALENT DRUG REASONABLY AVAILABLE ON
20 THE MARKET TO THE PROVIDER.
21 (V) THE PRESCRIBER HANDWRITES "BRAND NECESSARY" OR
22 "BRAND MEDICALLY NECESSARY" ON THE PRESCRIPTION.
23 (11) IF THE CLAIMANT CHOOSES NOT TO ACCEPT THE A-RATED
24 GENERIC THERAPEUTICALLY EQUIVALENT DRUG REQUIRED BY PARAGRAPH
25 (10), THE CLAIMANT SHALL BE LIABLE FOR THE COPAYMENT AND 70%
26 OF THE AVERAGE WHOLESALE COST OF THE BRAND NAME DRUG.
27 * * *
28 [(17)] (16) Any [health care professional] person <--
29 rendering service as a member of a utilization review
30 committee for this program shall not be liable for any civil
19920H2442B3917 - 10 -
1 damages as a result of any acts or omissions in rendering the
2 service as a member of any such committee except any acts or
3 omissions intentionally designed to harm or any grossly
4 negligent acts or omissions which result in harm to the
5 person receiving such service.
6 [(18)] (17) Any officer or employee of the department <--
7 rendering service as a member of a utilization review
8 committee for this program shall not be liable for any civil
9 damages as a result of any acts or omissions in rendering the
10 service as a member of any such committee or as a result of
11 any decision or action in connection with the program except
12 any acts or omissions intentionally designed to harm or any
13 grossly negligent acts or omissions which result in harm to
14 the person receiving such service.
15 (18) (19) The dispensing of an "A"-rated generic <--
16 therapeutically equivalent drug in accordance with this
17 chapter shall not be deemed incorrect substitution under
18 section 6(a) of the Generic Equivalent Drug Law.
19 (19) (20) The department shall annually verify the <--
20 income of eligible claimants. [Verification shall be <--
21 accomplished by a targeted sampling of 5% of the eligible
22 claimants.] THE DEPARTMENT SHALL VERIFY THE INCOME OF <--
23 ELIGIBLE CLAIMANTS BY REQUIRING INCOME DOCUMENTATION FROM THE
24 CLAIMANTS. AN APPLICATION FOR BENEFITS UNDER THIS CHAPTER
25 SHALL CONSTITUTE A WAIVER TO THE DEPARTMENT OF ALL RELEVANT
26 CONFIDENTIALITY REQUIREMENTS RELATING TO THE CLAIMANT'S
27 PENNSYLVANIA STATE INCOME TAX INFORMATION IN THE POSSESSION
28 OF THE DEPARTMENT OF REVENUE. THE DEPARTMENT OF REVENUE SHALL
29 PROVIDE THE DEPARTMENT WITH THE NECESSARY INCOME INFORMATION
30 SHOWN ON THE CLAIMANT'S PENNSYLVANIA STATE INCOME TAX RETURN
19920H2442B3917 - 11 -
1 SOLELY FOR INCOME VERIFICATION PURPOSES. IT SHALL BE UNLAWFUL
2 FOR ANY OFFICER, AGENT OR EMPLOYEE OF THE DEPARTMENT TO
3 DIVULGE OR MAKE KNOWN IN ANY MANNER WHATSOEVER ANY
4 INFORMATION GAINED THROUGH ACCESS TO THE DEPARTMENT OF
5 REVENUE INFORMATION EXCEPT FOR OFFICIAL INCOME VERIFICATION
6 PURPOSES UNDER THIS CHAPTER. A PERSON WHO VIOLATES THIS ACT
7 COMMITS A MISDEMEANOR AND SHALL, UPON CONVICTION, BE
8 SENTENCED TO PAY A FINE OF NOT MORE THAN $1,000 OR TO
9 IMPRISONMENT FOR NOT MORE THAN ONE YEAR, OR BOTH, TOGETHER
10 WITH THE COST OF PROSECUTION AND, IF THE OFFENDER IS AN
11 OFFICER OR EMPLOYEE OF THE COMMONWEALTH, HE SHALL BE
12 DISMISSED FROM OFFICE OR DISCHARGED FROM EMPLOYMENT. TO THE
13 EXTENT POSSIBLE, THE DEPARTMENT AND THE DEPARTMENT OF PUBLIC
14 WELFARE SHALL COORDINATE EFFORTS TO FACILITATE THE
15 APPLICATION AND ENROLLMENT OF ELIGIBLE OLDER PEOPLE IN THE
16 MEDICAID HEALTHY HORIZONS PROGRAM BY PROCESSING THESE
17 APPLICATIONS AT SENIOR CITIZENS CENTERS AND OTHER APPROPRIATE
18 FACILITIES PROVIDING SERVICES TO THE ELDERLY.
19 (20) (21) The retail price of the prescription shall be <--
20 indicated on the label of the prescription container OR BE <--
21 FURNISHED BY SEPARATE RECEIPT.
22 * * *
23 Section 2. Section 307 of the act is amended to read: <--
24 SECTION 3. SECTIONS 305 AND 307 OF THE ACT ARE AMENDED TO <--
25 READ:
26 SECTION 305. BOARD.
27 (A) ESTABLISHMENT.--A PHARMACEUTICAL ASSISTANCE REVIEW BOARD
28 SHALL BE ESTABLISHED TO ENSURE THAT THE PROGRAM IS PROVIDING AND
29 CONTINUES TO PROVIDE THE ASSISTANCE INTENDED IN A FISCALLY
30 RESPONSIBLE MANNER WITHOUT EXCESSIVELY HAMPERING THE
19920H2442B3917 - 12 -
1 PHARMACEUTICAL INDUSTRY.
2 (B) COMPOSITION.--THE BOARD SHALL BE COMPRISED OF THE
3 FOLLOWING [SEVEN] ELEVEN PERSONS:
4 (1) THE SECRETARY OF AGING, WHO SHALL SERVE AS ITS
5 CHAIRMAN.
6 (2) THE SECRETARY OF REVENUE.
7 (3) THE SECRETARY OF HEALTH.
8 (4) THE SECRETARY OF PUBLIC WELFARE.
