PRINTER'S NO. 987
No. 794 Session of 2005
INTRODUCED BY WONDERLING, BROWNE, BOSCOLA, RAFFERTY, M. WHITE,
FERLO, EARLL, PICCOLA, WAUGH, PILEGGI AND RHOADES,
JUNE 22, 2005
REFERRED TO PUBLIC HEALTH AND WELFARE, JUNE 22, 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.
15 Section 11. Effective date.
16 The General Assembly of the Commonwealth of Pennsylvania
17 hereby enacts as follows:
18 Section 1. Short title.
1 This act shall be known and may be cited as the Commonwealth
2 Pharmacy Program Procedures and Policies Act.
3 Section 2. Legislative intent (Reserved).
4 Section 3. Definitions.
5 The following words and phrases when used in this act shall
6 have the meanings given to them in this section unless the
7 context clearly indicates otherwise:
8 "Commonwealth pharmacy program." The term shall include:
9 medical assistance, general assistance, PACE, PACENET, the
10 Special Pharmaceutical Benefit Program in the Department of
11 Public Welfare, the End Stage Renal Program in the Department of
12 Health and any other pharmacy program administered by the
13 Commonwealth that is recognized by the Centers for Medicare and
14 Medicaid as a State pharmaceutical assistance program.
15 "Disease management program." A system of coordinated health
16 care interventions and communications designed for enhanced
17 health outcomes and managing costs for populations with
18 conditions where self-care efforts are significant. This program
19 promotes the physician-patient relationship and plan of care,
20 emphasizes the prevention of exacerbations and complications of
21 disease states utilizing patient empowerment strategies, and
22 evaluates clinical, humanistic and economic outcomes on an
23 ongoing basis with the goal of improving overall health.
24 "Health care facility." A general or specific hospital,
25 including State centers for the mentally retarded and
26 psychiatric hospitals, skilled nursing facilities and
27 intermediate care facilities, regardless of whether such a
28 facility is for profit, nonprofit or governmental.
29 "Less expensive." The lowest net cost to the Commonwealth
30 for a Commonwealth pharmacy program. The net cost shall include
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1 the amount paid by the Commonwealth to a pharmacy for a drug
2 under current retail pharmacy reimbursement formula less any
3 discounts or rebates, including those paid during the previous
4 calendar quarter and inclusive of all dispensing fees.
5 "Manufacturer." An entity which is engaged in any of the
6 following:
7 (1) The production, preparation, propagation,
8 compounding, conversion or processing of prescription drug
9 products directly or indirectly by extraction from substances
10 of natural origin, independently by means of chemical
11 synthesis or by a combination of extraction and chemical
12 synthesis.
13 (2) The packaging, repackaging, labeling or relabeling
14 or distribution of prescription drug products. The term shall
15 also include the entity holding legal title to or possession
16 of the national drug code number for the covered prescription
17 drug. The term does not include a wholesale distributor of
18 drugs, drugstore chain organization or retail pharmacy
19 licensed by the Commonwealth.
20 "National drug code number." The identifying drug number
21 maintained by the Food and Drug Administration. The complete 11-
22 digit number must include the labeler code, product code and
23 package size code.
24 "Office of Administration." The Governor's Office of
25 Administration.
26 "Preferred pharmacy program." Any pharmacy program exclusive
27 of Commonwealth pharmacy programs through which the
28 Commonwealth, or its affiliates or designees, through a
29 contractual agreement purchases or reimburses its affiliates or
30 designees for a pharmacy benefit. The term may include, but
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1 shall not be limited to, the Public Employees Benefit Trust
2 Fund, Children's Health Insurance Program, Workers' Compensation
3 Program and the Department of Corrections. The Office of
4 Administration shall publish in the Pennsylvania Bulletin a
5 listing of pharmacy programs that shall be designated preferred
6 pharmacy programs within 90 days of the effective date of this
7 act.
8 Section 4. Rebates.
9 (a) Procedures requirement.--Any Commonwealth pharmacy or
10 preferred pharmacy program that requires a manufacturer to remit
11 a rebate to the program as a condition of participating in it
12 shall have a clearly defined remittance procedure. The procedure
13 shall include a process for the efficient collection of rebates
14 that are not in dispute and a dispute resolution process.
15 (b) Uniformity.--The Office of Administration in
16 coordination with the corresponding departmental oversight
17 entity shall develop and publish in the Pennsylvania Bulletin a
18 clearly defined remittance procedure for any Commonwealth
19 pharmacy and preferred pharmacy program that does not already
20 have a procedure in place. The procedure shall include a process
21 for the efficient collection of rebates that are not in dispute
22 and a dispute resolution process. The development of the
23 procedure shall include the consideration of need for uniform
24 procedures. Nothing shall preclude the Office of Administration
25 from implementing a uniform procedure for all programs,
26 including those with procedures already in place.
