PRINTER'S NO. 1508
No. 1203 Session of 2001
INTRODUCED BY CONTI, HELFRICK, ORIE, ERICKSON AND TOMLINSON,
NOVEMBER 8, 2001
REFERRED TO AGING AND YOUTH, NOVEMBER 8, 2001
AN ACT
1 Amending the act of August 26, 1971 (P.L.351, No.91), entitled
2 "An act providing for a State Lottery and administration
3 thereof; authorizing the creation of a State Lottery
4 Commission; prescribing its powers and duties; disposition of
5 funds; violations and penalties therefor; exemption of prizes
6 from State and local taxation and making an appropriation,"
7 further providing for annual income limitations for PACE and
8 PACENET; providing for best price for pharmaceuticals;
9 establishing the Prescription Drug Access Clearinghouse
10 Authority and providing for its powers and duties; providing
11 for the Medicare Managed Care Fair Share Program; and
12 establishing the Medicare Participation Fund.
13 The General Assembly of the Commonwealth of Pennsylvania
14 hereby enacts as follows:
15 Section 1. The definition of "maximum annual income" in
16 section 502 of the act of August 26, 1971 (P.L.351, No.91),
17 known as the State Lottery Law, added November 21, 1996
18 (P.L.741, No.134), is amended 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:
1 * * *
2 "Maximum annual income."
3 (1) For PACE eligibility, the term shall mean annual income
4 which shall not exceed [$14,000] $15,000 in the case of single
5 persons nor [$17,200] $18,200 in the case of the combined annual
6 income of persons married to each other. Persons may, in
7 reporting income to the Department of Aging, round the amount of
8 each source of income and the income total to the nearest whole
9 dollar, whereby any amount which is less than 50¢ is eliminated.
10 (2) The maximum annual income amounts under this definition
11 shall be increased each year after the effective date of this
12 paragraph by the percentage, if any, by which the Consumer Price
13 Index for the most recent calendar year exceeds the Consumer
14 Price Index for the immediate preceding calendar year.
15 * * *
16 Section 2. Sections 509, 515 and 519 of the act, added
17 November 21, 1996 (P.L.741, No.134), are amended to read:
18 Section 509. Program generally.
19 The program shall include the following:
20 (1) Participating pharmacies shall be paid within 21
21 days of the contracting firm receiving the appropriate
22 substantiation of the transaction. Pharmacies shall be
23 entitled to interest for payment not made within the 21-day
24 period at a rate approved by the board.
25 (2) Collection of the copayment by pharmacies shall be
26 mandatory.
27 (3) Senior citizens participating in the program are not
28 required to maintain records of each transaction.
29 (4) A system of rebates or reimbursements to eligible
30 claimants for pharmaceutical expenses shall be prohibited.
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1 (5) PACE shall include a participant copayment schedule
2 for each prescription. The copayment may increase or decrease
3 on an annual basis by the average percent change of
4 ingredient costs for all prescription drugs, plus a
5 differential to raise the copayment to the next highest 25¢
6 increment. In addition, the department may approve a request
7 for increase or decrease in the level of copayment based upon
8 the financial experience and projections of PACE and after
9 consultation with the board. The department is prohibited
10 from approving adjustments to the copayment on more than an
11 annual basis.
12 (6) The program shall consist of payments to pharmacies
13 on behalf of eligible claimants for 90% of the average
14 wholesale costs of prescription drugs which exceed the
15 copayment, plus a dispensing fee of at least $3.50 or the
16 dispensing fee established by the department by regulation,
17 whichever is greater.
18 (7) In no case shall the Commonwealth or any person
19 enrolled in the program be charged more than the price of the
20 drug at the particular pharmacy on the date of the sale.
21 (8) Payments for multiple source drugs, meeting the
22 criteria set forth in 42 C.F.R. 447.332 (relating to upper
23 limits for multiple source drugs) and § 1927(e) of the Social
24 Security Act (49 Stat. 620, 42 U.S.C. § 301 et seq.), must
25 not exceed an amount based on the limit per unit which the
26 Health Care Financing Administration has determined to be
27 equal to 150% applied to the lowest price listed, in package
28 sizes of 100 units, unless otherwise noted, in any of the
29 published compendia of cost information of drugs.
30 Section 515. Reimbursement.
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1 [For-profit] Health maintenance organizations, for-profit
2 third-party insurers and not-for-profit prescription plans shall
3 be responsible for any payments made by the program to a
4 providing pharmacy or dispensing physician on behalf of a
5 claimant covered by such a third party.
6 Section 519. The Pharmaceutical Assistance Contract for the
7 Elderly Needs Enhancement Tier.
8 (a) Establishment.--There is hereby established within the
9 department a program to be known as the Pharmaceutical
10 Assistance Contract for the Elderly Needs Enhancement Tier
11 (PACENET).
12 (b) PACENET eligibility.--A claimant with an annual income
13 of not less than [$14,000] $15,000 and not more than [$16,000]
14 $17,000 in the case of a single person and of not less than
15 [$17,200] $18,200 and not more than [$19,200] $20,200 in the
16 case of the combined income of persons married to each other
17 shall be eligible for enhanced pharmaceutical assistance under
18 this section. A person may, in reporting income to the
19 department, round the amount of each source of income and the
20 income total to the nearest whole dollar, whereby any amount
21 which is less than 50¢ is eliminated.