9 [(4) FOUR] (5) SEVEN PUBLIC MEMBERS, ONE APPOINTED BY
10 THE PRESIDENT PRO TEMPORE OF THE SENATE, ONE APPOINTED BY THE
11 MAJORITY LEADER OF THE SENATE, ONE APPOINTED BY THE MINORITY
12 LEADER OF THE SENATE, ONE APPOINTED BY THE SPEAKER OF THE
13 HOUSE OF REPRESENTATIVES [AND], ONE APPOINTED BY THE MAJORITY
14 LEADER OF THE HOUSE OF REPRESENTATIVES, ONE APPOINTED BY THE
15 MINORITY LEADER OF THE HOUSE OF REPRESENTATIVES AND ONE
16 APPOINTED BY THE GOVERNOR. THOSE APPOINTED SHALL INCLUDE TWO
17 SENIOR CITIZENS, WHO HAVE NOT BEEN A PART OF THE
18 PHARMACEUTICAL INDUSTRY, TO SERVE AS CONSUMER ADVOCATES [AND
19 TWO REPRESENTATIVES]; ONE REPRESENTATIVE OF THE
20 PHARMACEUTICAL INDUSTRY[, AT LEAST ONE OF WHOM IS A
21 PRACTICING PENNSYLVANIA PHARMACIST]; TWO PRACTICING
22 PENNSYLVANIA PHARMACISTS; AND TWO PRACTICING PENNSYLVANIA
23 PHYSICIANS. A PUBLIC MEMBER WHO MISSES TWO CONSECUTIVE
24 MEETINGS WITHOUT GOOD CAUSE ACCEPTABLE TO THE CHAIRMAN SHALL
25 BE REPLACED BY THE APPOINTING AUTHORITY.
26 (C) REVIEW.--USING THE SEMIANNUAL REPORTS SUBMITTED BY THE
27 DEPARTMENT PURSUANT TO SECTION 303(I) AND OTHER APPROPRIATE DATA
28 SOURCES, THE BOARD SHALL CONDUCT A SEMIANNUAL REVIEW OF THE
29 PROGRAM. THE BOARD SHALL DEVELOP RECOMMENDATIONS CONCERNING ANY
30 CHANGES IN THE LEVEL OF COPAYMENT OR IN THE LEVEL OF FEES PAID
19920H2442B3917 - 13 -
1 TO PARTICIPATING PHARMACISTS. THE BOARD SHALL ENGAGE IN AN
2 ONGOING REVIEW OF THE ACTIONS OF THE DRUG UTILIZATION REVIEW
3 COMMITTEE OR ENTITY ESTABLISHED BY THE DEPARTMENT UNDER SECTION
4 303(C)((2)(I). THE BOARD [MAY] SHALL ALSO RECOMMEND OTHER
5 NECESSARY CHANGES IN THE STRUCTURE OF THE PROGRAM, INCLUDING
6 POSSIBLE COST CONTAINMENT MEASURES, AND MAY DIRECT THE
7 DEPARTMENT TO ENTER INTO DISCUSSIONS WITH THE PRIVATE CONTRACTOR
8 CONCERNING AMENDMENTS TO THE CONTRACT. THE COPAYMENT SCHEDULE
9 SHALL ONLY BE ADJUSTED ON A SEMIANNUAL BASIS.
10 (D) QUARTERLY MEETINGS.--THE BOARD SHALL MEET AT LEAST FOUR
11 TIMES PER YEAR.
12 Section 307. Prescription drug education program.
13 The department, in cooperation with the Department of Health,
14 shall develop and implement a Statewide prescription drug
15 education program designed to inform older adults of the dangers
16 of prescription drug abuse and misuse. The prescription drug
17 education program shall include, but not be limited to,
18 information concerning the following:
19 (1) The hazards of prescription drug overdose.
20 (2) The potential dangers of mixing prescription drugs.
21 (3) The danger of retaining unused prescription drugs
22 after the need to take them no longer exists.
23 (4) The necessity to carefully question physicians and
24 pharmacists concerning the effects of taking prescription
25 drugs, including the differences between brand name drugs and
26 generically equivalent drugs.
27 (5) The advisability of maintaining a prescription drug
28 profile or other record of prescription drug dosage and
29 frequency of dosage.
30 (6) The desirability of advising family members of the
19920H2442B3917 - 14 -
1 types and proper dosage of prescription drugs which are being
2 taken.
3 (7) The dangers of taking prescription drugs in excess
4 of prescribed dosages.
5 (8) The need to obtain complete, detailed directions
6 from the physician or pharmacist concerning the time period a
7 prescription drug should be taken.
8 Section 3. Section 501 of the act is amended by adding a <--
9 paragraph to read:
10 Section 501. Declaration of policy.
11 The General Assembly finds and declares as follows:
12 * * *
13 (6) Drug price inflation INCREASE has caused a dramatic <--
14 AN increase in the amount of public funds expended by the <--
15 PACE Program and the General Assistance Program.
16 Section 4. The definition of "average manufacturer price" in
17 section 502 of the act is amended and the section is amended by
18 adding a definition to read:
19 Section 502. Definitions.
20 The following words and phrases when used in this chapter
21 shall have the meanings given to them in this section unless the
22 context clearly indicates otherwise:
23 "Average manufacturer price (AMP)." With respect to a
24 covered prescription drug of the manufacturer for a calendar
25 quarter, the average unit price paid to the manufacturer for the
26 drug [in this Commonwealth] by wholesalers for drugs distributed
27 to the retail pharmacy class of trade, except for direct sales
28 to hospitals, health maintenance organizations and to
29 wholesalers where the drug is relabeled under that distributor's
30 national drug code number. Federal Supply Schedule prices shall
19920H2442B3917 - 15 -
1 not be included in the calculation of AMP. The term includes
2 cash discounts and all other price reductions, other than
3 rebates under this act and section 1927 of Title XIX of the
4 Social Security Act (Public Law 74-271, 42 U.S.C. § 301 et
5 seq.), added November 5, 1990 (Public Law 101-508, Title IV,
6 section 4401(a)(3), 104 Stat. 1388-143), which reduce the actual
7 price paid. For bundled or capitated sales, the allocation of
8 the discount shall be made proportionately to the dollar value
9 of the units of each covered prescription drug sold under the
10 bundled or capitated arrangement. The AMP for a quarter shall be
11 adjusted by the manufacturer if cumulative discounts or other
12 arrangements subsequently adjust the prices actually realized.
13 * * *
14 "Consumer Price Index-Urban." The Consumer Price Index for
15 All Urban Consumers compiled by the Bureau of Labor Statistics
16 of the United States Department of Labor.
17 * * *
18 Section 5. Sections 503(e) and 505(a) and (b) of the act are
19 amended to read:
20 Section 503. Rebate agreement.
21 * * *
22 [(e) Drug formulary.--[There] EXCEPT AS PROVIDED IN SECTION <--
23 303(H)(12), THERE shall be no drug formulary, prior or
24 retroactive approval system or any similar restriction imposed
25 on the coverage of outpatient drugs made by manufacturers who
26 have entered into agreements with the Commonwealth to pay
27 rebates for drugs utilized in the PACE program, provided that
28 such outpatient drugs [were] ARE approved for marketing by the <--
29 Food and Drug Administration [prior to July 1, 1991].] <--
30 Section 505. Amount of rebate.
19920H2442B3917 - 16 -
1 (a) Single-source drugs and innovator multiple-source
2 drugs.--With respect to single-source drugs and innovator
3 multiple-source drugs, each manufacturer shall remit a rebate to
4 the Commonwealth. Except as otherwise provided in this section,
5 the amount of the rebate to the Commonwealth per calendar
6 quarter with respect to each dosage form and strength of single-
7 source drugs and innovator multiple-source drugs shall be [equal
8 to] as follows:
9 (1) For quarters beginning after December 31, 1990, and
10 ending before July 1, 1992, the product of the total number
11 of units of each dosage form and strength reimbursed by the
12 PACE Program and the General Assistance Program in the
13 quarter and the difference between the average manufacturer
14 price and 87.5% of that price, after deducting customary
15 prompt payment discounts, for the quarter[, which rebate
16 shall be applicable for quarters beginning on and after
17 January 1, 1991].
18 (2) For quarters beginning after June 30, 1992, the
19 product of the total number of units of each dosage form and
20 strength reimbursed by the PACE Program and the General
21 Assistance Program in the quarter and the difference between
22 the average manufacturer price and 85% of that price, after
23 deducting customary prompt payment discounts, for the
24 quarter.
