PRINTER'S NO. 637
No. 599 Session of 1989
INTRODUCED BY ANDREZESKI, LYNCH, BODACK, WILLIAMS, STOUT AND
BELAN, FEBRUARY 21, 1989
REFERRED TO AGING AND YOUTH, FEBRUARY 21, 1989
AN ACT
1 Authorizing the Department of Health to establish a system for
2 paying pharmaceutical costs of chronically ill children; and
3 providing penalties for violations.
4 The General Assembly of the Commonwealth of Pennsylvania
5 hereby enacts as follows:
6 Section 1. Short title.
7 This act shall be known and may be cited as the Chronically
8 Ill Children's Pharmaceutical Payment Act.
9 Section 2. Legislative findings.
10 The General Assembly finds that:
11 (1) Despite great achievements, the Commonwealth of
12 Pennsylvania is still falling short of what is necessary to
13 promote the good health and well-being of the children of
14 this Commonwealth.
15 (2) Children must have healthy bodies if they are to
16 grow and develop into normal, healthy and productive members
17 of our society.
18 (3) Poor children are more likely to become ill due to
1 insufficient medical attention.
2 (4) Poverty level families and those families just above
3 poverty level and their chronically ill children have an
4 immediate need for pharmaceutical payments to alleviate some
5 of the high cost of medication.
6 Section 3. Definitions.
7 The following words and phrases when used in this act shall
8 have the meanings given to them in this section unless the
9 context clearly indicates otherwise:
10 "Board." The Chronically Ill Children's Pharmaceutical
11 Payment Board.
12 "Chronically ill children." Residents of this Commonwealth
13 18 years of age or younger who suffer from a chronic disease.
14 "Department." The Department of Health of the Commonwealth.
15 "Eligible claimant." A chronically ill child whose parent's
16 or legal guardian's income is less than the maximum annual
17 income and who is not otherwise qualified for public assistance
18 under the act of June 13, 1967 (P.L.31, No.21), known as the
19 Public Welfare Code.
20 "Income." All income from whatever source derived,
21 including, but not limited to, salaries, wages, bonuses,
22 commissions, income from self-employment, alimony, support
23 money, cash public assistance and relief, the gross amount of
24 any pensions or annuities (including railroad retirement
25 benefits), all benefits received under the Social Security Act
26 (Public Law 74-271, 42 U.S.C. § 301 et seq.) (except medicare
27 benefits), all benefits received under State unemployment
28 insurance laws and veterans' disability payments, all interest
29 received from the Federal Government or any state government or
30 any instrumentality or political subdivision thereof, realized
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1 capital gains, rentals, workmen's compensation and the gross
2 amount of loss of time insurance benefits, life insurance
3 benefits and proceeds (except the first $5,000 of the total of
4 death benefits payments) and gifts of cash or property (other
5 than transfer by gift between members of a household) in excess
6 of a total value of $300. The term does not include surplus food
7 or other relief in any kind supplied by a government agency, nor
8 does it include a property tax rebate.
9 "Maximum annual income." An amount of annual income as
10 determined by the department. The amount shall be between
11 $12,000 and $15,000 in the case of a single parent or legal
12 guardian, and between $15,000 and $20,000 in the case of the
13 combined annual income of married parents or guardians.
14 "Pharmacy." A pharmacy licensed by the Commonwealth.
15 "Prescription drug." All legend drugs, insulin, insulin
16 syringes and insulin needles. The term does not include
17 experimental drugs.
18 "Private contractor." A person, partnership or corporate
19 entity who designs and submits a proposal to provide
20 pharmaceutical assistance as established under the provisions of
21 this act.
22 "Program." The Chronically Ill Children's Pharmaceutical
23 Payment Plan as established by this act.
24 Section 4. Responsibilities of department.
25 (a) Determination of eligibility.--The department shall
26 adopt regulations relating to the determination of eligibility
27 of prospective claimants and providers, including dispensing
28 physicians, and the determination and elimination of program
29 abuse. The department shall have the power to declare ineligible
30 any claimant on whose behalf the established prescription plan
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1 is abused. The department shall have the power to investigate
2 cases of suspected provider or recipient fraud.
3 (b) Reduced assistance.--Any eligible claimant, not
4 otherwise qualified for payment of drugs under any public
5 assistance program, whose prescription drug costs are covered in
6 part by any other plan of assistance or insurance may be
7 required to receive reduced assistance under the provisions of
8 this act at the discretion of the department.
