PRIOR PRINTER'S NO. 1208 PRINTER'S NO. 1872
No. 1052 Session of 2005
INTRODUCED BY S. H. SMITH, ARMSTRONG, BAKER, BOYD, CALTAGIRONE,
CAPPELLI, CAUSER, CREIGHTON, DALLY, DENLINGER, BALDWIN,
CRAHALLA, FAIRCHILD, FORCIER, FREEMAN, GEIST, HERMAN, HESS,
GINGRICH, HARRIS, MARSICO, MACKERETH, JAMES, McGILL,
McILHATTAN, McILHINNEY, MICOZZIE, R. MILLER, NICKOL, PAYNE,
PHILLIPS, READSHAW, ROSS, RUBLEY, MUSTIO, O'NEILL, SAYLOR,
B. SMITH, STERN, R. STEVENSON, T. STEVENSON, STURLA,
E. Z. TAYLOR, TIGUE, WALKO, WATSON, YOUNGBLOOD, RAPP, REED,
REICHLEY, TRUE, GOOD, THOMAS, CIVERA AND BROWNE,
MARCH 21, 2005
AS REPORTED FROM COMMITTEE ON HEALTH AND HUMAN SERVICES, HOUSE
OF REPRESENTATIVES, AS AMENDED, MAY 3, 2005
AN ACT
1 Providing for the Commonwealth pharmacy program procedures and
2 policies; imposing powers and duties on the Governor's Office
3 of Administration; and providing for a review system.
4 TABLE OF CONTENTS
5 Section 1. Short title.
6 Section 2. Legislative intent (Reserved).
7 Section 3. Definitions.
8 Section 4. Rebates.
9 Section 5. Cost containment.
10 Section 6. Disease management.
11 Section 7. Recycling.
12 Section 8. Reporting.
13 Section 9. Rules and regulations.
14 Section 10. Severability.
1 Section 11. Effective date.
2 The General Assembly of the Commonwealth of Pennsylvania
3 hereby enacts as follows:
4 Section 1. Short title.
5 This act shall be known and may be cited as the Commonwealth
6 Pharmacy Program Procedures and Policies Act.
7 Section 2. Legislative intent (Reserved).
8 Section 3. Definitions.
9 The following words and phrases when used in this act shall
10 have the meanings given to them in this section unless the
11 context clearly indicates otherwise:
12 "Commonwealth pharmacy program." The term shall include:
13 medical assistance, GENERAL ASSISTANCE, PACE, PACENET, the <--
14 Special Pharmaceutical Benefit Program in the Department of
15 Public Welfare, the End Stage Renal Program in the Department of
16 Health and any other pharmacy program administered by the
17 Commonwealth that is recognized by the Centers for Medicare and
18 Medicaid as a State pharmaceutical assistance program.
19 "Disease management program." A system of coordinated health
20 care interventions and communications designed for enhanced
21 health outcomes and managing costs for populations with
22 conditions where self-care efforts are significant. This program
23 promotes the physician-patient relationship and plan of care,
24 emphasizes the prevention of exacerbations and complications of
25 disease states utilizing patient empowerment strategies, and
26 evaluates clinical, humanistic and economic outcomes on an
27 ongoing basis with the goal of improving overall health.
28 "Health care facility." A general or specific hospital,
29 including State centers for the mentally retarded and
30 psychiatric hospitals, skilled nursing facilities and
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1 intermediate care facilities, regardless of whether such a
2 facility is for profit, nonprofit or governmental.
3 "Hospital." An institution licensed or regulated as a <--
4 hospital by the Department of Health or the Department of Public
5 Welfare or a facility owned or operated by the Federal
6 Government and accredited by the Joint Commission on
7 Accreditation of Hospitals as a hospital.
8 "Less expensive." The lowest net cost to the Commonwealth
9 for a Commonwealth pharmacy program. The net cost shall include
10 the amount paid by the Commonwealth to a pharmacy for a drug
11 under current retail pharmacy reimbursement formula less any
12 discounts or rebates, including those paid during the previous
13 calendar quarter and inclusive of all dispensing fees.
14 "Manufacturer." An entity which is engaged in any of the
15 following:
16 (1) The production, preparation, propagation,
17 compounding, conversion or processing of prescription drug
18 products directly or indirectly by extraction from substances
19 of natural origin, independently by means of chemical
20 synthesis or by a combination of extraction and chemical
21 synthesis.
22 (2) The packaging, repackaging, labeling or relabeling
23 or distribution of prescription drug products. The term shall
24 also include the entity holding legal title to or possession
25 of the national drug code number for the covered prescription
26 drug. The term does not include a wholesale distributor of
27 drugs, drugstore chain organization or retail pharmacy
28 licensed by the Commonwealth.