22 (c) Deductible.--Upon enrollment in PACENET, eligible
23 claimants in the income ranges set forth in subsection (b) shall
24 be required to meet [an annual] monthly deductible in
25 unreimbursed prescription drug expenses of [$500] $40 per
26 person. To qualify for the deductible set forth in this
27 subsection the prescription drug must be purchased for the use
28 of the eligible claimant from a provider as defined in this
29 chapter. The department, after consultation with the board, may
30 approve an adjustment in the deductible on an annual basis.
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1 (d) Copayment.--For eligible claimants under this section,
2 the copayment schedule, which may be adjusted by the department
3 on an annual basis after consultation with the board, shall be:
4 (i) eight dollars for noninnovator multiple source
5 drugs as defined in section 702; or
6 (ii) fifteen dollars for single-source drugs and
7 innovator multiple-source drugs as defined in section
8 702.
9 (e) Annual increase in eligibility limits.--The maximum
10 annual income amounts for PACENET eligibility under subsection
11 (b) shall be increased each year after the effective date of
12 this subsection by the percentage, if any, by which the Consumer
13 Price Index for the most recent calendar year exceeds the
14 Consumer Price Index for the immediate preceding calendar year.
15 Section 3. The act is amended by adding chapters to read:
16 CHAPTER 7-A
17 BEST NEGOTIATED PRICE FOR PHARMACEUTICALS
18 Section 701-A. Short title of chapter.
19 This chapter shall be known and may be cited as the Best
20 Price for Pharmaceuticals Act.
21 Section 702-A. Definitions.
22 The following words and phrases when used in this chapter
23 shall have the meanings given to them in this section unless the
24 context clearly indicates otherwise:
25 "A-rated generically equivalent drug." A drug product that
26 the Commissioner of Food and Drugs of the Food and Drug
27 Administration has approved as safe and effective and has
28 determined to be equivalent as listed in "The Approved Drug
29 Products with Therapeutic Equivalence Evaluations" (Food and
30 Drug Administration "Orange Book"), with a specific "A" code
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1 designation only.
2 "Committee." A drug utilization review committee formed in
3 accordance with section 705-A.
4 "DESI drug." A drug product for which Federal financial
5 participation is not available under 42 CFR 441.25 (relating to
6 prohibition on FFP for certain prescribed drugs).
7 "Experimental drug." A drug or product currently being
8 investigated under an investigational or new drug application
9 filed with the Food and Drug Administration to determine its
10 safety and effectiveness.
11 "Licensed prescriber." A person currently licensed under the
12 law of a state to order medication for patient treatment.
13 "PACE." As defined in section 502.
14 "PACENET." As defined in section 502.
15 "Participant." A person who receives pharmacy services from
16 PACE or PACENET.
17 "Pharmaceutical manufacturer." A manufacturer of
18 prescription drugs, insulin, insulin needles or insulin
19 syringes.
20 "Pharmacy." A pharmacy licensed by the Commonwealth.
21 "Pharmacy services." Medically necessary prescription drugs
22 and other pharmacy services furnished directly to eligible
23 participants by pharmacies.
24 "Prescription drug." A drug requiring a prescription in this
25 Commonwealth, insulin, insulin syringes and insulin needles.
26 Experimental drugs or drugs prescribed for wrinkle removal or
27 hair growth are excluded.
28 "Prior authorization." A procedure established by the
29 Secretary of Aging under which the delivery of a pharmacy
30 service is either conditioned upon or delayed by a prior
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1 determination by the Secretary of Aging or his agent that a
2 person is eligible for a particular pharmacy service, that there
3 is medical necessity for a particular pharmacy service or that a
4 particular pharmacy service is suitable to a particular
5 participant.
6 "Private contracted entity." An entity under contract with
7 the Secretary of Aging to administer PACE and PACENET.
8 "Provider." A pharmacy or licensed prescriber who provides
9 pharmacy services to a PACE or PACENET recipient.
10 "Secretary." The Secretary of Aging of the Commonwealth.
11 "Wholesaler." A licensed person or entity within this
12 Commonwealth which legally purchases pharmaceuticals for resale
13 or distribution to persons other than recipients or consumers.
14 Section 703-A. Private contracted entities.
15 (a) Administration.--The secretary shall administer a
16 pharmacy benefits management program for all participants.
17 (b) Request for proposal.--Not later than 90 days from the
18 effective date of this chapter, the secretary shall issue a
19 request for proposal for a three-year contract with four private
20 contracted entities to administer pharmacy services for
21 participants Statewide.
22 (c) Requirements.--The proposal shall require the private
23 contracted entities to perform prospective, concurrent and
24 retrospective drug utilization review and education of providers
25 and participants.
26 (d) Criteria.--The selection process shall include criteria
27 designed to choose the private contracted entities best able to
28 provide a prescription drug benefit program for participants in
29 a way that maximizes savings for the Commonwealth and
30 participants without reducing the quality of prescription drug
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1 benefits now being provided to the participants. The selection
2 process shall also include criteria designed to choose those
3 private contracted entities that offer participants choices
4 among prescription drug benefits with different formulary
5 options and cost-sharing arrangements.