27 (c) Past due rebates.--The Office of Administration shall
28 have the authority to levy a surcharge penalty on any
29 manufacturer for the collection of past due rebates that are not
30 in dispute. The penalty may be levied on any rebate more than
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1 one year past due. The surcharge shall be in addition to any
2 interest and penalties authorized under existing law or
3 contractual agreement.
4 (1) The surcharge shall be equal to 15% of the principal
5 owed for each year that the rebate is past due. The
6 calculation of the surcharge shall be prorated for any
7 portion of the year that the rebate is past due.
8 (2) The Office of Administration shall not apply the
9 surcharge to any past due manufacturer's rebates prior to
10 notifying the manufacturer of its intent to levy the
11 surcharge. The notice shall provide the manufacturer with 30
12 days to satisfy any past due claims.
13 (d) Prohibition.--Nothing in this section shall be
14 interpreted to authorize or require the implementation of
15 rebates or supplemental rebates as a condition of participation
16 in any Commonwealth pharmacy or preferred pharmacy program.
17 Section 5. Cost containment.
18 (a) Auditing procedures.--The Office of Administration in
19 coordination with the corresponding departmental oversight
20 entity shall ensure that a uniform, coordinated and standardized
21 auditing procedure be adopted for all Commonwealth pharmacy and
22 preferred pharmacy programs.
23 (b) Claims adjudication.--The Office of Administration in
24 coordination with the corresponding departmental oversight
25 entity shall ensure that a state-of-the-art, online claims
26 adjudication system is established for all appropriate
27 Commonwealth pharmacy and preferred pharmacy programs. Nothing
28 shall preclude the Office of Administration from adopting
29 successful systems currently utilized in a Commonwealth pharmacy
30 program as a uniform procedure for all programs, including those
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1 with procedures already in place.
2 (c) Drug utilization review system.--The Office of
3 Administration in coordination with the corresponding
4 departmental oversight entity shall ensure that a state-of-the-
5 art, outcome-based, regulatory modeled, therapeutic drug
6 utilization review system is established to monitor and correct
7 misutilization of drug therapies for all appropriate
8 Commonwealth pharmacy and preferred pharmacy programs. The
9 system shall provide prospective and retrospective analysis of
10 potentially dangerous drug interactions, duplicative therapies,
11 maximum allowable dosing, therapy duration, acute to maintenance
12 therapy and drug utilization. Nothing shall preclude the Office
13 of Administration from adopting successful systems currently
14 utilized in a Commonwealth pharmacy program as a uniform
15 procedure for all programs, including those with procedures
16 already in place.
17 (d) Surveillance utilization review system.--The Office of
18 Administration in coordination with the corresponding
19 departmental oversight entity shall ensure that a surveillance
20 utilization review system is established to monitor, identify
21 and investigate potential misutilization or deficiencies in the
22 level of care. The system shall monitor potential fraud and
23 abuse by enrollees, providers and prescribers for all
24 appropriate Commonwealth pharmacy and preferred pharmacy
25 programs. Nothing shall preclude the Office of Administration
26 from adopting successful systems currently utilized in a
27 Commonwealth pharmacy program as a uniform procedure for all
28 programs, including those with procedures already in place.
29 (e) Mandatory generic substitution.--The Office of
30 Administration in consultation with the Department of Health and
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1 in coordination with the appropriate corresponding departmental
2 oversight entity shall provide for a procedure to ensure that,
3 notwithstanding provisions of the act of November 24, 1976
4 (P.L.1163, No.259), referred to as the Generic Equivalent Drug
5 Law, a brand name product shall be dispensed and not substituted
6 with an A-rated generic therapeutically equivalent drug if it is
7 less expensive to the Commonwealth pharmacy program.
8 (f) Access restrictions.--Except as provided in this
9 section, a Commonwealth pharmacy program shall not institute any
10 new access restrictions for enrollees. This limitation shall
11 include the implementation of script limitations, drug
12 formularies or preferred drug lists on or before January 1,
13 2007. This restriction shall also include:
14 (1) Any policy modifications to existing prior
15 authorization procedures.
16 (2) The application for any approval of modifications to
17 its State plan as provided for in the Social Security Act (49
18 Stat. 620, 42 U.S.C. § 301 et seq.) pertaining to the rebate
19 on or access to pharmaceuticals in a Commonwealth pharmacy
20 program.