9 (c) Request for proposal.--The department shall prepare a
10 request for proposal for the purpose of providing pharmaceutical
11 assistance for chronically ill children. The request for
12 proposal shall require private contractors to submit a three-
13 year proposal not to exceed $300,000,000. Upon the adoption of
14 the General Appropriation Act of 1989, the Department of Revenue
15 shall transmit the appropriated funds in the General Fund to the
16 State Treasurer to be deposited in the Chronically Ill
17 Children's Fund, to be created by the State Treasurer to fund
18 the operations of the program. Funds not expended in the fiscal
19 year in which they were appropriated shall not lapse and shall
20 be available for use in the following fiscal year.
21 (d) Program criteria.--The program shall include the
22 following criteria:
23 (1) Participating pharmacies are to be paid within 21
24 days of receipt by the contracting firm of the appropriate
25 substantiation of the transaction. Pharmacies shall be
26 entitled to interest for payment not made within the 21-day
27 period at a rate approved by the board.
28 (2) Collection of the copayment of the pharmacies shall
29 be mandatory.
30 (3) Parents and guardians participating in the program
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1 shall not be required to maintain records of each
2 transaction.
3 (4) A system of rebates or reimbursements to the
4 participant for pharmaceutical expenses is prohibited.
5 (5) The system established shall include a participant
6 copayment schedule of $4 for each prescription for the first
7 year of the contract. The copayment shall increase or
8 decrease on an annual basis by the average percent change of
9 ingredient costs for all prescription drugs, plus a
10 differential to raise the copayment to the next highest 25¢
11 increment. In addition, the department may approve a request
12 for increase or decrease in the level of copayment based upon
13 the financial experience and projections of the program and
14 after consultation with the board. The department shall not
15 approve adjustments to the copayment on more than a
16 semiannual basis.
17 (6) The program shall consist of payments to pharmacies
18 on behalf of eligible claimants for the average wholesale
19 cost of legend drugs, insulin, insulin syringes and insulin
20 needles which exceed the copayment and a dispensing fee of at
21 least $2.50 or the dispensing fee required by the Department
22 of Public Welfare under its Medical Assistance Program under
23 the act of June 13, 1967 (P.L.31, No.21), known as the Public
24 Welfare Code, whichever is greater. In no case shall the
25 Commonwealth be charged more than the price of the drug at
26 the particular pharmacy on the date of the sale. For the
27 purpose of this act, the eligible claimant shall be liable to
28 pay the difference between the brand-name drug and the
29 generically equivalent drug as approved under the provisions
30 of the act of November 24, 1976 (P.L.1163, No.259), referred
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1 to as the Generic Equivalent Drug Law. Only the physician may
2 prescribe a nongeneric medication.
3 (7) Prescription benefits for any single prescription
4 shall be limited to a 30-day supply of the prescription drug
5 or 100 doses, whichever is less, except that, in the case of
6 acute drugs, the limitation shall be a 15-day supply.
7 (8) Experimental drugs are to be excluded from the
8 program.
9 (9) The department may not enter into a contract with a
10 private contractor for an exclusive mail order system for the
11 delivery of prescription drugs under this program. Only mail
12 order pharmacy services provided by pharmacies which are
13 licensed by the Commonwealth and which have their principal
14 place of business within this Commonwealth may participate as
15 providers under the program. Within a period of six months
16 following the effective date of this act, the department
17 shall develop and promulgate specific regulations governing
18 the practice of mail order pharmacy and other enrolled
19 providers, to include the following minimum standards of
20 practice to ensure the health, safety and welfare of program
21 participants:
22 (i) The appropriate method or methods by which such
23 pharmacies shall verify the identity of the program
24 recipient and the authenticity of prescriptions received.
25 (ii) The appropriate method or methods by which such
26 pharmacies shall mail or deliver prescription drugs to
27 program recipients, which method or methods shall ensure,
28 to the maximum extent possible, that the intended program
29 recipient is the actual ultimate recipient of any
30 prescription dispensed by the pharmacy.
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1 (iii) The appropriate method or methods by which
2 such pharmacies shall communicate with program
3 participants in emergency situations.
4 (10) The program shall be in place and operational
5 within 90 days of the effective date of the contract.
6 (e) Reports by department.--The department shall maintain
7 monthly statistical records on the program to effectively
8 determine the cost of the program, level of participation and
9 any patterns of unusual drug usage. Based on this information,
10 the department shall submit a report every three months to the
11 Aging and Youth Committee in the Senate, to the Health and
12 Welfare Committee in the House of Representatives and to the
13 board. The quarterly report shall contain, but not be limited
14 to, all information relating to the number of persons served by
15 the program and their counties of residence, a breakdown of the
16 numbers and kinds of pharmaceuticals used, the cost of
17 prescriptions and an estimate of actual expenses incurred by
18 pharmacists participating in the program.
