THE GENERAL ASSEMBLY OF PENNSYLVANIA

HOUSE BILL

INTRODUCED BY DeLUCA, ARGALL, BAKER, BARBIN, BOYD, CALTAGIRONE, CARROLL, COHEN, CRUZ, DePASQUALE, DONATUCCI, FRANKEL, GALLOWAY, GEORGE, GOODMAN, HALUSKA, HENNESSEY, JOSEPHS, KORTZ, KULA, MANDERINO, McILVAINE SMITH, MELIO, MILLARD, MUNDY, MURT, M. O'BRIEN, PALLONE, PARKER, PYLE, READSHAW, SIPTROTH, K. SMITH, STURLA, WALKO, YUDICHAK, GIBBONS AND HANNA, FEBRUARY 27, 2009

REFERRED TO COMMITTEE ON INSURANCE, FEBRUARY 27, 2009  

AN ACT

Establishing One Pennsylvania, a program to consolidate and

unify procedures and requirements for the administration of

all Commonwealth-funded, Commonwealth-administered and

Commonwealth-supported prescription drug programs; and

providing for reimbursement for pharmaceutical services.

The General Assembly of the Commonwealth of Pennsylvania

hereby enacts as follows:

Section 1.  Short title.

This act shall be known and may be cited as the One

Pennsylvania Act.

Section 2.  Definitions.

The following words and phrases when used in this act shall

have the meanings given to them in this section unless the

context clearly indicates otherwise:

"Adjudication."

(1)  Except as provided in paragraph (2), an action taken

by the Office of Administration, the Secretary of

Administration or a prescription drug plan pursuant to this

act that constitutes an adjudication as defined by 2 Pa.C.S.

§ 101 (relating to definitions), including any of the

following:

(i)  A decision to allow a provider to participate in

a prescription drug plan or to suspend, restrict or

revoke participation by a provider in a prescription drug

plan.

(ii)  A decision by the Office of Administration to

include or exclude a medication from the formulary or

preferred drug list.

(iii)  The establishment of provider reimbursement

rates and formulas.

(iv)  A decision to grant or deny prior authorization

for the dispensing of prescription drugs or to approve or

disapprove the dispensing of drugs not included on the

formulary or preferred drug list.

(v)  An action taken by the program based upon audits

of claims submitted for reimbursement by providers.

(2)  An action taken by the program with respect to

determining recipient eligibility shall not be deemed an

adjudication by the Office of Administration pursuant to its

authority under this act. Eligibility shall be determined by

the agency or entity under whose authority the prescription

drug plan is authorized.

"Alerts."  Electronic communications between the Office of

Administration or the pharmacy benefits consolidation program

and pharmacies providing information pertaining to the

implementation of this act, including any of the following:

(1)  Information regarding the preferred drug lists.

(2)  Preferred drug lists.

(3)  Drug utilization review.

(4)  Prior authorization.

(5)  Disease management programs.

(6)  Claims submission and adjudication procedures.

(7)  Audits.

(8)  Pharmacy and patient education.

"Best price."  As defined under section 1927(c) of the Social

Security Act (49 Stat. 620, 42 U.S.C. § 1396r-8(c)).

"Medical assistance program."  The program established

pursuant to Subarticle (f) of Article IV of the act of June 13,

1967 (P.L.31, No.21), known as the Public Welfare Code.

"Medicare recipient."  An individual residing in this

Commonwealth who receives benefits under Part A of Subchapter

XVIII of Chapter 7 of the Social Security Act (49 Stat. 620, 42

U.S.C. § 301 et seq.) or who is enrolled under Part B, C or D of

Subchapter XVIII.

"Office of Administration."  The Office of Administration of

the Commonwealth.

"Pharmaceutical manufacturer."  A manufacturer as defined by

section 1927(k)(5) of the Social Security Act (49 Stat. 620, 42

U.S.C. § 1396r-8(k)(5)).

"Pharmacy."  A pharmacy licensed pursuant to the act of

September 27, 1961 (P.L.1700, No.699), known as the Pharmacy

Act.

"Pharmacy Act."  The act of September 27, 1961 (P.L.1700, No.

699), known as the Pharmacy Act.

"Pharmacy services."  The provision of health care services

defined as the practice of pharmacy by the act of September 27,

1961 (P.L.1700, No.699), known as the Pharmacy Act.

"Preferred drug list."  A list of prescription medications

covered under a prescription drug plan that may be dispensed by

a prescription drug plan without prior authorization, subject to

applicable limits and conditions.