25 (b) Rebate for other drugs.--
26 (1) The amount of the rebate to the Commonwealth for a
27 calendar quarter with respect to covered prescription drugs
28 which are noninnovator multiple-source drugs shall be equal
29 to the product of:
30 (i) the applicable percentage of the average
19920H2442B3917 - 17 -
1 manufacturer price, after deducting customary prompt
2 payment discounts, for each dosage form and strength of
3 such drugs for the quarter; and
4 (ii) the number of units of such form and dosage
5 reimbursed by the PACE Program and the General Assistance
6 Program in the quarter.
7 (2) For the purposes of paragraph (1), the following
8 shall apply:
9 (i) The applicable percentage for calendar quarters
10 beginning after January 1, 1991, and ending before July
11 1, 1992, is 10%.
12 (ii) The applicable percentage for calendar quarters
13 beginning after June 30, 1992, is 11%.
14 * * *
15 Section 6. The act is amended by adding sections to read:
16 SECTION 4. CHAPTER 5 OF THE ACT IS REPEALED. <--
17 SECTION 5. THE ACT IS AMENDED BY ADDING A CHAPTER TO READ:
18 CHAPTER 6
19 PRUDENT PHARMACEUTICAL PURCHASING
20 SECTION 601. DECLARATION OF POLICY.
21 THE GENERAL ASSEMBLY FINDS AND DECLARES AS FOLLOWS:
22 (1) THE COMMONWEALTH, THROUGH ASSISTANCE PROGRAMS
23 ENACTED FOR THE BENEFIT OF ITS CITIZENS, IS THE LARGEST
24 SINGLE PAYOR OF PRESCRIPTION MEDICATIONS IN PENNSYLVANIA.
25 (2) IN ORDER TO ENSURE THAT THE COMMONWEALTH, IN
26 EXPENDING MONEY ON BEHALF OF ITS CITIZENS, IS NOT UNDULY
27 HARMED BY BEING REQUIRED TO PAY A PRICE FOR PHARMACEUTICAL
28 PRODUCTS PURCHASED FROM MANUFACTURERS IN EXCESS OF THAT
29 ESTABLISHED FOR OTHER PURCHASERS AND REIMBURSERS OF THESE
30 PRODUCTS AND TO ENSURE THAT THE COMMONWEALTH CAN EFFICIENTLY
19920H2442B3917 - 18 -
1 AND PRUDENTLY EXPEND ITS MONEY AND MAXIMIZE ITS ABILITY TO
2 PROVIDE FOR THE HEALTH AND WELFARE OF AS MANY OF ITS NEEDY
3 CITIZENS AS POSSIBLE, IT IS REASONABLE, NECESSARY AND IN THE
4 PUBLIC INTEREST TO REQUIRE THAT PHARMACEUTICAL MANUFACTURERS
5 OFFER A DISCOUNT TO THE COMMONWEALTH FOR PHARMACEUTICAL
6 PRODUCTS PURCHASED OR REIMBURSED THROUGH STATE AGENCIES.
7 (3) IT IS IN THE PUBLIC INTEREST FOR PHARMACEUTICAL
8 MANUFACTURERS TO PROVIDE THE COMMONWEALTH WITH DATA RELATING
9 TO THE PRICE OF PHARMACEUTICAL PRODUCTS SOLD BY THE
10 MANUFACTURER TO PUBLIC BODIES, HOSPITALS, FOR-PROFIT OR
11 NONPROFIT ORGANIZATIONS, OTHER MANUFACTURERS OR WHOLESALERS
12 DOING BUSINESS IN THIS COMMONWEALTH IN ORDER TO ENSURE THAT
13 THE COMMONWEALTH CAN DETERMINE THAT IT IS BEING PROVIDED WITH
14 THE BEST PRICES OFFERED BY THE MANUFACTURER.
15 (4) ON A NATIONAL LEVEL, THERE HAS BEEN A RECOGNITION
16 THAT THE NEED FOR DISCOUNTS TO STATE MEDICAID AGENCIES, WHICH
17 REIMBURSE FOR A HIGH VOLUME OF PHARMACEUTICAL PRODUCTS,
18 EXISTS.
19 (5) ON A STATE LEVEL, THE GENERAL ASSEMBLY RECOGNIZES
20 THAT IT IS IN THE BEST INTEREST OF ITS CITIZENS TO PROVIDE
21 PHARMACEUTICAL ASSISTANCE IN A REASONABLE AND COST-EFFICIENT
22 MANNER.
23 SECTION 602. DEFINITIONS.
24 THE FOLLOWING WORDS AND PHRASES WHEN USED IN THIS CHAPTER
25 SHALL HAVE THE MEANINGS GIVEN TO THEM IN THIS SECTION UNLESS THE
26 CONTEXT CLEARLY INDICATES OTHERWISE:
27 "AVERAGE MANUFACTURER PRICE (AMP)." WITH RESPECT TO A
28 COVERED PRESCRIPTION DRUG OF THE MANUFACTURER FOR A CALENDAR
29 QUARTER, THE AVERAGE UNIT PRICE PAID TO THE MANUFACTURER FOR THE
30 DRUG IN THIS COMMONWEALTH BY WHOLESALERS FOR DRUGS DISTRIBUTED
19920H2442B3917 - 19 -
1 TO THE RETAIL PHARMACY CLASS OF TRADE, EXCEPT FOR DIRECT SALES
2 TO HOSPITALS, HEALTH MAINTENANCE ORGANIZATIONS AND TO
3 WHOLESALERS WHERE THE DRUG IS RELABELED UNDER THAT DISTRIBUTOR'S
4 NATIONAL DRUG CODE NUMBER. FEDERAL SUPPLY SCHEDULE PRICES SHALL
5 NOT BE INCLUDED IN THE CALCULATION OF AMP. THE TERM INCLUDES
6 CASH DISCOUNTS AND ALL OTHER PRICE REDUCTIONS, OTHER THAN
7 REBATES UNDER THIS ACT AND SECTION 1927 OF TITLE XIX OF THE
8 SOCIAL SECURITY ACT (PUBLIC LAW 74-271, 42 U.S.C. § 301 ET
9 SEQ.), ADDED NOVEMBER 5, 1990 (PUBLIC LAW 101-508, TITLE IV,
10 SECTION 4401(A)(3), 104 STAT. 1388-143), WHICH REDUCE THE ACTUAL
11 PRICE PAID. FOR BUNDLED OR CAPITATED SALES, THE ALLOCATION OF