29 "National drug code number." The identifying drug number
30 maintained by the Food and Drug Administration. The complete 11-
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1 digit number must include the labeler code, product code and
2 package size code.
3 "Office of Administration." The Governor's Office of
4 Administration.
5 "Preferred pharmacy program." Any pharmacy program exclusive
6 of Commonwealth pharmacy programs through which the
7 Commonwealth, or its affiliates or designees, through a
8 contractual agreement purchases or reimburses its affiliates or
9 designees for a pharmacy benefit. The term may include, but
10 shall not be limited to, the Public Employees Benefit Trust
11 Fund, Children's Health Insurance Program, Workers' Compensation
12 Program and the Department of Corrections. The Office of
13 Administration shall publish in the Pennsylvania Bulletin a
14 listing of pharmacy programs that shall be designated preferred
15 pharmacy programs within 90 days of the effective date of this
16 act.
17 Section 4. Rebates.
18 (a) Procedures requirement.--Any Commonwealth pharmacy or
19 preferred pharmacy program that requires a manufacturer to remit
20 a rebate to the program as a condition of participating in it
21 shall have a clearly defined remittance procedure. The procedure
22 shall include a process for the efficient collection of rebates
23 that are not in dispute and a dispute resolution process.
24 (b) Uniformity.--The Office of Administration in
25 coordination with the corresponding departmental oversight
26 entity shall develop and publish in the Pennsylvania Bulletin a
27 clearly defined remittance procedure for any Commonwealth
28 pharmacy and preferred pharmacy program that does not already
29 have a procedure in place. The procedure shall include a process
30 for the efficient collection of rebates that are not in dispute
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1 and a dispute resolution process. The development of the
2 procedure shall include the consideration of need for uniform
3 procedures. Nothing shall preclude the Office of Administration
4 from implementing a uniform procedure for all programs,
5 including those with procedures already in place.
6 (c) Past due rebates.--The Office of Administration shall
7 have the authority to levy a surcharge penalty on any
8 manufacturer for the collection of past due rebates that are not
9 in dispute. The penalty may be levied on any rebate more than
10 one year past due. The surcharge shall be in addition to any
11 interest and penalties authorized under existing law or
12 contractual agreement.
13 (1) The surcharge shall be equal to 15% of the principal
14 owed for each year that the rebate is past due. The
15 calculation of the surcharge shall be prorated for any
16 portion of the year that the rebate is past due.
17 (2) The Office of Administration shall not apply the
18 surcharge to any past due manufacturer's rebates prior to
19 notifying the manufacturer of its intent to levy the
20 surcharge. The notice shall provide the manufacturer with 90 <--
21 30 days to satisfy any past due claims. <--
22 (d) Prohibition.--Nothing in this section shall be
23 interpreted to authorize or require the implementation of
24 rebates or supplemental rebates as a condition of participation
25 in any Commonwealth pharmacy or preferred pharmacy program.
26 Section 5. Cost containment.
27 (a) Auditing procedures.--The Office of Administration in
28 coordination with the corresponding departmental oversight
29 entity shall ensure that a uniform, coordinated and standardized
30 auditing procedure be adopted for all Commonwealth pharmacy and
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1 preferred pharmacy programs.
2 (b) Claims adjudication.--The Office of Administration in
3 coordination with the corresponding departmental oversight
4 entity shall ensure that a state-of-the-art, online claims
5 adjudication system is established for all appropriate
6 Commonwealth pharmacy and preferred pharmacy programs. Nothing
7 shall preclude the Office of Administration from adopting
8 successful systems currently utilized in a Commonwealth pharmacy
9 program as a uniform procedure for all programs, including those
10 with procedures already in place.
11 (c) Drug utilization review system.--The Office of
12 Administration in coordination with the corresponding
13 departmental oversight entity shall ensure that a state-of-the-
14 art, outcome-based, regulatory modeled, therapeutic drug
15 utilization review system is established to monitor and correct
16 misutilization of drug therapies for all appropriate
17 Commonwealth pharmacy and preferred pharmacy programs. The
18 system shall provide prospective and retrospective analysis of
19 potentially dangerous drug interactions, duplicative therapies,
20 maximum allowable dosing, therapy duration, acute to maintenance
21 therapy and drug utilization. Nothing shall preclude the Office
22 of Administration from adopting successful systems currently
23 utilized in a Commonwealth pharmacy program as a uniform
24 procedure for all programs, including those with procedures
25 already in place.
