PRIOR PRINTER'S NO. 3155 PRINTER'S NO. 3226
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 AND BELARDI, MARCH 9, 1992
AS AMENDED ON THIRD CONSIDERATION, HOUSE OF REPRESENTATIVES,
MARCH 11, 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.
15 The General Assembly of the Commonwealth of Pennsylvania
16 hereby enacts as follows:
17 Section 1. Section 303(h)(5), (9), (10), (11), (12), (13),
18 (14), (15), (16), (17) and (18) of the act of August 14, 1991
19 (P.L.342, No.36), known as the Lottery Fund Preservation Act,
20 are amended and the subsection is amended by adding paragraphs
21 to read:
1 Section 303. Responsibilities of department.
2 * * *
3 (h) Program criteria.--The program shall include the
4 following criteria:
5 * * *
6 (5) The system established shall include a participant
7 copayment schedule of $4 for each prescription. The copayment
8 shall increase or decrease on the annual basis by the average
9 percent change of ingredient costs for all prescription drugs
10 plus a differential to raise the copayment to the next
11 highest 25¢ increment. In addition, the department may
12 approve a request for increase or decrease in the level of
13 copayment based upon the financial experience and projections
14 of the program and after consultation with the board. The
15 department is prohibited from approving adjustments to the
16 copayment on more than a semiannual basis. [The department
17 shall evaluate the feasibility of instituting a bifurcated
18 copayment differentiating between noninnovator multiple-
19 source drugs and single-source or innovator multiple-source
20 drugs. The department shall report its findings to the Aging
21 and Youth Committee of the Senate and the Aging and Youth
22 Committee of the House of Representatives by July 1, 1992.
23 The department shall, by July 1, 1992, institute a bifurcated
24 copayment unless the findings demonstrate that a bifurcated
25 copayment is not cost effective. As used in this paragraph,
26 the terms "innovator multiple-source drugs," "noninnovator
27 multiple-source drugs" and "single-source drugs" shall have
28 the meanings given to them in section 502.]
29 * * *
30 [(9) For purposes of this chapter, the eligible claimant
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1 shall be liable to pay a fixed differential whenever a more
2 expensive brand name drug is requested by the claimant when
3 the physician permitted substitution of a less expensive
4 generically equivalent drug approved under the provisions of
5 the act of November 24, 1976 (P.L.1163, No.259), referred to
6 as the Generic Equivalent Drug Law.
7 (10) The differential will be charged regardless of the
8 availability of a less expensive generic equivalent in the
9 providing pharmacy. In no case will the claimant bear the
10 cost of the differential when the generic equivalent is not
11 available.
12 (11) The department shall establish a pharmacist
13 consultation reimbursement program for a period of not less
14 than six months, following which the department may continue
15 or discontinue the program. This program shall provide an
16 additional $1 supplemental dispensing fee whenever a
17 pharmacy's documented intervention resulted in a physician
18 changing a prescription for a more expensive brand name
19 product to a prescription allowing substitution of a less
20 expensive generically equivalent drug. This supplemental
21 dispensing fee shall provide the only exception to paragraph
22 (8).
23 (12)] (9) Notwithstanding any other statute or
24 regulation, if an approved United States Food and Drug
25 Administration "A"-rated generic therapeutically equivalent
26 drug is available for dispensing to a claimant, the provider
27 shall dispense the generic therapeutically equivalent drug to
28 the claimant. The department shall not reimburse providers
29 for brand name drugs except in the following circumstances:
30 (i) There is no "A"-rated generic therapeutically
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1 equivalent drug available on the market. This
2 subparagraph does not apply to the lack of availability
3 of an "A"-rated generic therapeutically equivalent drug
4 in the providing pharmacy.
5 (ii) An "A"-rated generic therapeutically equivalent
6 drug is deemed by the department, in consultation with a
7 utilization review committee, to have a narrow
8 therapeutic index for safe and effective dispensing in
9 the community setting. The department shall notify
10 providing pharmacies of prescription drugs under this
11 subparagraph on a regular basis.
