PRINTER'S NO. 1888
No. 1420 Session of 2000
INTRODUCED BY SALVATORE, TARTAGLIONE, HELFRICK, TILGHMAN, WAUGH,
EARLL, STOUT, WHITE, TOMLINSON, KASUNIC, GREENLEAF, MADIGAN,
BELL, LEMMOND, BOSCOLA AND THOMPSON, APRIL 13, 2000
REFERRED TO BANKING AND INSURANCE, APRIL 13, 2000
AN ACT
1 Providing for a single pharmacy benefits manager to administer
2 certain prescription programs; and imposing powers and duties
3 on the Secretary of Administration.
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 Commonwealth
8 Single Pharmacy Benefits Manager Act.
9 Section 2. Definitions.
10 The following words and phrases when used in this act shall
11 have the meanings given to them in this section unless the
12 context clearly indicates otherwise:
13 "A-rated generically equivalent drug." A drug product that
14 the Commissioner of Food and Drugs of the Food and Drug
15 Administration has approved as safe and effective and has
16 determined to be equivalent as listed in "The Approved Drug
17 Products with Therapeutic Equivalence Evaluations" (Food and
18 Drug Administration "Orange Book"), with a specific "A" code
1 designation only.
2 "Committee." The drug utilization review committee formed in
3 accordance with section 5.
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 "Pharmaceutical manufacturer." A manufacturer of
14 prescription drugs, insulin, insulin needles or insulin
15 syringes.
16 "Pharmacy." A pharmacy licensed by the Commonwealth.
17 "Pharmacy benefits manager" or "PBM." An entity under
18 contract with the Secretary of Administration to administer any
19 prescription program established by the Commonwealth or in which
20 a contribution by the Commonwealth is required.
21 "Pharmacy services." Medically necessary prescription drugs
22 and other pharmacy services furnished directly to eligible
23 recipients 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 Administration under which the delivery of a
30 pharmacy service is either conditioned upon or delayed by a
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1 prior determination by the Secretary of Administration or his
2 agent that a person is eligible for a particular pharmacy
3 service, that there is medical necessity for a particular
4 pharmacy service or that a particular pharmacy service is
5 suitable to a particular recipient.
6 "Provider." A pharmacy or licensed prescriber who provides
7 pharmacy services to a recipient of any prescription program
8 established by the Commonwealth or in which a contribution by
9 the Commonwealth is required.
10 "Recipient." A person who receives pharmacy services through
11 any prescription program established by the Commonwealth or in
12 which a contribution by the Commonwealth is required.
13 "Secretary." The Secretary of Administration of the
14 Commonwealth.
15 "Wholesaler." A licensed person or entity within this
16 Commonwealth which legally purchases pharmaceuticals for resale
17 or distribution to persons other than recipients or consumers.
18 Section 3. Single medical assistance pharmacy benefits manager.
19 The secretary shall administer a single pharmacy benefits
20 manager program for all recipients. No later than 90 days from
21 the effective date of this act, the secretary shall issue a
22 request for proposal for a three-year contract with a pharmacy
23 benefits manager to administer pharmacy services for recipients.
24 The proposal shall require the PBM to perform prospective,
25 concurrent and retrospective drug utilization review and
26 education of providers and benefit recipients. No person,
27 partnership, corporation or entity which holds a 5% or greater
28 interest in one or more pharmacies, a chain of pharmacies, a
29 pharmacists association, an organization of pharmacies, a drug
30 wholesaler or drug manufacturer and no person, partnership,
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1 corporation or entity in which one or more pharmacies, a chain
2 of pharmacies, a pharmacists association, an organization of
3 pharmacies, a drug wholesaler or drug manufacturer has a 5% or
4 greater interest shall be considered eligible to bid. The
5 contract shall be executed within six months from the effective
6 date of this act.
7 Section 4. Pharmacy benefits manager functions.
8 (a) Requirements.--The secretary shall require the PBM to:
9 (1) Develop and update a formulary of drugs with the
10 advice of the DURC utilizing disease and care management.