12 THE DISCOUNT SHALL BE MADE PROPORTIONATELY TO THE DOLLAR VALUE
13 OF THE UNITS OF EACH COVERED PRESCRIPTION DRUG SOLD UNDER THE
14 BUNDLED OR CAPITATED ARRANGEMENT. THE AMP FOR A QUARTER SHALL BE
15 ADJUSTED BY THE MANUFACTURER IF CUMULATIVE DISCOUNTS OR OTHER
16 ARRANGEMENTS SUBSEQUENTLY ADJUST THE PRICES ACTUALLY REALIZED.
17 "BUNDLED OR CAPITATED SALES." THE PACKAGING OF DRUGS OF
18 DIFFERENT TYPES WHERE:
19 (1) THE CONDITION OF REBATE OR DISCOUNT IS THAT MORE
20 THAN ONE DRUG TYPE IS PURCHASED; OR
21 (2) THE RESULTING DISCOUNT OR REBATE IS GREATER THAN
22 THAT WHICH WOULD HAVE BEEN RECEIVED HAD THE DRUG PRODUCTS
23 BEEN PURCHASED SEPARATELY.
24 "COVERED PRESCRIPTION DRUG." A LEGEND DRUG, INSULIN, AN
25 INSULIN SYRINGE OR AN INSULIN NEEDLE ELIGIBLE FOR PAYMENT BY THE
26 COMMONWEALTH UNDER THE PACE PROGRAM OR UNDER THE GENERAL
27 ASSISTANCE PROGRAM.
28 "DEPOT PRICE." THE PRICE AVAILABLE TO ANY DEPOT OF THE
29 FEDERAL GOVERNMENT FOR PURCHASE OF DRUGS FROM THE MANUFACTURER
30 THROUGH THE DEPOT SYSTEM OF PROCUREMENT.
19920H2442B3917 - 20 -
1 "DIRECT SELLER." ANY PERSON, PARTNERSHIP, CORPORATION,
2 INSTITUTION OR ENTITY ENGAGED IN THE SELLING OF PHARMACEUTICAL
3 PRODUCTS DIRECTLY TO CONSUMERS IN THIS COMMONWEALTH.
4 "DISTRIBUTOR." A PRIVATE ENTITY UNDER CONTRACT WITH THE
5 ORIGINAL LABELER OR HOLDER OF THE NATIONAL DRUG CODE NUMBER TO
6 MANUFACTURE, PACKAGE OR MARKET THE COVERED PRESCRIPTION DRUG.
7 "DOING BUSINESS IN THIS COMMONWEALTH." THE DIRECT OR
8 INDIRECT SELLING OR THE MAKING OF COVERED PRESCRIPTION DRUGS
9 AVAILABLE FOR SALE IN A CONTINUOUS AND SYSTEMATIC MANNER WITH
10 THE REASONABLE EXPECTATION THAT THESE PRODUCTS WILL BE SOLD TO
11 CONSUMERS IN THIS COMMONWEALTH.
12 "FDA." THE FOOD AND DRUG ADMINISTRATION OF THE PUBLIC HEALTH
13 SERVICE OF THE DEPARTMENT OF HEALTH AND HUMAN SERVICES.
14 "GENERAL ASSISTANCE PROGRAM." THE GENERAL ASSISTANCE PROGRAM
15 OF THE DEPARTMENT OF PUBLIC WELFARE.
16 "INNOVATOR MULTIPLE-SOURCE DRUGS." A MULTIPLE-SOURCE DRUG
17 THAT WAS ORIGINALLY MARKETED UNDER A NEW DRUG APPLICATION
18 APPROVED BY THE FDA. THE TERM INCLUDES:
19 (1) COVERED PRESCRIPTION DRUGS APPROVED UNDER PRODUCT
20 LICENSE APPROVAL (PLA), ESTABLISHMENT LICENSE APPROVAL (ELA)
21 OR ANTIBIOTIC DRUG APPROVAL (ADA); AND
22 (2) A COVERED PRESCRIPTION DRUG MARKETED BY A CROSS-
23 LICENSED PRODUCER OR DISTRIBUTOR UNDER THE APPROVED
24 ABBREVIATED NEW DRUG APPLICATION (ANDA) WHEN THE DRUG PRODUCT
25 MEETS THIS DEFINITION.
26 "MANUFACTURER."
27 (1) AN ENTITY WHICH IS ENGAGED IN ANY OF THE FOLLOWING:
28 (I) THE PRODUCTION, PREPARATION, PROPAGATION,
29 COMPOUNDING, CONVERSION OR PROCESSING OF PRESCRIPTION
30 DRUG PRODUCTS:
19920H2442B3917 - 21 -
1 (A) DIRECTLY OR INDIRECTLY BY EXTRACTION FROM
2 SUBSTANCES OF NATURAL ORIGIN;
3 (B) INDEPENDENTLY BY MEANS OF CHEMICAL
4 SYNTHESIS; OR
5 (C) BY A COMBINATION OF EXTRACTION AND CHEMICAL
6 SYNTHESIS.
7 (II) THE PACKAGING, REPACKAGING, LABELING OR
8 RELABELING, OR DISTRIBUTION OF PRESCRIPTION DRUG
9 PRODUCTS.
10 (2) THE ENTITY HOLDING LEGAL TITLE TO OR POSSESSION OF
11 THE NATIONAL DRUG CODE NUMBER FOR THE COVERED PRESCRIPTION
12 DRUG.
13 (3) THE TERM DOES NOT INCLUDE A WHOLESALE DISTRIBUTOR OF
14 DRUGS, DRUGSTORE CHAIN ORGANIZATION OR RETAIL PHARMACY
15 LICENSED BY THE COMMONWEALTH.
16 "NATIONAL DRUG CODE NUMBER." THE IDENTIFYING DRUG NUMBER
17 MAINTAINED BY THE FDA. THE COMPLETE ELEVEN DIGIT NUMBER MUST
18 INCLUDE THE LABELER CODE, PRODUCT CODE AND PACKAGE SIZE CODE.
19 "NEW DRUG." A COVERED PRESCRIPTION DRUG APPROVED AS A NEW
20 DRUG UNDER SECTION 201(P) OF THE FEDERAL FOOD, DRUG, AND
21 COSMETIC ACT (52 STAT. 1040, 21 U.S.C. § 321(P)).
22 "NONINNOVATOR MULTIPLE-SOURCE DRUG." ANY OF THE FOLLOWING:
23 (1) A COVERED PRESCRIPTION DRUG WHICH IS NOT AN
24 INNOVATOR MULTIPLE-SOURCE DRUG APPROVED UNDER AN ABBREVIATED
25 NEW DRUG APPLICATION (ANDA) OR AN AMENDED ANTIBIOTIC DRUG
26 APPROVAL (AADA).
27 (2) A DRUG THAT HAS BEEN APPROVED FOR SUBSTITUTION UNDER
28 THE ACT OF NOVEMBER 24, 1976 (P.L.1163, NO.259), REFERRED TO
29 AS THE GENERIC EQUIVALENT DRUG LAW.
30 "PACE PROGRAM." THE PROGRAM UNDER CHAPTER 3.