12 (iii) The Department of Health has determined that a
13 drug shall not be recognized as a generic therapeutically
14 equivalent drug for purpose of substitution under section
15 5(b) of the act of November 24, 1976 (P.L.1163, No.259),
16 referred to as the Generic Equivalent Drug Law.
17 (10) If a claimant chooses not to accept the generic
18 therapeutically equivalent drug required by paragraph (9),
19 the claimant shall be liable for the entire cost of the brand
20 name drug and the copayment less the average wholesale cost
21 of the least expensive generic therapeutically equivalent
22 drug present at the providing pharmacy. The average wholesale
23 cost of the least expensive generic therapeutically
24 equivalent drug present at the providing pharmacy shall be
25 reimbursed by the program. If no generic therapeutically
26 equivalent drug is present in the providing pharmacy, no
27 reimbursement shall be provided by the program. THIS <--
28 PARAGRAPH SHALL NOT APPLY IF A PRESCRIBER CAN DEMONSTRATE TO
29 THE DEPARTMENT THAT:
30 (I) THE CLAIMANT IS IN DANGER OF AN ADVERSE REACTION
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1 FROM USE OF THE GENERIC THERAPEUTICALLY EQUIVALENT DRUG
2 REQUIRED BY PARAGRAPH (9).
3 (II) USE OF THE PRESCRIBED BRAND NAME DRUG WOULD
4 ELIMINATE THE DANGER OF THE ADVERSE REACTION.
5 (11) Prescription benefits for any single prescription
6 shall be limited to a 30-day supply of the prescription drug
7 or 100 units, whichever is less, except that, in the case of
8 diagnosis for acute conditions, the limitation shall be a 15-
9 day supply.
10 [(13)] (12) The department may establish a restricted
11 formulary of the drugs which will not be reimbursed by the
12 program. This formulary shall include only experimental drugs
13 and drugs on the Drug Efficacy Study Implementation List
14 prepared by the Health Care Finance Administration. A medical
15 exception may be permitted by the department for
16 reimbursement of a drug on the Drug Efficacy Study
17 Implementation List upon declaration of its necessity on the
18 prescription by the treating physician; except that, for DESI
19 drugs for which the FDA has issued a Notice for Opportunity
20 Hearing (NOOH) for the purpose of withdrawing the New Drug
21 Application approved for that drug, reimbursement coverage
22 shall be discontinued under the provisions of this chapter.
23 [(14)] (13) The department may not enter into a contract
24 with a private contractor for an exclusive mail-order system
25 for the delivery of prescription drugs under this program.
26 Only mail-order pharmacy services provided by pharmacies
27 which are licensed by the Commonwealth and which have their
28 principal place of business within this Commonwealth may
29 participate as providers under the program. The department
30 shall develop and promulgate specific regulations governing
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1 the practice of mail-order pharmacy and other enrolled
2 providers to include the following minimum standards of
3 practice to ensure the health, safety and welfare of program
4 participants:
5 (i) The appropriate method or methods by which such
6 pharmacies shall verify the identity of the program
7 recipient and the authenticity of prescriptions received.
8 (ii) The appropriate method or methods by which such
9 pharmacies shall mail or deliver prescription drugs to
10 program recipients ensuring, to the maximum extent
11 possible, that the intended program recipient is the
12 actual ultimate recipient of any prescription dispensed
13 by such pharmacies.
14 (iii) The appropriate method or methods by which
15 such pharmacies shall communicate with program
16 participants in emergency situations.
17 [(15)] (14) The program must be in place and operational
18 within 90 days of the effective date of the contract.
19 [(16)] (15) For-profit third party insurers and not-for-
20 profit prescription plans shall reimburse the department for
21 any payments made to a providing pharmacy on behalf of a
22 claimant covered by such a third party.
23 [(17)] (16) Any [health care professional] person
24 rendering service as a member of a utilization review
25 committee for this program shall not be liable for any civil
26 damages as a result of any acts or omissions in rendering the
27 service as a member of any such committee except any acts or
28 omissions intentionally designed to harm or any grossly
29 negligent acts or omissions which result in harm to the
30 person receiving such service.