6 (e) Decision.--All participants may choose the private
7 contracted entity of their preference for the delivery of their
8 pharmacy services. Each private contracted entity shall make
9 available information to all potential participants so an
10 informed decision may be made. Participants shall have the
11 option of changing the private contracted entity at their
12 discretion in an open enrollment period every 12 months.
13 (f) Execution.--The contracts under this section shall be
14 executed within six months from the effective date of this
15 chapter.
16 Section 704-A. Private contracted entity functions.
17 (a) Requirements.--The secretary shall require each private
18 contracted entity to:
19 (1) develop and update a formulary of drugs with the
20 advice of its committee utilizing disease and care
21 management. Formulary options may include an open formulary,
22 closed formulary or a modified closed formulary with an
23 opportunity for substitution upon prior authorization;
24 (2) manage a drug formulary;
25 (3) ensure that any pharmacy licensed in this
26 Commonwealth which is willing to accept the terms and
27 conditions of the private contracted entity is eligible to
28 provide pharmacy services according to any regulations in
29 effect on the effective date of this chapter and that
30 regulate pharmacy providers;
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1 (4) negotiate drug rebates with manufacturers;
2 (5) in accordance with the act of November 24, 1976
3 (P.L.1163, No.259), referred to as the Generic Equivalent
4 Drug Law, make provisions for generic substitutions and
5 require pharmacists to disclose any affiliation with a
6 generic manufacturer;
7 (6) provide for prospective drug utilization review
8 which precludes overriding alerts without intervention;
9 (7) provide for prior authorization in accordance with
10 regulations of the secretary;
11 (8) provide for prospective and concurrent and
12 retrospective drug utilization review to ensure that
13 prescriptions are appropriate, medically necessary and not
14 likely to result in adverse medical results and to educate
15 providers and participants and to correct and report
16 misutilization and abuse by licensed prescribers and
17 participants and provide for fraud and abuse audits,
18 coordinating its activities with the secretary to support
19 compliance with applicable laws and regulations;
20 (9) educate providers on disease and care management;
21 (10) provide educational materials for participants on
22 disease and care management;
23 (11) seek best price from pharmaceutical manufacturers
24 under prevailing private market conditions;
25 (12) negotiate with drug manufacturers to maximize
26 savings to the Commonwealth in a way that does not reduce the
27 quality of existing prescription drug services for
28 participants;
29 (13) adjudicate claims through a Statewide point-of-sale
30 electronic verification and claims processing system which
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1 will allow for intervention upon receipt of a prospective
2 drug utilization review alert and will allow for an emergency
3 supply of prescribed medication in the event of equipment
4 failures;
5 (14) create an audit and recoupment system for providers
6 and participants, and third-party medical resources; and
7 (15) reimburse pharmacies on a fee-for-service basis.
8 (b) Formulary.--The private contracted entities, with the
9 advice of their committees, shall prepare a formulary of drugs
10 and, in accordance with the Generic Equivalent Drug Law, include
11 generically equivalent drugs to be used in PACE or PACENET. In
12 evaluating drugs for the formulary, each private contracted
13 entity shall consider their therapeutic efficacy and take into
14 consideration all discounts, rebates or other concessions
15 provided by manufacturers. The formulary must indicate that
16 drugs will not be reimbursed if they are experimental or on the
17 Drug Efficacy Study Implementation list (DESI) prepared by the
18 Health Care Financing Administration. The formulary shall
19 provide for a medical exception for a drug on the latter list
20 upon a handwritten declaration of its necessity on the
21 prescription by the treating prescriber.
22 (c) Conflicts.--In developing the formulary, the private
23 contracted entity shall demonstrate how it will avoid a conflict
24 of interest with any pharmaceutical manufacturer, wholesaler or
25 drug store chain that holds an interest in the private
26 contracted entity or in which the private contracted entity has
27 an interest and shall indicate how it will prevent the sharing
28 of nonpublic information concerning other drug manufacturers'
29 bids, proposals, contracts, prices, rebates or discounts.
30 (d) Considerations.--In preparing and managing the
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1 formulary, the private contracted entity shall ensure that they
2 will consider all discounts, rebates or other concessions
3 offered by manufacturers, drug chains or wholesale drug
4 companies. In no event shall such considerations exclude a drug
5 recommended for inclusion by the committee in its
6 recommendations regarding the clinical basis of the formulary.
7 No formulary or other restriction affecting payment for a drug
8 by the program shall be adopted if it is not supported by the
9 clinical recommendations of the committee.
10 (e) Continuation.--Upon making changes to the formulary the
11 private contracted entities shall allow a participant to
12 continue to receive a drug which is part of an ongoing treatment
13 regimen until such time as the prescriber evaluates the medical
14 need for the specific drug and determines the clinical
15 suitability of a change of therapy. In no event shall a
16 formulary change result in denial of a patient's access to
17 covered care by denial of payment or mandatory switch of therapy
18 as long as previously authorized refills remain for the
19 prescription.