19 (f) Adjustments to program.--The department is authorized to
20 enter into discussions with the private contractor pursuant to
21 section 7(c).
22 Section 5. Prescription drug education program.
23 The department, in cooperation with the Department of Public
24 Welfare, shall develop and implement a Statewide prescription
25 drug education program designed to inform parents and guardians
26 of the dangers of prescription drug abuse and misuse. The
27 prescription drug education program shall include, but not be
28 limited to, information concerning the following:
29 (1) The hazards of prescription drug overdose.
30 (2) The potential dangers of mixing prescription drugs.
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1 (3) The danger of retaining unused prescription drugs
2 after the need to take them no longer exists.
3 (4) The necessity to question physicians and pharmacists
4 carefully concerning the effects of taking prescription
5 drugs.
6 (5) The advisability of maintaining a prescription drug
7 profile or other record of prescription drug dosage and
8 frequency of dosage.
9 (6) The desirability of advising family members of the
10 types of proper dosage of prescription drugs which are being
11 taken.
12 (7) The dangers of taking prescription drugs in excess
13 of prescribed dosages.
14 (8) The need to obtain complete, detailed directions
15 from the physician or pharmacist concerning the period of
16 time when a prescription drug should be taken.
17 Section 6. Contract.
18 The department is authorized to enter into a contract
19 providing for prescription drugs to eligible persons under this
20 act. The department shall select a proposal that includes, but
21 is not limited to, the criteria set forth in section 4.
22 Section 7. Chronically Ill Children's Pharmaceutical Payment
23 Board.
24 (a) Establishment.--A Chronically Ill Children's
25 Pharmaceutical Payment Board shall be established to ensure that
26 the program is providing and continues to provide the assistance
27 intended in a fiscally responsible manner without excessively
28 hampering the pharmaceutical industry.
29 (b) Composition.--The board shall be comprised of the
30 following persons:
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1 (1) The Secretary of Health, who shall serve as its
2 chairman.
3 (2) The Secretary of Revenue.
4 (3) The Secretary of Public Welfare.
5 (4) Four public members, one appointed by the President
6 pro tempore of the Senate, one appointed by the Minority
7 Leader of the Senate, one appointed by the Speaker of the
8 House of Representatives and one appointed by the Minority
9 Leader of the House of Representatives. Those appointed shall
10 include two representatives of the pharmaceutical industry,
11 at least one of whom is a practicing Pennsylvania pharmacist,
12 and two representatives of the Health Care industry, at least
13 one of whom is a practicing Pennsylvania pediatrician.
14 (c) Review.--Using the quarterly reports submitted by the
15 department pursuant to section 4(e) and other appropriate data
16 sources, the board shall conduct a quarterly review and shall
17 develop recommendations concerning any changes in the level of
18 copayment or in the level of fees paid to participating
19 pharmacists. The board may also recommend other changes in the
20 structure of the program and direct the department to enter into
21 discussions with the private contractor concerning amendments to
22 the contract. The copayment schedule shall be adjusted no more
23 than semiannually.
24 Section 8. Penalties.
25 (a) Criminal penalties.--Any person who submits a false or
26 fraudulent claim under this act, or who aids or abets another in
27 the submission of a false or fraudulent claim, or who is
28 eligible under a private, State or Federal program for
29 prescription assistance and claims or receives duplicative
30 benefits hereunder, or who otherwise violates any provisions of
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1 this act, commits a misdemeanor of the third degree.
2 (b) Suspension of license.--Any provider who is found guilty
3 of violating this act shall be subject to a suspension of his
4 license to practice for a period of one year.
5 (c) Repayment of gain.--Any provider or recipient who is
6 found guilty of violating this act is subject to repayment of
7 three times the value of the material gain he received.
8 Section 9. Implementation of act.
9 Implementation of the provisions of this act shall be in
10 accordance with the following guidelines:
11 (1) The department shall publish its request for
12 proposals in the Pennsylvania Bulletin within 60 days of the
13 effective date of this act.
14 (2) The deadline for submitting bids on the proposal
15 shall be 60 days from the date of publication.
16 (3) The department shall make a selection and enter into
17 a contract within 30 days of the close of bids.
18 Section 10. Effective date.
19 This act shall take effect in 60 days.
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