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1 [(18)] (17) Any officer or employee of the department
2 rendering service as a member of a utilization review
3 committee for this program shall not be liable for any civil
4 damages as a result of any acts or omissions in rendering the
5 service as a member of any such committee or as a result of
6 any decision or action in connection with the program except
7 any acts or omissions intentionally designed to harm or any
8 grossly negligent acts or omissions which result in harm to
9 the person receiving such service.
10 (18) The dispensing of an "A"-rated generic
11 therapeutically equivalent drug in accordance with this
12 chapter shall not be deemed incorrect substitution under
13 section 6(a) of the Generic Equivalent Drug Law.
14 (19) The department shall annually verify the income of
15 eligible claimants. Verification shall be accomplished by a
16 targeted sampling of 5% of the eligible claimants.
17 (20) THE RETAIL PRICE OF THE PRESCRIPTION SHALL BE <--
18 INDICATED ON THE LABEL OF THE PRESCRIPTION CONTAINER.
19 * * *
20 SECTION 2. SECTION 307 OF THE ACT IS AMENDED TO READ: <--
21 SECTION 307. PRESCRIPTION DRUG EDUCATION PROGRAM.
22 THE DEPARTMENT, IN COOPERATION WITH THE DEPARTMENT OF HEALTH,
23 SHALL DEVELOP AND IMPLEMENT A STATEWIDE PRESCRIPTION DRUG
24 EDUCATION PROGRAM DESIGNED TO INFORM OLDER ADULTS OF THE DANGERS
25 OF PRESCRIPTION DRUG ABUSE AND MISUSE. THE PRESCRIPTION DRUG
26 EDUCATION PROGRAM SHALL INCLUDE, BUT NOT BE LIMITED TO,
27 INFORMATION CONCERNING THE FOLLOWING:
28 (1) THE HAZARDS OF PRESCRIPTION DRUG OVERDOSE.
29 (2) THE POTENTIAL DANGERS OF MIXING PRESCRIPTION DRUGS.
30 (3) THE DANGER OF RETAINING UNUSED PRESCRIPTION DRUGS
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1 AFTER THE NEED TO TAKE THEM NO LONGER EXISTS.
2 (4) THE NECESSITY TO CAREFULLY QUESTION PHYSICIANS AND
3 PHARMACISTS CONCERNING THE EFFECTS OF TAKING PRESCRIPTION
4 DRUGS, INCLUDING THE DIFFERENCES BETWEEN BRAND NAME DRUGS AND
5 GENERICALLY EQUIVALENT 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 AND 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 TIME PERIOD A
16 PRESCRIPTION DRUG SHOULD BE TAKEN.
17 Section 2 3. Section 501 of the act is amended by adding a <--
18 paragraph to read:
19 Section 501. Declaration of policy.
20 The General Assembly finds and declares as follows:
21 * * *
22 (6) Drug price inflation has caused a dramatic increase
23 in the amount of public funds expended by the PACE Program
24 and the General Assistance Program.
25 Section 3 4. The definition of "average manufacturer price" <--
26 in section 502 of the act is amended and the section is amended
27 by adding a definition to read:
28 Section 502. Definitions.
29 The following words and phrases when used in this chapter
30 shall have the meanings given to them in this section unless the
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1 context clearly indicates otherwise:
2 "Average manufacturer price (AMP)." With respect to a
3 covered prescription drug of the manufacturer for a calendar
4 quarter, the average unit price paid to the manufacturer for the
5 drug [in this Commonwealth] by wholesalers for drugs distributed
6 to the retail pharmacy class of trade, except for direct sales
7 to hospitals, health maintenance organizations and to
8 wholesalers where the drug is relabeled under that distributor's
9 national drug code number. Federal Supply Schedule prices shall
10 not be included in the calculation of AMP. The term includes
11 cash discounts and all other price reductions, other than
12 rebates under this act and section 1927 of Title XIX of the
13 Social Security Act (Public Law 74-271, 42 U.S.C. § 301 et
14 seq.), added November 5, 1990 (Public Law 101-508, Title IV,
15 section 4401(a)(3), 104 Stat. 1388-143), which reduce the actual
16 price paid. For bundled or capitated sales, the allocation of
17 the discount shall be made proportionately to the dollar value
18 of the units of each covered prescription drug sold under the
19 bundled or capitated arrangement. The AMP for a quarter shall be
20 adjusted by the manufacturer if cumulative discounts or other
21 arrangements subsequently adjust the prices actually realized.