11 (2) Manage a drug formulary.
12 (3) Ensure that any pharmacy licensed in this
13 Commonwealth is eligible to provide pharmacy services
14 according to any regulations in effect on the effective date
15 of this act and that regulate pharmacy providers.
16 (4) Negotiate drug rebates with manufacturers.
17 (5) In accordance with the act of November 24, 1976
18 (P.L.1163, No.259), referred to as the Generic Equivalent
19 Drug Law, make provisions for generic substitutions and
20 require pharmacists to disclose any affiliation with a
21 generic manufacturer.
22 (6) Provide for prospective drug utilization review
23 which precludes overriding alerts without intervention.
24 (7) Provide for prior authorization in accordance with
25 regulations of the secretary.
26 (8) Provide for prospective and concurrent and
27 retrospective drug utilization review to ensure that
28 prescriptions are appropriate, medically necessary and not
29 likely to result in adverse medical results and to educate
30 providers and recipients and to correct and report
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1 misutilization and abuse by licensed prescribers and
2 recipients and provide for fraud and abuse audits,
3 coordinating its activities with the secretary to support
4 compliance with applicable laws and regulations.
5 (9) Educate providers on disease and care management.
6 (10) Provide educational materials for recipients on
7 disease and care management.
8 (11) In accordance with the provisions of the Omnibus
9 Budget Reconciliation Act of 1990 (Public Law 101-508, 104
10 Stat. 1388), bill, recoup and relay to the secretary
11 manufacturers' drug rebates and excessive consumer price
12 inflation discounts and resolve disputes, as defined in the
13 Omnibus Budget Reconciliation Act of 1990.
14 (12) Adjudicate claims through a Statewide point-of-sale
15 electronic verification and claims processing system which
16 will allow for intervention upon receipt of a prospective
17 drug utilization review alert and will allow for an emergency
18 supply of prescribed medication in the event of equipment
19 failures.
20 (13) Create an audit and recoupment system for providers
21 and recipients, and third-party medical resources.
22 (14) Reimburse pharmacies on a fee-for-service basis.
23 (b) Preparation of a formulary.--The PBM, with the advice of
24 the Drug Utilization Review Committee created in section 5,
25 shall prepare a formulary of drugs and, in accordance with the
26 Generic Equivalent Drug Law, include generically equivalent
27 drugs to be used in any prescription program established by the
28 Commonwealth or in which a contribution by the Commonwealth is
29 required. In evaluating drugs for the formulary, the PBM shall
30 consider their therapeutic efficacy and take into consideration
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1 all discounts, rebates or other concessions provided by
2 manufacturers. The formulary must indicate that drugs will not
3 be reimbursed if they are experimental or on the Drug Efficacy
4 Study Implementation list (DESI) prepared by the Health Care
5 Financing Administration. The formulary shall provide for a
6 medical exception for a drug on the latter list upon a
7 handwritten declaration of its necessity on the prescription by
8 the treating prescriber.
9 (c) Conflict of interest.--In developing the formulary, the
10 single PBM shall demonstrate how it will avoid a conflict of
11 interest with any pharmaceutical manufacturer, wholesaler or
12 drug store chain that holds a less-than-5% interest in the PBM
13 or in which the PBM has a less-than-5% interest and shall
14 indicate how it will prevent the sharing of nonpublic
15 information concerning other drug manufacturers' bids,
16 proposals, contracts, prices, rebates or discounts.
17 (d) Considerations.--In preparing and managing the
18 formulary, the PBM shall ensure that it will consider all
19 discounts, rebates or other concessions offered by
20 manufacturers, drug chains or wholesale drug companies.
21 (e) Changes to the formulary.--Upon making changes to the
22 formulary the PBM shall allow a benefit recipient to continue to
23 receive a drug which is part of an ongoing treatment regimen for
24 a period of up to 60 days.