20 (f) Nontermination.--The private contracted entities shall
21 not terminate any contract currently in existence with any
22 agency or program which cannot be favorably renegotiated.
23 Section 705-A. Drug utilization review committees.
24 (a) Requirement.--The secretary shall require each private
25 contracted entity to form a drug utilization review committee.
26 (b) Composition.--Each committee shall be comprised of nine
27 members, five of whom shall be actively practicing physicians
28 licensed in this Commonwealth and four of whom shall be actively
29 practicing pharmacists licensed in this Commonwealth. None of
30 the members may hold a 5% or greater interest in the private
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1 contracted entity, its parent company or companies, or in a
2 company or companies owned by the private contracted entity.
3 (c) Functions.--
4 (1) The committees shall develop a system that provides
5 prospective, concurrent and retrospective review of drug
6 utilization to ensure that pharmacy services provided are or
7 were appropriate and medically necessary and not likely to
8 result in adverse medical results. The review program shall
9 be designed to educate licensed prescribers and pharmacists
10 as provided in paragraph (4) on the proper utilization of
11 drugs in disease and care management. In reviewing drug
12 utilization, the committee shall assess data on drug use
13 against predetermined standards consistent with the American
14 Hospital Formulary Service Drug Information, the United
15 States Pharmacopoeia-Drug Information, American Medical
16 Association Drug Evaluations or peer-reviewed medical
17 literature.
18 (2) The committees shall develop a system to utilize the
19 compendia and literature referred to in paragraph (1) as its
20 source of standards to screen for potential drug problems
21 before a prescription is filled or delivered to a
22 participant. Prospective drug use review shall include
23 consultation with participants by pharmacists.
24 (3) The secretary and the private contracted entities
25 shall provide data to the committees, through mechanized drug
26 claims processing and retrieval systems, for the ongoing
27 periodic examination of claims data and other records in
28 order to identify patterns of fraud, abuse, gross overuse or
29 inappropriate or medically unnecessary care among licensed
30 prescribers, pharmacists and participants or associated with
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1 specific drugs or groups of drugs. The committees shall, on
2 an ongoing basis, assess data on drug use against explicit
3 predetermined standards using the compendia and literature
4 referred to in this subsection and to introduce, as
5 necessary, remedial strategies to improve the quality of care
6 and to conserve program funds or patient expenditures.
7 (4) The committees shall, using drug use data on common
8 therapy problems, develop active and ongoing educational
9 outreach programs to disseminate information to providers on
10 common drug therapy problems with the aim of improving
11 prescribing or dispensing practices. The educational programs
12 shall include interventions for providers targeting therapy
13 problems or individuals identified in the course of
14 retrospective drug reviews. The committees shall reevaluate
15 interventions from time to time to determine if the
16 interventions were successful in improving the quality of
17 drug therapy and shall make modifications as necessary.
18 Intervention programs shall include:
19 (i) information dissemination sufficient to ensure
20 the ready availability to providers of information
21 concerning the committees' duties, powers and basis for
22 their standards;
23 (ii) written, oral or electronic reminders
24 containing patient-specific and/or drug-specific
25 information and suggested changes in prescribing or
26 dispensing practices, communicated in a manner designed
27 to ensure the privacy of patient-related information;
28 (iii) use of communication between health care
29 professionals who are experts in rational drug therapy
30 and selected prescribers and pharmacists who have been
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1 targeted for educational intervention, including
2 discussion of optimal prescribing, dispensing or pharmacy
3 care practices and follow-up communications; and
4 (iv) intensified review or monitoring of selected
5 prescribers or dispensers.
6 (5) The committees shall, using practices and formats
7 generally accepted in the professional practice of pharmacy,
8 develop recommendations for the structure and specific
9 products to be included on the formulary. The recommendations
10 shall be appropriate for the clinical needs of the enrollee
11 population and shall be entirely independent of any and all
12 financial considerations that may be relevant to the
13 program's implementation of the formulary recommendations.
14 The committee's recommendations shall be consistent with the
15 following:
16 (i) All new drugs shall be available without
17 restriction upon being approved by the Federal Food and
18 Drug Administration and made available in the marketplace
19 until such time as a committee completes its clinical
20 evaluation of the relative place of the new drug on the
21 formulary. A drug is considered "new" for purposes of
22 this subparagraph if the drug is a newly released drug or
23 compound that has never before been marketed or a drug
24 that has been approved by the Federal Food and Drug
25 Administration for a new indication or treatment use. A
26 drug is "available" in the marketplace for purposes of
27 this subparagraph if the drug can be readily obtained in
28 commercial quantities by pharmacies in this Commonwealth.
29 (ii) No drug may be recommended for exclusion from
30 the formulary until is has been included for a period of
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1 at least 12 months to provide a committee with data
2 regarding its use and potential misuse in the enrollee
3 population.
4 (iii) Any recommendation by a committee that access
5 to a drug be restricted either by exclusion from the
6 formulary or by prior authorization that limits
7 conditions of use for a drug shall be based on committee
8 analysis of retrospective data using the criteria to
9 identify a drug whose use is likely not to be medically
10 appropriate or medically necessary or likely to result in
11 adverse medical outcomes in the enrollee population.