22 * * *
23 "Consumer Price Index-Urban." The Consumer Price Index for
24 All Urban Consumers compiled by the Bureau of Labor Statistics
25 of the United States Department of Labor.
26 * * *
27 Section 4 5. Sections 503(e) and 505(a) and (b) of the act <--
28 are amended to read:
29 Section 503. Rebate agreement.
30 * * *
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1 [(e) Drug formulary.--There shall be no drug formulary,
2 prior or retroactive approval system or any similar restriction
3 imposed on the coverage of outpatient drugs made by
4 manufacturers who have entered into agreements with the
5 Commonwealth to pay rebates for drugs utilized in the PACE
6 program, provided that such outpatient drugs were approved for
7 marketing by the Food and Drug Administration prior to July 1,
8 1991.]
9 Section 505. Amount of rebate.
10 (a) Single-source drugs and innovator multiple-source
11 drugs.--With respect to single-source drugs and innovator
12 multiple-source drugs, each manufacturer shall remit a rebate to
13 the Commonwealth. Except as otherwise provided in this section,
14 the amount of the rebate to the Commonwealth per calendar
15 quarter with respect to each dosage form and strength of single-
16 source drugs and innovator multiple-source drugs shall be [equal
17 to] as follows:
18 (1) For quarters beginning after December 31, 1990, and
19 ending before July 1, 1992, the product of the total number
20 of units of each dosage form and strength reimbursed by the
21 PACE Program and the General Assistance Program in the
22 quarter and the difference between the average manufacturer
23 price and 87.5% of that price, after deducting customary
24 prompt payment discounts, for the quarter[, which rebate
25 shall be applicable for quarters beginning on and after
26 January 1, 1991].
27 (2) For quarters beginning after June 30, 1992, the
28 product of the total number of units of each dosage form and
29 strength reimbursed by the PACE Program and the General
30 Assistance Program in the quarter and the difference between
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1 the average manufacturer price and 85% of that price, after
2 deducting customary prompt payment discounts, for the
3 quarter.
4 (b) Rebate for other drugs.--
5 (1) The amount of the rebate to the Commonwealth for a
6 calendar quarter with respect to covered prescription drugs
7 which are noninnovator multiple-source drugs shall be equal
8 to the product of:
9 (i) the applicable percentage of the average
10 manufacturer price, after deducting customary prompt
11 payment discounts, for each dosage form and strength of
12 such drugs for the quarter; and
13 (ii) the number of units of such form and dosage
14 reimbursed by the PACE Program and the General Assistance
15 Program in the quarter.
16 (2) For the purposes of paragraph (1), the following
17 shall apply:
18 (i) The applicable percentage for calendar quarters
19 beginning after January 1, 1991, and ending before July
20 1, 1992, is 10%.
21 (ii) The applicable percentage for calendar quarters
22 beginning after June 30, 1992, is 11%.
23 * * *
24 Section 5 6. The act is amended by adding sections to read: <--
25 Section 505.1. Excessive pharmaceutical price inflation
26 discount.
27 (a) General rule.--A discount shall be provided to the
28 department for all covered prescription drugs. The discount
29 shall be calculated as follows:
30 (1) For each quarter for which a rebate under section
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1 505(a) and (b) is to be paid after December 31, 1991, the
2 average manufacturer price for each dosage form and strength
3 of a covered prescription drug shall be compared to the
4 average manufacturer price for the same form and strength in
5 the previous calendar year; and a percentage increase shall
6 be calculated.