19920H2442B3917 - 22 -
1 "PRIVATE ENTITY." INCLUDES A FOR-PROFIT ENTITY AND A
2 NONPROFIT ENTITY.
3 "PRODUCER PRICE INDEX FOR PHARMACEUTICALS." THE PRESCRIPTION
4 DRUG PRODUCER PRICE INDEX COMPILED BY THE BUREAU OF LABOR
5 STATISTICS OF THE UNITED STATES DEPARTMENT OF LABOR FOR
6 MEASURING AVERAGE CHANGES IN SELLING PRICES RECEIVED BY DOMESTIC
7 DRUG MANUFACTURERS.
8 "PROVIDER." A PHARMACY OR DISPENSING PHYSICIAN ENROLLED AS A
9 PROVIDER IN THE PACE PROGRAM OR THE GENERAL ASSISTANCE PROGRAM
10 OR A PHARMACY LICENSED BY THE COMMONWEALTH.
11 "SECRETARY." THE SECRETARY OF AGING OF THE COMMONWEALTH.
12 "SINGLE-SOURCE DRUGS." LEGEND DRUG PRODUCTS FOR WHICH THE
13 FDA HAS NOT APPROVED AN ABBREVIATED NEW DRUG APPLICATION (ANDA).
14 "UNIT." A DRUG UNIT IN THE LOWEST IDENTIFIABLE AMOUNT, SUCH
15 AS TABLET OR CAPSULE FOR SOLID DOSAGE FORMS, MILLILITER FOR
16 LIQUID FORMS AND GRAM FOR OINTMENTS OR CREAMS. THE MANUFACTURER
17 SHALL SPECIFY THE UNIT FOR EACH DOSAGE FORM AND STRENGTH OF EACH
18 COVERED PRESCRIPTION DRUG IN ACCORDANCE WITH THE INSTRUCTIONS
19 DEVELOPED BY THE HEALTH CARE FINANCING ADMINISTRATION FOR
20 PURPOSES OF THE FEDERAL MEDICAID REBATE PROGRAM UNDER SECTION
21 1927 OF TITLE XIX OF THE SOCIAL SECURITY ACT (PUBLIC LAW 74-271,
22 42 U.S.C. § 301 ET SEQ.).