25 Section 5. Drug Utilization Review Committee.
26 (a) Formation.--The secretary shall require the PBM to form
27 a drug utilization review committee.
28 (b) Composition and number.--The committee shall be
29 comprised of nine members, five of whom shall be actively
30 practicing physicians licensed in this Commonwealth and four of
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1 whom shall be actively practicing pharmacists licensed in this
2 Commonwealth. None of the members may hold a 5% or greater
3 interest in the PBM, its parent company or companies, or in a
4 company or companies owned by the PBM.
5 (c) Quality of care.--
6 (1) The committee shall develop a system that provides
7 prospective, concurrent and retrospective review of drug
8 utilization to ensure that pharmacy services provided are or
9 were appropriate and medically necessary and not likely to
10 result in adverse medical results. The review program shall
11 be designed to educate licensed prescribers and pharmacists
12 as provided in paragraph (4) on the proper utilization of
13 drugs in disease and care management. In reviewing drug
14 utilization, the committee shall assess data on drug use
15 against predetermined standards consistent with the American
16 Hospital Formulary Service Drug Information, the United
17 States Pharmacopeia-Drug Information, American Medical
18 Association Drug Evaluations or peer-reviewed medical
19 literature.
20 (2) The committee shall develop a system to utilize the
21 compendia and literature referred to in paragraph (1) as its
22 source of standards to screen for potential drug problems
23 before a prescription is filled or delivered to a recipient.
24 Prospective drug use review shall include consultation with
25 recipients by pharmacists.
26 (3) The secretary and the PBM shall provide data to the
27 committee, through mechanized drug claims processing and
28 retrieval systems, for the ongoing periodic examination of
29 claims data and other records in order to identify patterns
30 of fraud, abuse, gross overuse or inappropriate or medically
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1 unnecessary care among licensed prescribers, pharmacists and
2 recipients or associated with specific drugs or groups of
3 drugs. The committee shall, on an ongoing basis, assess data
4 on drug use against explicit predetermined standards using
5 the compendia and literature referred to in this subsection
6 and to introduce, as necessary, remedial strategies to
7 improve the quality of care and to conserve program funds or
8 patient expenditures.
9 (4) The committee shall, using drug use data on common
10 therapy problems, develop active and ongoing educational
11 outreach programs to disseminate information to providers on
12 common drug therapy problems with the aim of improving
13 prescribing or dispensing practices. The educational programs
14 shall include interventions for providers targeting therapy
15 problems or individuals identified in the course of
16 retrospective drug reviews. The committee shall reevaluate
17 interventions from time to time to determine if the
18 interventions were successful in improving the quality of
19 drug therapy and shall make modifications as necessary.
20 Intervention programs shall include:
21 (i) Information dissemination sufficient to ensure
22 the ready availability to providers of information
23 concerning the committee's duties, powers and basis for
24 its standards.
25 (ii) Written, oral or electronic reminders
26 containing patient-specific and/or drug-specific
27 information and suggested changes in prescribing or
28 dispensing practices, communicated in a manner designed
29 to ensure the privacy of patient-related information.
30 (iii) Use of face-to-face discussions between health
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1 care professionals who are experts in rational drug
2 therapy and selected prescribers and pharmacists who have
3 been targeted for educational intervention, including
4 discussion of optimal prescribing, dispensing or pharmacy
5 care practices and follow-up face-to-face discussions.
6 (iv) Intensified review or monitoring of selected
7 prescribers or dispensers.
8 (d) Corrective actions.--Should licensed prescribers or
9 recipients continue to misutilize drugs or abuse the system, the
10 committee shall provide information to the secretary for
11 corrective action. In the case of prescribers, the committee
12 shall submit a report and recommendations to the secretary for
13 appropriate action. The secretary shall inform the PBM and the
14 appropriate Commonwealth licensing body of any final
15 administrative sanctions.
16 (e) Nonliability.--Any person rendering service as a member
17 of a utilization review committee for this program shall not be
18 liable for any civil damages as a result of any acts or
19 omissions in rendering the service as a member of any such
20 committee except any acts or omissions intentionally designed to
21 harm or any grossly negligent acts or omissions which result in
22 harm to the person receiving such service.