21 (3) The implementation of any approval of modifications
22 to its State plan as provided for in Ch. 7 Subch. XIX of the
23 Social Security Act pertaining to the rebate on or access to
24 pharmaceuticals in a Commonwealth pharmacy program.
25 (4) Nothing in this section shall preclude the adoption
26 of a new or revised procedure for the reimbursement for,
27 rebate on or access to pharmaceuticals in a Commonwealth
28 pharmacy program provided that the adoption of such change is
29 required by Federal law.
30 (g) Access restrictions after January 1, 2007.--
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1 (1) The Commonwealth may institute or adopt any new
2 restrictions, drug formulary, preferred drug list or any
3 other substitution process for the purchase of
4 pharmaceuticals by a Commonwealth pharmacy program after
5 January 1, 2007, provided that the General Assembly does not
6 object to the adoption of such a procedure.
7 (2) The Office of Administration in coordination with
8 the corresponding departmental oversight entity shall notify
9 the Majority Leader and the Minority Leader of the Senate and
10 the Majority Leader and the Minority Leader of the House of
11 Representatives upon the adoption of any access restriction
12 as outlined in subsection (f). Upon receipt of the
13 notification, the General Assembly may overturn the
14 restriction, provided that it adopts a concurrent resolution
15 within 25 legislative days of receiving notice.
16 (3) The department shall not implement a preferred drug
17 list, formulary, substitution process or prior authorization
18 procedure for the following:
19 (i) A central nervous system prescription drug that
20 is classified as an anticonvulsant, antidepressant,
21 antipsychotic or a noncontrolled substance anti-anxiety
22 drug in a generally accepted standard medical reference.
23 (ii) A prescription drug that is cross-indicated for
24 a central nervous system drug exempted under clause (i)
25 as documented in a generally accepted standard medical
26 reference.
27 (iii) A prescription drug that is used as an
28 immunosuppressant.
29 (iv) Unless the prescription drug is a controlled
30 substance or the prescription drug is being prescribed to
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1 treat a condition that is excluded from coverage under
2 this act, a prescription drug that is recognized in a
3 generally accepted standard medical reference as
4 effective in the treatment of conditions specified in the
5 most recent diagnostic and statistical manual of mental
6 disorders published by the American Psychiatric
7 Association. The department or the department's agent
8 shall not deny a request for prior authorization of a
9 controlled substance under this subsection unless the
10 department or the department's agent determines that the
11 controlled substance or the dosage of the controlled
12 substance being prescribed is not consistent with its
13 licensed indications or with generally accepted medical
14 practice as documented in a standard medical reference.
15 (v) A prescription drug that is recognized in a
16 generally accepted standard medical reference for the
17 treatment of and is being prescribed to a patient for the
18 treatment of human immunodeficiency virus, acquired
19 immune deficiency syndrome or opportunistic infections.
20 Section 6. Disease management.
21 (a) Authorization.--The Office of Administration in
22 coordination with the corresponding departmental oversight
23 entity shall evaluate the feasibility and fiscal impact of
24 implementing a disease management program for Commonwealth
25 pharmacy and preferred pharmacy programs. When appropriate, the
26 Office of Administration shall provide for the contracting for,
27 the implementation of and the administration of disease
28 management programs. The contracting for the services may
29 include the bundling of multiple Commonwealth pharmacy and
30 preferred pharmacy programs.
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1 (b) Program.--A disease management program shall include:
2 (1) A population identification process; collaborative
3 practice models to include physicians and support-service
4 providers; patient self-management education, including
5 primary prevention, behavior modification programs and
6 compliance-surveillance; process and outcomes measurement,
7 evaluation and management; and periodic reporting, including
8 communication with patient, physician, health plan and
9 ancillary providers and practice profiling.
10 (2) A disease management program may be established to
11 include any of the following conditions: asthma, diabetes,
12 mental health, congestive heart failure, chronic obstructive
13 pulmonary disease, coronary artery disease, chronic kidney
14 disease and high-risk pregnancies.
15 Section 7. Recycling.
16 (a) Authorization.--The Office of Administration in
17 coordination with the corresponding departmental oversight
18 entity shall evaluate the feasibility and fiscal impact of
19 implementing a pharmaceutical recycling program for the
20 redistribution of prescription drugs at health care facilities
21 or State correctional facilities for enrollees of Commonwealth
22 pharmacy and preferred pharmacy programs. The Office of
23 Administration shall have the immediate authority to provide for
24 the contracting for, the implementation of and the
25 administration of a pharmaceutical recycling pilot program in
26 State correctional facilities. Upon the completion of the
27 studies provided for in subsection (f), the Office of
28 Administration may expand the recycling program to other health
29 care facilities. The establishment of such a program may be
30 limited to specific classes of enrollees or specific categories
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1 of health care facilities.