23 "WHOLESALER." ANY PERSON, PARTNERSHIP, CORPORATION,
24 INSTITUTION OR ENTITY TO WHICH THE MANUFACTURER SELLS THE
25 COVERED PRESCRIPTION DRUG, INCLUDING A PHARMACY OR CHAIN OF
26 PHARMACIES, BUT THAT DOES NOT RELABEL OR REPACKAGE THE COVERED
27 PRESCRIPTION DRUG.
28 SECTION 603. REBATE AGREEMENT.
29 (A) REQUIREMENT.--THE PACE PROGRAM AND THE GENERAL
30 ASSISTANCE PROGRAM SHALL NOT REIMBURSE FOR ANY COVERED
19920H2442B3917 - 23 -
1 PRESCRIPTION DRUG WITHOUT A REBATE AGREEMENT BETWEEN THE
2 DEPARTMENT AND THE MANUFACTURER OF THE COVERED PRESCRIPTION
3 DRUG.
4 (B) EXCEPTION.--SUBSECTION (A) SHALL NOT APPLY IF THE
5 AVAILABILITY OF THE DRUG IS ESSENTIAL TO THE HEALTH OF ELIGIBLE
6 CLAIMANTS AS DETERMINED BY THE DEPARTMENT.
7 (C) AGREEMENTS.--MANUFACTURERS OF PRESCRIPTION DRUGS
8 REIMBURSED UNDER THE PACE PROGRAM AND THE GENERAL ASSISTANCE
9 PROGRAM MUST ENTER INTO A REBATE AGREEMENT WITH THE DEPARTMENT
10 WITHIN 120 DAYS OF THE EFFECTIVE DATE OF THIS CHAPTER. IF A
11 MANUFACTURER HAS NOT ENTERED INTO AN AGREEMENT WITHIN THE 120-
12 DAY PERIOD, AN AGREEMENT SUBSEQUENTLY ENTERED INTO SHALL NOT BE
13 EFFECTIVE UNTIL THE FIRST DAY OF THE CALENDAR QUARTER THAT
14 BEGINS 120 DAYS AFTER THE DATE THE AGREEMENT IS ENTERED INTO.
15 (D) NOTICE.--THE DEPARTMENT SHALL NOTIFY ENROLLED PROVIDERS
16 OF THE PACE PROGRAM ON AN ANNUAL BASIS AND AS APPROPRIATE OF ALL
17 MANUFACTURERS WHO HAVE ENTERED INTO A REBATE AGREEMENT.
18 (E) DRUG FORMULARY.--EXCEPT AS PROVIDED IN SECTION
19 303(H)(13), THERE SHALL BE NO DRUG FORMULARY, PRIOR OR
20 RETROACTIVE APPROVAL SYSTEM OR ANY SIMILAR RESTRICTION IMPOSED
21 ON THE COVERAGE OF OUTPATIENT DRUGS MADE BY MANUFACTURERS WHO
22 HAVE ENTERED INTO AGREEMENTS WITH THE COMMONWEALTH TO PAY
23 REBATES FOR DRUGS UTILIZED IN THE PACE PROGRAM, PROVIDED THAT
24 SUCH OUTPATIENT DRUGS ARE APPROVED FOR MARKETING BY THE FOOD AND
25 DRUG ADMINISTRATION.
26 SECTION 604. TERMS OF REBATE AGREEMENT.
27 (A) QUARTERLY BASIS.--A REBATE AGREEMENT SHALL REQUIRE ANY
28 MANUFACTURER OF COVERED PRESCRIPTION DRUGS TO PROVIDE TO THE
29 DEPARTMENT A REBATE EACH CALENDAR QUARTER IN AN AMOUNT SPECIFIED
30 IN SECTION 605 FOR COVERED PRESCRIPTION DRUGS OF THE
19920H2442B3917 - 24 -
1 MANUFACTURER REIMBURSED DURING THE QUARTER. THE REBATE SHALL BE
2 PAID BY THE MANUFACTURER NOT LATER THAN 30 DAYS AFTER THE DATE
3 OF RECEIPT OF THE INFORMATION DESCRIBED IN SUBSECTION (B) FOR
4 THE PERIOD INVOLVED.
5 (B) INFORMATION.--
6 (1) THE DEPARTMENT SHALL REPORT TO EACH MANUFACTURER,
7 NOT LATER THAN 60 DAYS AFTER THE END OF EACH CALENDAR
8 QUARTER, INFORMATION BY ZIP CODE OF PROVIDER ON THE TOTAL
9 NUMBER OF DOSAGE UNITS OF EACH COVERED PRESCRIPTION DRUG
10 REIMBURSED UNDER THE PACE PROGRAM AND UNDER THE GENERAL
11 ASSISTANCE PROGRAM DURING THE QUARTER.
12 (2) A MANUFACTURER MAY REVIEW THE INFORMATION PROVIDED
13 UNDER PARAGRAPH (1) AND VERIFY INFORMATION. ADJUSTMENTS TO
14 REBATES SHALL BE MADE TO THE EXTENT THAT INFORMATION
15 INDICATES THAT UTILIZATION WAS GREATER OR LESS THAN THE
16 AMOUNT PREVIOUSLY SPECIFIED.
17 (3) IN THE EVENT THAT, IN ANY QUARTER, A MATERIAL
18 DISCREPANCY IN THE DEPARTMENT'S INFORMATION IS CERTIFIED BY
19 THE MANUFACTURER PRIOR TO THE DUE DATE OF THE REBATE, THE
20 DEPARTMENT AND THE MANUFACTURER SHALL, IN GOOD FAITH, ATTEMPT
21 TO RESOLVE THE DISCREPANCY. IF RESOLUTION IS NOT REACHED
22 WITHIN 30 DAYS OF RECEIPT OF THE MANUFACTURER'S CERTIFICATION
23 BY THE DEPARTMENT, THE MANUFACTURER MAY APPEAL THE
24 DEPARTMENT'S DECISION UNDER THE DEPARTMENT'S FORMAL FAIR
25 HEARINGS AND APPEALS PROCESS. THE MANUFACTURER SHALL PAY THE
26 DEPARTMENT THAT PORTION OF THE REBATE AMOUNT WHICH IS NOT
27 DISPUTED WITHIN THE REQUIRED TIME FRAME UNDER THIS CHAPTER.
28 ANY BALANCE DUE, PLUS STATUTORY INTEREST, SHALL BE PAID OR
29 CREDITED BY THE MANUFACTURER OR THE DEPARTMENT BY THE DUE
30 DATE OF THE NEXT QUARTERLY PAYMENT AFTER RESOLUTION OF THE
19920H2442B3917 - 25 -
1 DISPUTE.
2 (C) MANUFACTURER PROVISION OF PRICE INFORMATION.--
3 (1) EACH MANUFACTURER WITH AN AGREEMENT IN EFFECT UNDER
4 THIS CHAPTER SHALL REPORT THE AVERAGE MANUFACTURER PRICE FOR
5 ALL COVERED PRESCRIPTION DRUGS PRODUCED BY THAT MANUFACTURER
6 TO THE DEPARTMENT NOT LATER THAN 30 DAYS AFTER THE LAST DAY
7 OF EACH QUARTER.
8 (2) THE DEPARTMENT SHALL RETAIN THE SERVICES OF AN
9 INDEPENDENT CONTRACTOR TO SURVEY WHOLESALERS, DIRECT SELLERS
10 AND MANUFACTURERS THAT DIRECTLY DISTRIBUTE THEIR COVERED
11 PRESCRIPTION DRUGS, WHEN NECESSARY, TO VERIFY MANUFACTURER
12 PRICES REPORTED UNDER PARAGRAPH (1). ANY SURVEY CONDUCTED
13 SHALL NOT REVEAL TO THE DEPARTMENT NOR TO ANY OTHER PERSON OR
14 ENTITY OTHER THAN THE INDEPENDENT CONTRACTOR THE NAME,
15 IDENTITY, LOCATION, ACTUAL ACQUISITION INVOICE, OTHER
16 PROPRIETARY INFORMATION OR ANY INFORMATION FROM WHICH THE
17 DEPARTMENT MIGHT BE ENABLED TO ASCERTAIN THE NAME, IDENTITY
18 OR LOCATION OF ANY WHOLESALER, DIRECT SELLER OR PROVIDER SO
19 SURVEYED UNLESS THE CONTRACTOR SHALL HAVE GATHERED SUFFICIENT
20 EVIDENCE TO ENABLE THE DEPARTMENT TO BRING CHARGES AGAINST
21 ANY WHOLESALER, DIRECT SELLER OR PROVIDER IN VIOLATION OF
22 SUBSECTION (D)(3).
23 (D) PENALTIES.--THE DEPARTMENT SHALL ADMINISTER PENALTIES AS
24 FOLLOWS:
25 (1) A MANUFACTURER WHO FAILS TO SUPPLY INFORMATION
26 REQUIRED UNDER SUBSECTION (C)(1) SHALL BE LIABLE FOR A CIVIL
27 PENALTY IN THE AMOUNT OF 2% OF THE REBATE NEXT REQUIRED TO BE
28 PAID, PLUS $1,000 FOR EACH DAY THAT THE INFORMATION IS LATE.