26 (d) Surveillance utilization review system.--The Office of
27 Administration in coordination with the corresponding
28 departmental oversight entity shall ensure that a surveillance
29 utilization review system is established to monitor, identify
30 and investigate potential misutilization or deficiencies in the
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1 level of care. The system shall monitor potential fraud and
2 abuse by enrollees, providers and prescribers for all
3 appropriate Commonwealth pharmacy and preferred pharmacy
4 programs. Nothing shall preclude the Office of Administration
5 from adopting successful systems currently utilized in a
6 Commonwealth pharmacy program as a uniform procedure for all
7 programs, including those with procedures already in place.
8 (e) Mandatory generic substitution.--The Office of
9 Administration in consultation with the Department of Health and
10 in coordination with the appropriate corresponding departmental
11 oversight entity shall provide for a procedure to ensure that,
12 notwithstanding provisions of the act of November 24, 1976
13 (P.L.1163, No.259), referred to as the Generic Equivalent Drug
14 Law, and the act of August 26, 1971 (P.L.351, No.91), known as <--
15 the State Lottery Law, to the contrary, a generic drug
16 equivalent shall only be dispensed when it is less expensive for
17 a Commonwealth pharmacy program.
18 (f) Access restrictions.--Except as provided for in this
19 section, the Commonwealth shall not institute or adopt any new
20 restrictions, drug formulary, preferred drug list or any other
21 substitution process for the purchase of or reimbursement for
22 pharmaceuticals by a Commonwealth pharmacy program on or before
23 January 1, 2007. This restriction shall include: LAW, A BRAND <--
24 NAME PRODUCT SHALL BE DISPENSED AND NOT SUBSTITUTED WITH AN A-
25 RATED GENERIC THERAPEUTICALLY EQUIVALENT DRUG IF IT IS LESS
26 EXPENSIVE TO THE COMMONWEALTH PHARMACY PROGRAM.
27 (F) ACCESS RESTRICTIONS.--EXCEPT AS PROVIDED IN THIS
28 SECTION, A COMMONWEALTH PHARMACY PROGRAM SHALL NOT INSTITUTE ANY
29 NEW ACCESS RESTRICTIONS FOR ENROLLEES. THIS LIMITATION SHALL
30 INCLUDE THE IMPLEMENTATION OF SCRIPT LIMITATIONS, DRUG
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1 FORMULARIES OR PREFERRED DRUG LISTS ON OR BEFORE JANUARY 1,
2 2007. THIS RESTRICTION SHALL ALSO INCLUDE:
3 (1) Any policy modifications to existing prior
4 authorization procedures.
5 (2) The application for any approval of modifications to
6 its State plan as provided for in the Social Security Act (49
7 Stat. 620, 42 U.S.C. § 301 et seq.) pertaining to the
8 reimbursement for, rebate on or access to pharmaceuticals in <--
9 a Commonwealth pharmacy program.
10 (3) The implementation of any approval of modifications
11 to its State plan as provided for in Ch. 7 Subch. XIX of the
12 Social Security Act pertaining to the reimbursement for, <--
13 rebate on or access to pharmaceuticals in a Commonwealth
14 pharmacy program.
15 (4) Nothing in this section shall preclude the adoption
16 of a new or revised procedure for the reimbursement for,
17 rebate on or access to pharmaceuticals in a Commonwealth
18 pharmacy program provided that the adoption of such change is
19 required by Federal law.
20 (g) Access restrictions after January 1, 2007.--If other <--
21 cost-saving measures are not identified, the
22 (1) THE Commonwealth may institute or adopt any new <--
23 restrictions, drug formulary, preferred drug list or any
24 other substitution process for the purchase of or <--
25 reimbursement for pharmaceuticals by a Commonwealth pharmacy
26 program after January 1, 2007, provided that the General
27 Assembly does not object to the adoption of such a procedure.
28 (h) Notice and procedure.-- <--
29 (2) The Office of Administration in coordination with <--
30 the corresponding departmental oversight entity shall notify
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1 the Majority Leader and the Minority Leader of the Senate and
2 the Majority Leader and the Minority Leader of the House of
3 Representatives upon the adoption of any access restriction
4 as outlined in subsection (f). Upon receipt of the
5 notification, the General Assembly may overturn the
6 restriction, provided that it adopts a concurrent resolution
7 within 25 legislative days of receiving notice.