2 (b) Program.--Each health care facility or State
3 correctional facility may be required to return to the
4 appropriate vendor pharmacy, for initial repackaging by that
5 vendor pharmacy and redistribution to that health care facility
6 or State correctional facility, prescription drug products which
7 are suitable for redistribution. The redistribution of
8 prescription drug products shall only occur if the products are:
9 (1) Not controlled substances.
10 (2) Sealed in individually packaged units.
11 (3) Returned to the vendor pharmacy at least 90 days
12 prior to the expiration of the recommended period of shelf
13 life for the purpose of redispensing such drug products.
14 (4) Oral and parenteral medication in single-dose sealed
15 containers approved by the FDA, topical or inhalant drug
16 products in units of use containers approved by the FDA or
17 parenteral medications in multiple-dose sealed containers
18 approved by the FDA from which no doses have been withdrawn.
19 (5) Subject to a stringent pedigree papers process which
20 documents the product's chain of possession, when it was last
21 repackaged, the drug product's lot number and the drug
22 product's expiration date.
23 (c) Scope.--The determination of which products and
24 facilities that may be included in the program shall include a
25 specific costs benefit analysis for each category of health care
26 facility and class of a pharmacy program enrollee. In order to
27 enhance the cost-effectiveness of the recycling program and
28 maximize patient safety, the scope of prescription drugs covered
29 may be limited.
30 (d) Fees.--The program shall establish by regulation or
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1 contract an appropriate fee schedule for vendors utilized in the
2 collection, redistribution and tracking of pharmaceuticals
3 included within the program.
4 (e) Prohibition.--Nothing in this section shall require a
5 pharmaceutical manufacturer to provide a rebate based on the
6 reuse and redistribution of any unused drug as authorized in
7 this section.
8 (f) Liability.--No pharmaceutical manufacturer shall be
9 liable for any claim or injury arising from the transfer of any
10 prescription drug pursuant to the provision of this act,
11 including, but not limited to, liability for failure to transfer
12 or communicate product or consumer information regarding the
13 transferred drug, as well as the expiration date of the
14 transferred drug.
15 (g) Studies.--
16 (1) No sooner than one year after the initial
17 implementation of the recycling pilot program authorized by
18 subsection (a) the Office of Administration shall evaluate
19 the fiscal impact of the pilot program and determine the
20 feasibility of establishing such a program in other health
21 care facilities.
22 (2) In conjunction with the pilot program's analysis,
23 the Office of Administration in consultation with
24 representatives of the pharmaceutical manufacturers and
25 dispensing pharmacists shall provide recommendations on
26 suggested revisions to the practices and protocols for the
27 packaging and distribution of pharmaceuticals that could
28 further enhance the cost-effectiveness of a recycling
29 program.
30 (3) Upon the completion of the studies provided for in
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1 this section, copies of the studies shall be transmitted to
2 the chairman and minority chairman of the Appropriations
3 Committee of the Senate, the chairman and minority chairman
4 of the Public Health and Welfare Committee of the Senate, the
5 chairman and minority chairman of the Appropriations
6 Committee of the House of Representatives and the chairman
7 and minority chairman of the Health and Human Services
8 Committee of the House of Representatives.
9 Section 8. Reporting.
10 No later than two years from the effective date of this act,
11 the Office of Administration in coordination with the
12 corresponding departmental oversight entities shall submit a
13 report to the chairman and minority chairman of the
14 Appropriations Committee of the Senate, the chairman and
15 minority chairman of the Public Health and Welfare Committee of
16 the Senate, the chairman and minority chairman of the
17 Appropriations Committee of the House of Representatives and the
18 chairman and minority chairman of the Health and Human Services
19 Committee of the House of Representatives evaluating the fiscal
20 impact of implementing the various provisions of this act and
21 making recommendations to the General Assembly for enhancing the
22 efficacy of this act.
23 Section 9. Rules and regulations.
24 The Office of Administration shall promulgate regulations to
25 administer this act.
26 Section 10. Severability.
27 The provisions of this act are severable. If any provision of
28 this act or its application to any person or circumstance is
29 held invalid, the invalidity shall not affect other provisions
30 or applications of this act which can be given effect without
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1 the invalid provision or application.
2 Section 11. Effective date.
3 This act shall take effect immediately.
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