12 (6) A committee shall issue all recommendations
13 regarding the program formulary in writing for at least a 30-
14 day period of public inspection before they are submitted to
15 the program for adoption and implementation.
16 (7) Any interested party, including, but not limited to,
17 physicians, pharmacists, beneficiaries and manufacturers or
18 distributors of the drug proposed to be restricted may submit
19 additional clinical information relevant to determining the
20 formulary status of the drug. All relevant clinical
21 information shall be considered by a committee before the
22 recommendation is finalized and submitted to the program.
23 (8) Any interested party, including, but not limited to,
24 physicians, pharmacists, beneficiaries and manufacturers or
25 distributors of the drug proposed to be restricted may
26 request an opportunity to make an oral presentation to the
27 committee. Upon timely receipt of a request for an oral
28 hearing, a committee shall schedule a hearing and provide any
29 interested party with an opportunity to express clinical
30 concerns related to the proposed formulary status of such
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1 drug. A committee shall consider the record of any hearing
2 prior to submitting its formulary recommendation to the
3 program.
4 (d) Misutilization.--Should licensed prescribers or
5 participants continue to misutilize drugs or abuse the system, a
6 committee shall provide information to the secretary for
7 corrective action. In the case of prescribers, a committee shall
8 submit a report and recommendations to the secretary for
9 appropriate action. The secretary shall inform the private
10 contracted entity and the appropriate Commonwealth licensing
11 body of any final administrative sanctions.
12 (e) Nonliability.--Any person rendering service as a member
13 of a committee for this program shall not be liable for any
14 civil damages as a result of any acts or omissions in rendering
15 the service as a member of any such committee except any acts or
16 omissions intentionally designed to harm or any grossly
17 negligent acts or omissions which result in harm to the person
18 receiving such service.
19 (f) Report.--The secretary shall require the committees to
20 provide an annual report describing the committees' activities,
21 including the nature and scope of the prospective, concurrent
22 and retrospective drug reviews, a summary of interventions used,
23 an assessment of the impact of these educational interventions
24 on quality of care and an estimate of the cost savings generated
25 as a result of the program.
26 Section 706-A. Copayments.
27 Except for services which are excluded under the
28 Commonwealth's medical assistance program, a participant is
29 liable for a copayment in an amount set by the secretary, and
30 collection of the copayment by pharmacies shall be mandatory.
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1 The amount of the copayment paid to pharmacy providers by
2 participants shall be deducted from the Commonwealth's fee to
3 pharmacy providers.
4 Section 707-A. Administration of contract.
5 (a) Secretary.--The secretary shall administer the contract
6 with the private contracted entities and shall promulgate rules
7 and regulations, as necessary, to carry out the provisions of
8 this chapter.
9 (b) Data.--The secretary and the private contracted entities
10 shall provide data necessary to the committees to develop
11 provider prescribing profiles and participant utilization
12 profiles to perform utilization review and disease and care
13 management through the coordination of health care and pharmacy
14 services to ensure that participants are receiving and complying
15 with appropriate therapies.
16 Section 708-A. Drug prior authorization review process.
17 Any drug prior authorization program shall meet all of the
18 following conditions:
19 (1) The program shall provide telephone, fax or other
20 electronically transmitted authorization or denial within 24
21 hours after receipt of the prior authorization request.
22 (2) In an emergency situation, including a situation in
23 which a response to a prior authorization request is
24 unavailable while the patient waits in the pharmacy, a 72-
25 hour supply of the prescribed drug shall be dispensed and
26 paid for by the program.
27 (3) A prescription will only be changed upon the orders
28 of the prescriber.
29 Section 709-A. Studies required.
30 (a) General.--
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1 (1) The secretary shall select a competent contractor to
2 analyze and compare expenditures, utilization rates and
3 utilization patterns for pharmacy services provided to PACE
4 or PACENET.
5 (2) To effectuate the purposes of this chapter, all
6 participating pharmacy providers, manufacturers, drug chains
7 and wholesalers shall, as a condition of participation, be
8 required to cooperate with the secretary in preparing the
9 required report.
10 (3) The secretary shall report preliminary findings to
11 the President pro tempore of the Senate and the Speaker of
12 the House of Representatives by September 30, 2002. The
13 secretary shall report finally on June 30, 2004.
14 (b) Report.--The Legislative Budget and Finance Committee
15 shall evaluate and prepare a report to be submitted no later
16 than June 30, 2004, to the General Assembly on the best price
17 for pharmaceuticals program under this chapter.
18 Section 710-A. Applicability of chapter.
19 This chapter shall apply to PACE and PACENET.
20 Section 711-A. Prohibited activities.
21 It shall be unlawful for any individual, partnership or
22 corporation to solicit, receive, offer or pay any kickback,
23 bribe or rebate in cash or in kind from or to any person in
24 connection with the furnishing of services under this chapter.
25 Section 712-A. Expiration of chapter.
26 This chapter shall expire December 31, 2004, unless
27 reauthorized by the General Assembly.