29 IF THE INFORMATION IS NOT REPORTED WITHIN 30 DAYS OF THE DUE
30 DATE, THE AGREEMENT SHALL BE SUSPENDED FOR SERVICES FURNISHED
19920H2442B3917 - 26 -
1 AFTER THE END OF THE 30-DAY PERIOD UNTIL THE DATE THE
2 INFORMATION IS REPORTED OR THE EXPIRATION OF 45 DAYS,
3 WHICHEVER IS LATER.
4 (2) A MANUFACTURER WHO KNOWINGLY SUPPLIES FALSE
5 INFORMATION THAT IS REQUIRED UNDER SUBSECTION (C)(1) SHALL BE
6 LIABLE FOR A CIVIL PENALTY IN THE AMOUNT OF $50,000 FOR EACH
7 ITEM OF FALSE INFORMATION.
8 (3) A DIRECT SELLER, MANUFACTURER OR WHOLESALER WHO
9 REFUSES A REQUEST FOR INFORMATION, OR KNOWINGLY PROVIDES
10 FALSE INFORMATION, THAT IS REQUIRED UNDER SUBSECTION (C)(2)
11 SHALL BE LIABLE FOR A CIVIL PENALTY IN THE AMOUNT OF $50,000.
12 (4) PENALTIES COLLECTED UNDER THIS SUBSECTION SHALL BE
13 DEPOSITED INTO THE FUND.
14 (5) ALL CIVIL MONETARY PENALTIES IMPOSED UNDER THIS
15 CHAPTER ARE IN ADDITION TO OTHER CIVIL OR CRIMINAL PENALTIES.
16 (E) CONFIDENTIALITY OF INFORMATION.--INFORMATION DISCLOSED
17 BY MANUFACTURERS, WHOLESALERS OR DIRECT SELLERS UNDER THIS
18 CHAPTER IS CONFIDENTIAL AND SHALL NOT BE DISCLOSED BY THE
19 DEPARTMENT IN A FORM WHICH DISCLOSES THE IDENTITY OF A SPECIFIC
20 MANUFACTURER, WHOLESALER OR DIRECT SELLER OR THE PRICES CHARGED
21 FOR DRUGS BY THE MANUFACTURER OR WHOLESALER, EXCEPT AS THE
22 DEPARTMENT DETERMINES TO BE NECESSARY TO CARRY OUT THIS CHAPTER
23 AND TO PERMIT THE DEPARTMENT OF THE AUDITOR GENERAL AND THE
24 OFFICE OF STATE INSPECTOR GENERAL TO REVIEW THE INFORMATION
25 PROVIDED.
26 (F) LENGTH OF AGREEMENT.--A REBATE AGREEMENT SHALL REMAIN IN
27 EFFECT FOR AN INITIAL PERIOD OF NOT LESS THAN ONE YEAR AND SHALL
28 BE AUTOMATICALLY RENEWED FOR A PERIOD OF NOT LESS THAN ONE YEAR
29 UNLESS TERMINATED UNDER SUBSECTION (G).
30 (G) TERMINATION.--
19920H2442B3917 - 27 -
1 (1) THE DEPARTMENT MAY PROVIDE FOR TERMINATION OF A
2 REBATE AGREEMENT FOR ANY REASON. TERMINATION SHALL NOT BE
3 EFFECTIVE EARLIER THAN 60 DAYS AFTER THE DATE OF RECEIPT OF
4 NOTICE OF TERMINATION BY THE MANUFACTURERS.
5 (2) A MANUFACTURER MAY TERMINATE A REBATE AGREEMENT FOR
6 ANY REASON. TERMINATION SHALL NOT BE EFFECTIVE EARLIER THAN
7 60 DAYS AFTER THE DATE OF RECEIPT OF NOTICE OF TERMINATION BY
8 THE DEPARTMENT.
9 (3) TERMINATION OF THE REBATE AGREEMENT SHALL NOT AFFECT
10 REBATES DUE UNDER THE AGREEMENT BEFORE THE EFFECTIVE DATE OF
11 TERMINATION.
12 (4) COMMONWEALTH COURT SHALL HAVE ORIGINAL JURISDICTION
13 OVER CASES OF TERMINATION OF AGREEMENTS UNDER THIS
14 SUBSECTION. COMMENCEMENT OF AN ACTION UNDER THIS PARAGRAPH
15 SHALL NOT DELAY THE EFFECTIVE DATE OF TERMINATION.
16 (5) IF A REBATE AGREEMENT IS TERMINATED FOR CAUSE,
17 ANOTHER AGREEMENT WITH THE SAME MANUFACTURER OR A SUCCESSOR
18 MANUFACTURER MAY NOT BE ENTERED INTO UNTIL A PERIOD OF ONE
19 YEAR HAS ELAPSED FROM THE DATE OF THE TERMINATION UNLESS THE
20 DEPARTMENT FINDS GOOD CAUSE FOR AN EARLIER AGREEMENT.
21 SECTION 605. AMOUNT OF REBATE.
22 (A) SINGLE-SOURCE DRUGS AND INNOVATOR MULTIPLE-SOURCE
23 DRUGS.--WITH RESPECT TO SINGLE-SOURCE DRUGS AND INNOVATOR
24 MULTIPLE-SOURCE DRUGS, EACH MANUFACTURER SHALL REMIT A REBATE TO
25 THE COMMONWEALTH. EXCEPT AS OTHERWISE PROVIDED IN THIS SECTION,
26 THE AMOUNT OF THE REBATE TO THE COMMONWEALTH PER CALENDAR
27 QUARTER WITH RESPECT TO EACH DOSAGE FORM AND STRENGTH OF SINGLE-
28 SOURCE DRUGS AND INNOVATOR MULTIPLE-SOURCE DRUGS SHALL BE AS
29 FOLLOWS:
30 (1) FOR QUARTERS BEGINNING AFTER DECEMBER 31, 1990, AND
19920H2442B3917 - 28 -
1 ENDING BEFORE JANUARY 1, 1993, THE PRODUCT OF THE TOTAL
2 NUMBER OF UNITS OF EACH DOSAGE FORM AND STRENGTH REIMBURSED
3 BY THE PACE PROGRAM AND THE GENERAL ASSISTANCE PROGRAM IN THE
4 QUARTER AND THE DIFFERENCE BETWEEN THE AVERAGE MANUFACTURER
5 PRICE AND 87.5% OF THAT PRICE, AFTER DEDUCTING CUSTOMARY
6 PROMPT PAYMENT DISCOUNTS, FOR THE QUARTER.
7 (2) FOR QUARTERS BEGINNING AFTER DECEMBER 31, 1992, THE
8 PRODUCT OF THE TOTAL NUMBER OF UNITS OF EACH DOSAGE FORM AND
9 STRENGTH REIMBURSED BY THE PACE PROGRAM AND THE GENERAL
10 ASSISTANCE PROGRAM IN THE QUARTER AND THE DIFFERENCE BETWEEN
11 THE AVERAGE MANUFACTURER PRICE AND 85% OF THAT PRICE, AFTER
12 DEDUCTING CUSTOMARY PROMPT PAYMENT DISCOUNTS, FOR THE
13 QUARTER.
14 (B) REBATE FOR OTHER DRUGS.--
15 (1) THE AMOUNT OF THE REBATE TO THE COMMONWEALTH FOR A
16 CALENDAR QUARTER WITH RESPECT TO COVERED PRESCRIPTION DRUGS
17 WHICH ARE NONINNOVATOR MULTIPLE-SOURCE DRUGS SHALL BE EQUAL
18 TO THE PRODUCT OF:
19 (I) THE APPLICABLE PERCENTAGE OF THE AVERAGE
20 MANUFACTURER PRICE, AFTER DEDUCTING CUSTOMARY PROMPT
21 PAYMENT DISCOUNTS, FOR EACH DOSAGE FORM AND STRENGTH OF
22 SUCH DRUGS FOR THE QUARTER; AND
23 (II) THE NUMBER OF UNITS OF SUCH FORM AND DOSAGE
24 REIMBURSED BY THE PACE PROGRAM AND THE GENERAL ASSISTANCE
25 PROGRAM IN THE QUARTER.
26 (2) FOR THE PURPOSES OF PARAGRAPH (1), THE FOLLOWING
27 SHALL APPLY:
28 (I) THE APPLICABLE PERCENTAGE FOR CALENDAR QUARTERS
29 BEGINNING AFTER JANUARY 1, 1991, AND ENDING BEFORE
30 JANUARY 1, 1993, IS 10%.
19920H2442B3917 - 29 -
1 (II) THE APPLICABLE PERCENTAGE FOR CALENDAR QUARTERS
2 BEGINNING AFTER DECEMBER 31, 1992, IS 11%.
3 (C) DRUGS APPROVED AFTER ACT TAKES EFFECT.--IN THE CASE OF A
4 COVERED OUTPATIENT DRUG APPROVED FOR MARKETING AFTER THE
5 EFFECTIVE DATE OF THIS ACT, ANY REFERENCE TO JANUARY 1, 1991,
6 SHALL BE A REFERENCE TO THE FIRST DAY OF THE FIRST MONTH DURING
7 WHICH THE DRUG WAS MARKETED.
8 Section 505.1 605.1. Excessive pharmaceutical price inflation <--
9 discount.