23 (f) Annual report.--The secretary shall require the
24 committee to provide an annual report describing the committee's
25 activities, including the nature and scope of the prospective,
26 concurrent and retrospective drug reviews, a summary of
27 interventions used, an assessment of the impact of these
28 educational interventions on quality of care and an estimate of
29 the cost savings generated as a result of the program.
30 Section 6. Reimbursement.
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1 (a) General rule.--The PBM shall reimburse pharmacies on a
2 fee-for-service basis, using formulas established by regulation.
3 Pharmacies reimbursed under this act shall be paid at fee-for-
4 service rates no less than the rates in effect on the effective
5 date of this act. Pharmacies shall be paid within 21 days of the
6 PBM's receipt of appropriate substantiation of the transaction.
7 Pharmacies shall be entitled to interest at a rate approved by
8 the department for any payment not made within the 21-day
9 period. The secretary may not reimburse the PBM for interest
10 paid.
11 (b) Copayments.--Except for services which are excluded
12 under the Commonwealth's medical assistance program, a recipient
13 is liable for a copayment in an amount set by the secretary, and
14 collection of the copayment by pharmacies shall be mandatory.
15 The amount of the copayment paid to pharmacy providers by
16 recipients shall be deducted from the Commonwealth's medical
17 assistance fee to pharmacy providers.
18 Section 7. Administration of contract.
19 (a) General rule.--The secretary shall administer the
20 contract with the PBM and shall promulgate rules and
21 regulations, as necessary, to carry out the provisions of this
22 act.
23 (b) Provision of data.--The secretary and the PBM shall
24 provide data necessary to the committee to develop provider
25 prescribing profiles and recipient utilization profiles to
26 perform utilization review and disease and care management
27 through the coordination of health care and pharmacy services to
28 ensure that recipients are receiving and complying with
29 appropriate therapies.
30 Section 8. Studies required.
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1 (a) Selection of contractor.--
2 (1) The secretary shall select a competent contractor to
3 analyze and compare expenditures, utilization rates and
4 utilization patterns for pharmacy services provided to any
5 prescription program established by the Commonwealth or in
6 which a contribution by the Commonwealth is required and in
7 the single pharmacy benefits management program established
8 under this act.
9 (2) To effectuate the purposes of this act, all
10 participating pharmacy providers, manufacturers, drug chains
11 and wholesalers shall, as a condition of participation, be
12 required to cooperate with the secretary in preparing the
13 required report.
14 (3) The secretary shall report preliminary findings to
15 the President pro tempore of the Senate and the Speaker of
16 the House of Representatives by September 30, 2001. The
17 secretary shall report finally on June 30, 2003. That report
18 shall include recommendations to the General Assembly on
19 whether to continue the single medical assistance pharmacy
20 benefits manager program which shall terminate on December
21 31, 2003.
22 (b) Report.--The Legislative Budget and Finance Committee
23 shall evaluate and prepare a report to be submitted no later
24 than June 30, 2003, to the General Assembly on the single
25 pharmacy benefits manager selected under this act.
26 Section 9. Applicability.
27 This act shall apply to the provision of all pharmacy
28 services under any prescription program established by the
29 Commonwealth or in which a contribution by the Commonwealth is
30 required by any managed health care plan, pharmaceutical
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1 manufacturer, licensed pharmacy, chain of pharmacies or
2 wholesaler.
3 Section 10. Prohibited activities.
4 It shall be unlawful for any individual, partnership or
5 corporation to solicit, receive, offer or pay any kickback,
6 bribe or rebate in cash or in-kind from or to any person in
7 connection with the furnishing of services under this act.
8 Section 11. Repeals.
9 All acts and parts of acts are repealed insofar as they are
10 inconsistent with this act.
11 Section 12. Effective date.
12 This act shall take effect in 60 days.
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