28 CHAPTER 7-B
29 PRESCRIPTION DRUG ACCESS CLEARINGHOUSE AUTHORITY
30 Section 701-B. Definitions.
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1 The following words and phrases when used in this chapter
2 shall have the meanings given to them in this section unless the
3 context clearly indicates otherwise:
4 "Authority." The Prescription Drug Access Clearinghouse
5 Authority established by this chapter.
6 "Board." The board of directors of the Prescription Drug
7 Access Clearinghouse Authority.
8 "Discount plan." A prescription drug discount plan.
9 "Discount program." The Prescription Drug Discount Program
10 under section 707-B.
11 "PACE." As defined in section 502.
12 "PACENET." As defined in section 502.
13 Section 702-B. Establishment and duties of authority.
14 (a) Authority established.--The Prescription Drug Access
15 Clearinghouse Authority is hereby established to assist citizens
16 with accessing prescription drug services at affordable prices.
17 (b) Duties of authority.--The authority shall:
18 (1) Disseminate information and advertise programs that
19 will assist citizens with purchasing prescription drugs at a
20 lower cost.
21 (2) Provide specific assistance to State residents to
22 facilitate greater participation in the PACE and PACENET
23 programs.
24 (3) Assist State residents with enrolling in programs
25 such as PACE, PACENET and Medicaid and that may provide for
26 prescription drug coverage for which they may be eligible.
27 (4) Assist residents of this Commonwealth with assessing
28 discount programs or insurance programs that may be of
29 benefit to them.
30 (5) Perform studies to identify additional strategies
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1 that may help improve access by Commonwealth residents to
2 prescription drugs and provide appropriate reports to the
3 Governor and General Assembly.
4 (6) Serve as a general resource responsible for
5 promoting the interest of residents of this Commonwealth on
6 prescription drug access issues.
7 Section 703-B. Authority board of directors.
8 (a) Membership.--The authority shall be governed by a 13-
9 member board of directors as follows:
10 (1) Four members appointed by the Governor, one of whom
11 shall be a consumer representative and one of whom shall have
12 knowledge of pharmaceutical benefit programs.
13 (2) Two members appointed by the Majority Leader of the
14 Senate, one of whom shall be a practicing pharmacist.
15 (3) Two members appointed by the Minority Leader of the
16 Senate, one of whom shall have knowledge of group procurement
17 practices.
18 (4) Two members appointed by the Majority Leader of the
19 House of Representatives, one of whom shall have experience
20 in operations of group health plans.
21 (5) Two members appointed by the Minority Leader of the
22 House of Representatives, one of whom shall represent
23 individuals in this Commonwealth who are elderly or have
24 disabilities.
25 (6) The executive director of the authority, to be
26 selected by the other members of the board, who shall serve
27 as an ex officio, voting member of the board.
28 (b) Executive director.--The executive director of the
29 authority shall be the chief executive officer of the authority
30 and presiding officer of the board of directors.
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1 (c) Compensation.--Except for the executive director,
2 members of the board shall receive no compensation for their
3 services but shall be reimbursed for their necessary expenses
4 incurred while serving as board members.
5 (d) Vacancies.--A vacancy on the board shall be filled by
6 the appointing authority for the balance of the term.
7 (e) Terms of members.--
8 (1) Initial terms of appointed members shall be as
9 follows:
10 (i) The Governor shall appoint one member for two
11 years.
12 (ii) The Majority Leader of the Senate shall appoint
13 one member for two years.
14 (iii) The Minority Leader of the Senate shall
15 appoint one member for two years.
16 (iv) The Majority Leader of the House of
17 Representatives shall appoint one member for two years.
18 (v) The Minority Leader of the House of
19 Representatives shall appoint one member for two years.
20 (vi) The remaining members shall be appointed for
21 four years.
22 (2) Each subsequent term of a member shall be for four
23 years and until a successor is appointed and qualified.
24 Except for the executive director, members may serve only two
25 consecutive full terms. Any member of the board may be
26 removed by the Governor or by a majority of the other board
27 members for malfeasance in office, failure to attend
28 regularly scheduled meetings, or for any cause that renders
29 the member incapable of for unfit to discharge the duties of
30 a director.
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1 (f) Meetings.--Meetings of the board shall be subject to 65
2 Pa.C.S. Ch. 7 (relating to open meetings) and the act of June
3 21, 1957 (P.L.390, No.212), referred to as the Right-to-Know
4 Law. A quorum for a meeting shall be a majority of the total
5 membership of the board. Any action of the board of directors
6 requires the affirmative vote of a majority of a quorum.
7 (g) Conflicts of interest.--No part of the revenues or
8 assets of the authority may inure to the benefit of, or be
9 distributed to, its board of directors or officers or any other
10 private person or entity. Any member of the board of directors
11 and any employee or other agent or advisor of the authority, who
12 has a direct or indirect interest in a pharmaceutical
13 manufacturer, pharmacy, discount program, insurance program or
14 in any contract or transaction with the authority, must disclose
15 this interest to the authority. If a board member has an
16 interest in a transaction, then the member may not participate
17 in the deliberations or voting on such a transaction. The status
18 of the authority's chief executive officer, in and of itself,
19 does not constitute a conflicting interest.