8 (3) THE DEPARTMENT SHALL NOT IMPLEMENT A PREFERRED DRUG <--
9 LIST, FORMULARY, SUBSTITUTION PROCESS OR PRIOR AUTHORIZATION
10 PROCEDURE FOR THE FOLLOWING:
11 (I) A CENTRAL NERVOUS SYSTEM PRESCRIPTION DRUG THAT
12 IS CLASSIFIED AS AN ANTICONVULSANT, ANTIDEPRESSANT,
13 ANTIPSYCHOTIC OR A NONCONTROLLED SUBSTANCE ANTI-ANXIETY
14 DRUG IN A GENERALLY ACCEPTED STANDARD MEDICAL REFERENCE.
15 (II) A PRESCRIPTION DRUG THAT IS CROSS-INDICATED FOR
16 A CENTRAL NERVOUS SYSTEM DRUG EXEMPTED UNDER CLAUSE (I)
17 AS DOCUMENTED IN A GENERALLY ACCEPTED STANDARD MEDICAL
18 REFERENCE.
19 (III) A PRESCRIPTION DRUG THAT IS USED AS AN
20 IMMUNOSUPPRESSANT.
21 (IV) UNLESS THE PRESCRIPTION DRUG IS A CONTROLLED
22 SUBSTANCE OR THE PRESCRIPTION DRUG IS BEING PRESCRIBED TO
23 TREAT A CONDITION THAT IS EXCLUDED FROM COVERAGE UNDER
24 THIS ACT, A PRESCRIPTION DRUG THAT IS RECOGNIZED IN A
25 GENERALLY ACCEPTED STANDARD MEDICAL REFERENCE AS
26 EFFECTIVE IN THE TREATMENT OF CONDITIONS SPECIFIED IN THE
27 MOST RECENT DIAGNOSTIC AND STATISTICAL MANUAL OF MENTAL
28 DISORDERS PUBLISHED BY THE AMERICAN PSYCHIATRIC
29 ASSOCIATION. THE DEPARTMENT OR THE DEPARTMENT'S AGENT
30 SHALL NOT DENY A REQUEST FOR PRIOR AUTHORIZATION OF A
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1 CONTROLLED SUBSTANCE UNDER THIS SUBSECTION UNLESS THE
2 DEPARTMENT OR THE DEPARTMENT'S AGENT DETERMINES THAT THE
3 CONTROLLED SUBSTANCE OR THE DOSAGE OF THE CONTROLLED
4 SUBSTANCE BEING PRESCRIBED IS NOT CONSISTENT WITH ITS
5 LICENSED INDICATIONS OR WITH GENERALLY ACCEPTED MEDICAL
6 PRACTICE AS DOCUMENTED IN A STANDARD MEDICAL REFERENCE.
7 (V) A PRESCRIPTION DRUG THAT IS RECOGNIZED IN A
8 GENERALLY ACCEPTED STANDARD MEDICAL REFERENCE FOR THE
9 TREATMENT OF AND IS BEING PRESCRIBED TO A PATIENT FOR THE
10 TREATMENT OF HUMAN IMMUNODEFICIENCY VIRUS, ACQUIRED
11 IMMUNE DEFICIENCY SYNDROME OR OPPORTUNISTIC INFECTIONS.
12 Section 6. Disease management.
13 (a) Authorization.--The Office of Administration in
14 coordination with the corresponding departmental oversight
15 entity shall evaluate the feasibility and fiscal impact of
16 implementing a disease management program for Commonwealth
17 pharmacy and preferred pharmacy programs. When appropriate, the
18 Office of Administration shall provide for the contracting for,
19 the implementation of and the administration of disease
20 management programs. The contracting for the services may
21 include the bundling of multiple Commonwealth pharmacy and
22 preferred pharmacy programs.
23 (b) Program.--A disease management program shall include:
24 (1) A population identification process; collaborative
25 practice models to include physicians and support-service
26 providers; patient self-management education, including
27 primary prevention, behavior modification programs and
28 compliance-surveillance; process and outcomes measurement,
29 evaluation and management; and periodic reporting, including
30 communication with patient, physician, health plan and
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1 ancillary providers and practice profiling.
2 (2) A disease management program may be established to
3 include any of the following conditions: asthma, diabetes,
4 mental health, congestive heart failure, chronic obstructive
5 pulmonary disease, coronary artery disease, chronic kidney
6 disease and high-risk pregnancies.
7 Section 7. Recycling.
8 (a) Authorization.--The Office of Administration in
9 coordination with the corresponding departmental oversight
10 entity shall evaluate the feasibility and fiscal impact of
11 implementing a pharmaceutical recycling program for the
12 redistribution of prescription drugs at health care facilities
13 or State correctional facilities for enrollees of Commonwealth
14 pharmacy and preferred pharmacy programs. The Office of
15 Administration shall have the immediate authority to provide for
16 the contracting for, the implementation of and the
17 administration of a pharmaceutical recycling pilot program in
18 State correctional facilities. Upon the completion of the
19 studies provided for in subsection (f), the Office of
20 Administration may expand the recycling program to other health
21 care facilities. The establishment of such a program may be
22 limited to specific classes of enrollees or specific categories
23 of health care facilities.