"Prescription drug."  A covered outpatient drug as defined by

section 1927(k)(2) of the Social Security Act (49 Stat. 620, 42

U.S.C. § 1396r-8(k)(2)).

"Prescription drug plan."  A Commonwealth operation or funded

pharmaceutical program that pays or reimburses for prescription

drugs dispensed to individuals enrolled in the program that is

supported directly or indirectly, in whole or in part, by

Commonwealth public funds, including, but not limited to, all of

the following:

(1)  The medical assistance program, the Special

Pharmaceutical Benefit Program in the Department of Public

Welfare.

(2)  The Pharmaceutical Assistance Contract for the

Elderly (PACE) and any other pharmacy program administered by

the Commonwealth that is recognized by the Centers for

Medicare and Medicaid of the United States as a State

pharmaceutical assistance program.

(3)  Programs or plans paying for prescription drugs

dispensed to employees as a retirement or employee benefit,

including programs established by the Public School

Employees' Retirement System, the State Employees' Retirement

System and the State Employees' Benefit Trust Fund.

(4)  A pharmaceutical program that utilizes funds of this

Commonwealth, including the State Lottery Fund, to provide

assistance in obtaining prescription drugs to Medicare

recipients.

(5)  Programs where the Commonwealth purchases or

reimburses affiliates or designees for a pharmaceutical drug

benefit. The programs shall include the Children's Health

Insurance Program, Workers' Compensation Program and any

program involving the purchase or reimbursement of

pharmaceutical drugs for inmates under the Department of

Corrections.

(6)  The End Stage Renal Program in the Department of

Health.

(7)  All prescription drug plans that prescribe benefits

to members and employees of the General Assembly and the

unified judicial system and its retirees.

"Program."  The One Pennsylvania pharmacy benefits

consolidation program established pursuant to section 3.

"Provider."  A pharmacy, a dispensing physician or a

certified registered nurse practitioner enrolled as a provider

in the One Pennsylvania program.

"Public School Employees' Retirement System."  The retirement

system established by 24 Pa.C.S. Part IV (relating to retirement

for school employees).

"Public Welfare Code."  The act of June 13, 1967 (P.L.31, No.

21), known as the Public Welfare Code.

"Retail pharmacy."  A pharmacy licensed to operate pursuant

to the act of September 27, 1961 (P.L.1700, No.699), known as

the Pharmacy Act, which provides services to the general public,

excluding any institutional pharmacy, specialty pharmacy or

mail-order pharmacy.

"Secretary."  The Secretary of Administration of the

Commonwealth.

"Social Security Act."  The Social Security Act (49 Stat.

620, 42 U.S.C. § 301 et seq.). A reference to the Social

Security Act shall include regulations implementing the Social

Security Act adopted by the United States Department of Health

and Human Services or the Centers for Medicare and Medicaid

Services.

"State agency."  Any of the following entities that purchases

or provides coverage for prescription medications:

(1)  An agency under the jurisdiction of the Governor.

(2)  An independent agency supported by public funds.

"State Employees' Benefit Trust Fund."  The trust fund

established to purchase health insurance coverage, including

coverage for prescription medications, for State employees.

"State Employees' Retirement System."  The retirement system

established under 71 Pa.C.S. Part XXV (relating to retirement

for State employees and officers).

Section 3.  One Pennsylvania.

(a)  Establishment.--The Office of Administration shall

establish a pharmacy benefits consolidation program to be known

as One Pennsylvania. The program shall administer all publicly

funded Commonwealth prescription drug plans through an

integrated system of plan administration using uniform standards

and requirements for the reimbursement to providers as provided

by this act.

(b)  Program requirements.--The Office of Administration

shall do all of the following:

(1)  Develop, manage and implement preferred drug lists

for all publicly funded Commonwealth prescription drug plans

to the extent allowed by applicable Federal law. A preferred

drug list shall include all prescription drugs for which a

manufacturer has entered into a rebate agreement pursuant to

section 6 and the requirements and restrictions, except for

prior authorization, provided by section 1927(d) of the

Social Security Act. A preferred drug list shall comply with

the standards established by Part D, section 1860D-4(b)(3) of

the Social Security Act and any additional regulations as may

be adopted by the Office of Administration pursuant to this

act. A current list of drugs included in the preferred drug

list shall be publicly available, posted electronically on

the Internet website of the Office of Administration and

communicated to pharmacies through alerts. All preferred drug

lists shall be uniform to the extent administratively

feasible under the statutory authority establishing the

individual prescription drug plans. The Office of

Administration may, in its discretion, allow exceptions to

the uniformity requirements in administrating the individual

programs due to fiscal and administrative considerations.