20 (h) Personnel.--A State employee who elects to become an
21 employee of the authority shall receive full credit from the
22 authority for sick leave and annual leave accrued while employed
23 by the State. The authority may establish and administer its own
24 personnel program, including a wage and benefit structure for
25 authority employees. Authority employees may participate in and
26 be eligible for enrollment in the Commonwealth retirement system
27 established pursuant to 71 Pa.C.S. Pt. XXV (relating to
28 retirement for State employees and officers).
29 Section 704-B. General powers of authority.
30 The authority shall have the general powers of an independent
20010S1203B1508 - 22 -
1 corporate entity, including the following:
2 (1) To have the duties, privileges, immunities, rights,
3 powers, liabilities and obligations of a body corporate and
4 politic.
5 (2) To enroll residents in State programs offering a
6 prescription drug benefit after entering into a memorandum of
7 understanding with the relevant agency regarding coordination
8 of enrollment procedures.
9 (3) To provide counseling and guidance to residents of
10 this Commonwealth regarding existing Federal, State or
11 private programs, including manufacturer assistance programs,
12 that may be available to help address individual needs.
13 (4) To evaluate or rate prescription drug programs,
14 insurance programs and discount programs according to
15 criteria determined by the authority in advance, so long as
16 the authority deems the evaluation or ratings useful to
17 members of the public.
18 (5) To advertise the availability of any public or
19 private program offering prescription drug benefits to
20 members of the public in accordance with criteria the
21 authority determines will advance the public's ability to
22 acquire quality prescription drugs at lower cost.
23 (6) To enter into any contract, agreement or other
24 instrument necessary or convenient in the exercise of the
25 powers and functions of the authority that are not
26 inconsistent with the laws of this Commonwealth.
27 (7) To manage its own finances and deposit funds into
28 independent banking accounts.
29 (8) To contract for and to accept any grants and loans
30 of funds, property or any other aid in any form from the
20010S1203B1508 - 23 -
1 Federal or State government sources, or any other source, or
2 any combination thereof.
3 (9) To appoint agents, employees and professional and
4 business advisers as may from time to time be necessary in
5 its judgment to accomplish the purposes of the authority and
6 to fix the compensation of its officers, employees, agents
7 and advisers, and to establish the powers and duties of its
8 agents, officers, employees and other persons contracting
9 with the authority.
10 Section 705-B. Construction.
11 Nothing in this chapter shall be construed as a restriction
12 or limitation upon any other powers which the authority might
13 otherwise have under any other law of this Commonwealth.
14 Section 706-B. Exemption from taxation.
15 Any real property acquired, maintained and operated by the
16 authority under this act shall not be subject to taxation by any
17 political subdivision or local taxing authority. The authority
18 is exempt from sales and use taxes imposed under Article II of
19 the act of March 4, 1971 (P.L.6, No.2), known as the Tax Reform
20 Code of 1971, for purchases acquired and used for its public
21 purposes.
22 Section 707-B. Availability of discount programs.
23 (a) General rule.--The authority shall administer a
24 prescription drug discount program. The authority shall
25 establish public-private partnerships using a process to
26 identify multiple-private sector prescription drug discount
27 plans that will accept enrollment from any eligible resident of
28 this Commonwealth; provide enrollees with enhanced access to
29 prescription drugs; and engage in ongoing competition for
30 enrollees on the basis of access, cost and quality of service
20010S1203B1508 - 24 -
1 and product offered.
2 (b) Contract standards.--The authority shall issue requests
3 for proposals for participation by private sector prescription
4 drug discount plans on an annual or biannual basis as necessary,
5 to ensure that residents of this Commonwealth have access to
6 multiple plans throughout this Commonwealth.
7 (c) Eligibility.--Any resident of this Commonwealth is
8 eligible for the discount program under this chapter.
9 (d) Subsidy.--The Commonwealth shall subsidize
10 administrative costs associated with the discount program,
11 including the authority's efforts to actively endorse and
12 promote the selected discount plans. The Commonwealth is not
13 responsible for subsidizing the direct cost of prescription
14 drugs under this discount program.
15 (e) Out-of-pocket costs.--Enrollees in the discount program
16 are responsible for all costs of prescription drugs that they
17 may purchase at discounted rates as available under competing
18 prescription drug plans participating in the discount program.
19 (f) Enrollment.--Participation in the discount program is
20 contingent upon enrollment and selection of a discount plan. The
21 authority shall establish an annual open enrollment period and
22 may prevent residents from changing plans during the course of a
23 year unless a discount plan's contract is revoked or the
24 discount plan becomes unable to deliver services.
25 (g) Participation.--Participation in the discount program is
26 voluntary. Enrollees are permitted to purchase prescription
27 drugs outside of the discount program at any time.
28 (h) Enrollment fee.--The authority may authorize discount
29 plans to collect a modest enrollment fee up to $25 from each
30 individual enrolling in the discount plans on a sliding fee
20010S1203B1508 - 25 -
1 schedule.
2 (i) Consumer choice.--Eligible residents shall be given a
3 choice of discount plans in which to participate. The authority
4 may, at its discretion, create categories of plans to address
5 different consumer needs.