24 (b) Program.--Each health care facility or State
25 correctional facility may be required to return to the
26 appropriate vendor pharmacy, for initial repackaging by that
27 vendor pharmacy and redistribution to that health care facility
28 or State correctional facility, prescription drug products which
29 are suitable for redistribution. The redistribution of
30 prescription drug products shall only occur if the products are:
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1 (1) Not controlled substances.
2 (2) Sealed in individually packaged units.
3 (3) Returned to the vendor pharmacy at least 90 days
4 prior to the expiration of the recommended period of shelf
5 life for the purpose of redispensing such drug products.
6 (4) Oral and parenteral medication in single-dose sealed
7 containers approved by the FDA, topical or inhalant drug
8 products in units of use containers approved by the FDA or
9 parenteral medications in multiple-dose sealed containers
10 approved by the FDA from which no doses have been withdrawn.
11 (5) Subject to a stringent pedigree papers process which
12 documents the product's chain of possession, when it was last
13 repackaged, the drug product's lot number and the drug
14 product's expiration date.
15 (c) Scope.--The determination of which products and
16 facilities that may be included in the program shall include a
17 specific costs benefit analysis for each category of health care
18 facility and class of a pharmacy program enrollee. In order to
19 enhance the cost-effectiveness of the recycling program and
20 maximize patient safety, the scope of prescription drugs covered
21 may be limited.
22 (d) Fees.--The program shall establish by regulation or
23 contract an appropriate fee schedule for vendors utilized in the
24 collection, redistribution and tracking of pharmaceuticals
25 included within the program.
26 (e) Prohibition.--Nothing in this section shall require a
27 pharmaceutical manufacturer to provide a rebate based on the
28 reuse and redistribution of any unused drug as authorized in
29 this section.
30 (f) Liability.--No pharmaceutical manufacturer shall be
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1 liable for any claim or injury arising from the transfer of any
2 prescription drug pursuant to the provision of this act,
3 including, but not limited to, liability for failure to transfer
4 or communicate product or consumer information regarding the
5 transferred drug, as well as the expiration date of the
6 transferred drug.
7 (g) Studies.--
8 (1) No sooner than one year after the initial
9 implementation of the recycling pilot program authorized by
10 subsection (a) the Office of Administration shall evaluate
11 the fiscal impact of the pilot program and determine the
12 feasibility of establishing such a program in other health
13 care facilities.
14 (2) In conjunction with the pilot program's analysis,
15 the Office of Administration in consultation with
16 representatives of the pharmaceutical manufacturers and
17 dispensing pharmacists shall provide recommendations on
18 suggested revisions to the practices and protocols for the
19 packaging and distribution of pharmaceuticals that could
20 further enhance the cost-effectiveness of a recycling
21 program.
22 (3) Upon the completion of the studies provided for in
23 this section, copies of the studies shall be transmitted to
24 the chairman and minority chairman of the Appropriations
25 Committee of the Senate, the chairman and minority chairman
26 of the Public Health and Welfare Committee of the Senate, the
27 chairman and minority chairman of the Appropriations
28 Committee of the House of Representatives and the chairman
29 and minority chairman of the Health and Human Services
30 Committee of the House of Representatives.
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1 Section 8. Reporting.
2 No later than two years from the effective date of this act,
3 the Office of Administration in coordination with the
4 corresponding departmental oversight entities shall submit a
5 report to the chairman and minority chairman of the
6 Appropriations Committee of the Senate, the chairman and
7 minority chairman of the Public Health and Welfare Committee of
8 the Senate, the chairman and minority chairman of the
9 Appropriations Committee of the House of Representatives and the
10 chairman and minority chairman of the Health and Human Services
11 Committee of the House of Representatives evaluating the fiscal
12 impact of implementing the various provisions of this act and
13 making recommendations to the General Assembly for enhancing the
14 efficacy of this act.
15 Section 9. Rules and regulations.
16 The Office of Administration shall promulgate rules and <--
17 regulations to administer this act.
18 Section 10. Severability.
19 The provisions of this act are severable. If any provision of
20 this act or its application to any person or circumstance is
21 held invalid, the invalidity shall not affect other provisions
22 or applications of this act which can be given effect without
23 the invalid provision or application.
24 Section 11. Effective date.
25 This act shall take effect immediately.
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