7 (2) For each quarter under paragraph (1), the average
8 percentage increase in the Consumer Price Index-Urban over
9 the same quarter in the previous calendar year shall be
10 calculated.
11 (3) If the calculation under paragraph (1) is greater
12 than the calculation under paragraph (2), the discount amount
13 for each quarter shall be equal to the product of:
14 (i) the difference between the calculations under
15 paragraphs (1) and (2); and
16 (ii) the total number of units of each dosage form
17 and strength reimbursed by the PACE Program and General
18 Assistance Program and the average manufacturer price
19 reported by the manufacturer under section 504(c)(1).
20 (b) New by-marketed drugs.--For covered prescription drugs
21 that have not been marketed for a full calendar year, subsection
22 (a) shall apply after the covered prescription drug has been on
23 the market for four consecutive quarters. The drug's initial
24 average manufacturer price shall be based on the first day of
25 the first quarter that the drug was marketed.
26 Section 505.2. Lowered best price.
27 (a) General rule.--If the rebate under section 505 and the
28 discount under section 505.1 would establish a lowered Federal
29 best price, as defined in section 1927(c)(1)(C) of the Social
30 Security Act (Public Law 74-271, 42 U.S.C. § 1396r-8(c)(1)(C)),
19920H2442B3226 - 12 -
1 the manufacturer shall be liable for a total rebate and discount
2 in an amount that does not reduce the Federal best price for
3 that covered prescription drug.
4 (b) Procedure.--If a manufacturer asserts a lowered Federal
5 best price under subsection (a), it must provide substantial
6 evidence of the existing best price within 30 days of the end of
7 the quarter for which the price is asserted.
8 (c) Civil penalty.--A manufacturer which provides false
9 information under this section shall be liable for a civil
10 penalty in the amount of $50,000. Each item of false information
11 constitutes a separate violation.
12 Section 6 7. Sections 508 and 509 of the act are amended to <--
13 read:
14 [Section 508. Existing agreements.
15 Any rebate agreement between the department and a
16 manufacturer entered into prior to the effective date of this
17 chapter shall remain in effect and be considered a rebate
18 agreement in compliance with this chapter until the agreement
19 expires or until either party terminates the agreement.
20 Section 509. Expiration of chapter.
21 This chapter shall expire July 1, 1992, unless reenacted by
22 the General Assembly.]
23 SECTION 8. THE ACT IS AMENDED BY ADDING A SECTION TO READ: <--
24 SECTION 901.1. RULES AND REGULATIONS.
25 ALL RULES AND REGULATIONS PROMULGATED UNDER THIS ACT SHALL BE
26 SUBJECT TO THE ACT OF JUNE 25, 1982 (P.L.633, NO.181), KNOWN AS
27 THE REGULATORY REVIEW ACT, AND TO LEGISLATIVE REVIEW BY THE
28 AGING AND YOUTH COMMITTEE OF THE SENATE AND THE AGING AND YOUTH
29 COMMITTEE OF THE HOUSE OF REPRESENTATIVES.
30 SECTION 9. THE HOUSE OF REPRESENTATIVES, RECOGNIZING THE
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1 OVERSIGHT ROLE THAT THE LEGISLATIVE BUDGET AND FINANCE COMMITTEE
2 HAS WITH REGARD TO THE PROGRAMS AND SERVICES OF THE DEPARTMENT
3 OF AGING, DIRECTS THE LEGISLATIVE BUDGET AND FINANCE COMMITTEE
4 TO CONDUCT A STUDY OF THE STATE LOTTERY AS IT IMPACTS UPON THE
5 FUTURE OF PROGRAMS AND SERVICES FOR OLDER PENNSYLVANIANS AND THE
6 POSSIBLE NEED FOR LEGISLATIVE ACTION AND MAKE A REPORT TO THE
7 HOUSE OF REPRESENTATIVES NO LATER THAN DECEMBER 31, 1992.
8 Section 7 10. The addition of sections 505.1 and 505.2 of <--
9 the act shall be retroactive to January 1, 1992.
10 Section 8 11. This act shall take effect immediately. <--
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