6 (j) Nonexclusivity.--Residents of this Commonwealth may
7 enroll in a discount plan regardless of whether they have other
8 prescription drug insurance coverage or other coverage.
9 (k) Plan selection.--Subject to public notice and comment
10 and in consultation with industry representatives, the authority
11 shall issue requests for proposals from discount plans, such as
12 discount card programs, pharmacy chain discount programs,
13 pharmaceutical benefit managers and other qualifying entities
14 capable of delivering lower prices to residents of this
15 Commonwealth. In designing the criteria for evaluating the
16 responses, the authority shall take into account the quality of
17 the services to be provided and the savings generated for
18 residents of this Commonwealth. The authority may take into
19 account other factors, including geographic coverage, product
20 differentiation, the need to target different populations within
21 this Commonwealth, mail order service, coverage of rural areas
22 and other factors as determined by the authority. If the
23 authority receives multiple qualifying proposals in a category,
24 the authority must approve at least two contractors in each
25 category, but may, at its sole discretion, limit the maximum
26 number of contractors in each category.
27 (l) Applicability.--The discount program applies to
28 medically necessary prescription drugs and biologicals provided
29 to patients in outpatient pharmacies. Under all circumstances,
30 there must be at least two drugs equally available to enrollees
20010S1203B1508 - 26 -
1 in each therapeutic class or subclass of pharmaceutical agents.
2 The authority, through the contracting process, shall ensure
3 adequate access to medically necessary prescription drugs.
4 CHAPTER 7-C
5 MEDICARE MANAGED CARE FAIR SHARE PROGRAM
6 Section 701-C. Short title of chapter.
7 This chapter shall be known and may be cited as the Medicare
8 Managed Care Fair Share Program.
9 Section 702-C. Declaration of policy.
10 The General Assembly finds and declares as follows:
11 (1) The PACE program provides prescription drug coverage
12 to this Commonwealth's low-income seniors who do not qualify
13 for Medicaid.
14 (2) Presently, out of the 11 Medicare managed care
15 providers who operate in this Commonwealth, one Medicare
16 managed care provider does not provide prescription drug
17 coverage to its Medicare beneficiaries.
18 (3) A total of 43,300 low-income Medicare beneficiaries
19 who are enrolled in Medicare managed care receive their
20 prescription drug benefit through the State-administered PACE
21 program.
22 (4) A Medicare managed care provider who does not
23 provide prescription drug coverage to its Medicare enrollees
24 benefits from the Commonwealth's provision of a
25 pharmaceutical benefit through the PACE program.
26 (5) Prescription drugs are a cost-effective therapy that
27 has been shown to offer significant savings in other aspects
28 of health care, particularly in the hospital and urgent-care
29 setting.
30 (6) Medicare managed care providers who directly benefit
20010S1203B1508 - 27 -
1 in terms of cost savings as a result of healthier seniors who
2 participate in the PACE program should be required to
3 contribute their fair share of costs presently borne by the
4 Commonwealth in its administration of the PACE program.
5 Section 703-C. Definitions.
6 The following words and phrases when used in this chapter
7 shall have the meanings given to them in this section unless the
8 context clearly indicates otherwise:
9 "Contribution amount." The amount due to the Commonwealth
10 under the Medicare Managed Care Fair Share Program.
11 "Covered Medicare manage care provider." A managed care
12 entity, plan or provider that participates in the Medicare
13 program and does not provide outpatient prescription drug
14 coverage as a covered benefit to its Medicare beneficiaries.
15 "Department." The Department of Aging of the Commonwealth.
16 "Fund." The Medicare Participation Fund established under
17 section 705-C.
18 "Program." The Medicare Managed Care Fair Share Program
19 established under this chapter.
20 Section 704-C. Program administration.
21 The program shall be administered by the department. The
22 department shall promulgate and adopt rules and regulations as
23 are necessary to implement the program in a cost-effective
24 manner and that are consistent with the purposes outlined in
25 this chapter.
26 Section 705-C. Contribution amount and fund.
27 (a) Fund.--There is hereby established a separate account in
28 the State Treasury to be known as the Medicare Participation
29 Fund. Moneys collected from covered Medicare managed care
30 providers under subsection (b) shall be deposited in the fund.
20010S1203B1508 - 28 -
1 All moneys in the fund are continuously appropriated to the
2 department solely for purposes of the PACE program. The
3 department shall collect the contributions under subsection (b)
4 on a quarterly basis.
5 (b) Collection of contribution.--The department shall
6 collect a contribution amount from covered Medicare managed care
7 providers in an amount equal to a $20 charge per patient per
8 month for each patient who is:
9 (1) enrolled and participates in a covered Medicare
10 managed care provider plan; and
11 (2) enrolled and participates in the PACE program.
12 (c) Adjustments.--The department may consider adjustments to
13 the contribution amount on an annual basis.
14 Section 706-C. Annual report.
15 The department shall prepare and submit annually a report to
16 the Governor and General Assembly which shall include the
17 department's findings and recommendations relating to the
18 program's cost and effectiveness, including recommended
19 adjustments to the contribution amount.
20 Section 4. This act shall take effect in 60 days.
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