10 (a) General rule.--A discount shall be provided to the
11 department for all covered prescription drugs. The discount
12 shall be calculated as follows:
13 (1) For each quarter for which a rebate under section
14 505(a) 605(A) and (b) is to be paid after December 31, 1991, <--
15 the average manufacturer price for each dosage form and
16 strength of a covered prescription drug shall be compared to
17 the average manufacturer price for the same form and strength
18 in the previous calendar year; and a percentage increase
19 shall be calculated.
20 (2) For each quarter under paragraph (1), the average
21 percentage increase in the Consumer Price Index-Urban <--
22 PRODUCER PRICE INDEX FOR PHARMACEUTICALS over the same <--
23 quarter in the previous calendar year shall be calculated.
24 (3) If the calculation under paragraph (1) is greater
25 than the calculation under paragraph (2), the discount amount
26 for each quarter shall be equal to the product of:
27 (i) the difference between the calculations under
28 paragraphs (1) and (2); and
29 (ii) the total number of units of each dosage form
30 and strength reimbursed by the PACE Program and General
19920H2442B3917 - 30 -
1 Assistance Program and the average manufacturer price
2 reported by the manufacturer under section 504(c)(1) <--
3 604(C)(1). <--
4 (b) New by-marketed NEWLY MARKETED drugs.--For covered <--
5 prescription drugs that have not been marketed for a full
6 calendar year, subsection (a) shall apply after the covered
7 prescription drug has been on the market for four consecutive
8 quarters. The drug's initial average manufacturer price shall be
9 based on the first day of the first quarter that the drug was
10 marketed.
11 Section 505.2 605.2. Lowered best price. <--
12 (a) General rule.--If the rebate under section 505 605 and <--
13 the discount under section 505.1 605.1 would establish a lowered <--
14 Federal best price, as defined in section 1927(c)(1)(C) of the
15 Social Security Act (Public Law 74-271, 42 U.S.C. § 1396r-
16 8(c)(1)(C)), the manufacturer shall be liable for a total rebate
17 and discount in an amount that does not reduce the Federal best
18 price for that covered prescription drug.
19 (b) Procedure.--If a manufacturer asserts a lowered Federal <--
20 best price under subsection (a), it must provide substantial
21 evidence of the existing best price within 30 days of the end of
22 the quarter for which the price is asserted.
23 (B) PROCEDURE.--ANY CLAIM BY A MANUFACTURER THAT A REBATE <--
24 WOULD ESTABLISH A LOWER FEDERAL BEST PRICE UNDER SUBSECTION (A)
25 SHALL BE VERIFIED IN WRITING BY AN INDEPENDENT PUBLIC ACCOUNTING
26 FIRM APPROVED BY THE DEPARTMENT WITHIN 45 DAYS OF THE END OF THE
27 QUARTER FOR WHICH THE CLAIM IS ASSERTED. THE INFORMATION
28 PROVIDED TO THE PUBLIC ACCOUNTING FIRM SHALL REMAIN
29 CONFIDENTIAL.
30 (c) Civil penalty.--A manufacturer which THAT INTENTIONALLY <--
19920H2442B3917 - 31 -
1 AND KNOWINGLY provides false information under this section
2 shall be liable for a civil penalty in the amount of OF NOT MORE <--
3 THAN $50,000. Each item of false information constitutes a
4 separate violation.
5 Section 7. Sections 508 and 509 of the act are amended to <--
6 read:
7 [Section 508. Existing agreements.
8 Any rebate agreement between the department and a
9 manufacturer entered into prior to the effective date of this
10 chapter shall remain in effect and be considered a rebate
11 agreement in compliance with this chapter until the agreement
12 expires or until either party terminates the agreement.
13 Section 509. Expiration of chapter.
14 This chapter shall expire July 1, 1992, unless reenacted by
15 the General Assembly.]
16 SECTION 606. EXEMPTION. <--
17 SECTION 306(A) SHALL NOT APPLY TO REBATES UNDER THIS CHAPTER.
18 SECTION 607. DISPOSITION OF FUNDS.
19 (A) PACE PROGRAM.--MONEY RECEIVED UNDER THIS CHAPTER IN
20 CONNECTION WITH THE PACE PROGRAM SHALL BE DEPOSITED IN THE
21 PHARMACEUTICAL ASSISTANCE CONTRACT FOR THE ELDERLY FUND.
22 (B) GENERAL ASSISTANCE PROGRAM.--MONEY RECEIVED UNDER THIS
23 CHAPTER IN CONNECTION WITH THE GENERAL ASSISTANCE PROGRAM SHALL
24 AUGMENT THE MEDICAL ASSISTANCE OUTPATIENT APPROPRIATION TO THE
25 DEPARTMENT OF PUBLIC WELFARE.
26 Section 8 6. The act is amended by adding a section to read: <--
27 Section 901.1. Rules and regulations.
28 All rules and regulations promulgated under this act shall be
29 subject to the act of June 25, 1982 (P.L.633, No.181), known as
30 the Regulatory Review Act., and to legislative review by the <--
19920H2442B3917 - 32 -
1 Aging and Youth Committee of the Senate and the Aging and Youth
2 Committee of the House of Representatives.
3 Section 9 7. The House of Representatives GENERAL ASSEMBLY, <--
4 recognizing the oversight role that the Legislative Budget and
5 Finance Committee has with regard to the programs and services
6 of the Department of Aging, directs the Legislative Budget and
7 Finance Committee to conduct a study of the State lottery as it
8 impacts upon the future of programs and services for older
9 Pennsylvanians and the possible need for legislative action and
10 make a report to the House of Representatives GENERAL ASSEMBLY <--
11 no later than December 31, 1992.
12 Section 10. The addition of sections 505.1 and 505.2 of the <--
13 act shall be retroactive to January 1, 1992.
14 SECTION 8. THIS ACT SHALL APPLY RETROACTIVELY AS FOLLOWS: <--
15 (1) THE ADDITION OF SECTIONS 605.1 AND 605.2 OF THE ACT
16 SHALL APPLY RETROACTIVELY TO JANUARY 1, 1992.
17 (2) EXCEPT AS PROVIDED IN PARAGRAPH (1), IF THIS ACT IS
18 ENACTED AFTER JULY 1, 1992, THE ADDITION OF CHAPTER 6 OF THE
19 ACT SHALL APPLY RETROACTIVELY TO JULY 1, 1992, AND ANY ACTION
20 TAKEN UNDER A PROVISION OF CHAPTER 5 OF THE ACT AFTER JUNE
21 30, 1992, AND BEFORE THE EFFECTIVE DATE OF CHAPTER 6 OF THE
22 ACT SHALL BE DEEMED TAKEN UNDER THE CORRESPONDING PROVISION
23 OF CHAPTER 6 OF THE ACT AS LONG AS THERE IS A CORRESPONDING
24 PROVISION.
25 Section 11 9. This act shall take effect immediately. <--
C3L72VDL/19920H2442B3917 - 33 -