(2)  Adopt regulations relating to the eligibility of

participating providers and the adjudication of items and all

other provisions necessary to carry out the provisions of

this act. Any pharmacy shall be eligible to participate in

the program, provided the pharmacy complies with the

regulations adopted under the paragraph and other provisions

of this act.

(3)  The Office of Administration shall promulgate

statements of policy, as necessary, to carry out the

provisions of this act. No statement of this policy adopted

by the Office of Administration shall have the force and

effect of law or regulation or may modify the provisions of

any regulations adopted by the Office of Administration. All

statements of policy adopted by the Office of Administration

shall, except in emergency circumstances, be published for

notice and comment prior to adoption and shall be published

in the Pennsylvania Bulletin.

(4)  (i)  Except as provided in subparagraph (ii), make

provisions for generic substitutions in accordance with

the act of November 24, 1976 (P.L.1163, No.259), referred

to as the Generic Equivalent Drug Law.

(ii)  Notwithstanding the provisions of the Generic

Equivalent Drug Law and the act of August 26, 1971 (P.L.

351, No.91), known as the State Lottery Law, generic

substitutions shall only be dispensed when it is less

expensive for the program.

(5)  Provide for a program of prospective drug

utilization review consistent with section 1927(g)(2) of the

Social Security Act.

(6)  Provide for prior authorization consistent with the

requirements of section 1927(g)(5)of the Social Security Act

and in accordance with regulations of the Office of

Administration.

(7)  Provide for a program of retrospective drug

utilization review and education consistent with section

1927(g)(2) of the Social Security Act and in accordance with

regulations of the Office of Administration to ensure that

prescriptions are appropriate, medically necessary and not

likely to result in adverse medical results and to educate

providers and recipients of pharmacy services through the

pharmacy consolidated benefits program and to correct and

report misutilization and abuse by licensed prescribers and

recipients and provide for fraud and abuse audits,

coordinating its activities with the secretary to support

compliance with applicable laws and regulations. Pharmacies

shall not be denied payments for medications dispensed based

upon the results of retrospective drug utilization review or

audits, where the medication was dispensed in good faith by

the pharmacy without prior knowledge that the prescription of

a medication was not appropriate or necessary, was likely to

cause adverse medical results or constituted a fraudulent or

abusive practice by the prescriber.

(8)  Establish a program of medication therapy management

consistent with section 1860D-4(c)(2) of the Social Security

Act.

(9)  Provide educational materials for program recipients

of pharmacy services on disease and care management.

(10)  In accordance with section 1927(a) through (d) of

the Social Security Act or Chapter 7 of the act of August 26,

1971 (P.L.351, No.91), known as the State Lottery Law, bill,

recoup and relay to the medical assistance program

manufacturers' drug rebates and excessive consumer price

inflation discounts and resolve disputes. Upon the

establishment of the program, all medical assistance

recipients shall be enrolled in prescription drug programs

for which rebates and discounts are collected pursuant to

section 1927(a) through (d) of the Social Security Act.

(11)  Adjudicate claims through an electronic claims

management system consistent with section 1927(h) of the

Social Security Act and which allows for an emergency supply

of prescribed medication in the event of equipment failures.

(12)  The Office of Administration shall develop a manual

setting forth procedures, guidelines and standards to be

utilized by prescription drug plans in audits of providers

pertaining to the program.

(13)  Create a uniform audit and recoupment system

subject to the requirements of section 7(c) for all of the

following:

(i)  Pharmacies, pharmacists, dispensing physicians

and any other providers under this act.

(ii)  Pharmaceutical manufacturers, wholesalers and

other suppliers of prescription drugs.

(14)  Provide for the reimbursement of all providers

participating in prescription drug programs on a fee-for-

service basis.

(15)  Allow providers certified in medication therapy

management by a national accrediting body or by any other

certification process approved by the State Board of Pharmacy

to provide medication therapy management.

(c)  Considerations.--In preparing and managing the uniform

drug list, the Office of Administration shall enter into

agreements with drug manufacturers to collect and remit to the

program discounts, rebates or other concessions offered by

manufacturers.

(d)  Advisory committee.--

(1)  An advisory committee for One Pennsylvania is

established to assist the program in making informed and

fiscally responsive decisions in administering and

consolidating the purchases and reimbursements of

pharmaceutical drugs and benefits for the Commonwealth.

(2)  An advisory committee to the Office of

Administration shall consist of the following members:

(i)  Three members appointed by the Governor.

(ii)  Two members appointed by each of the following:

(A)  The President pro tempore of the Senate.

(B)  The Minority Leader of the Senate.

(C)  The Speaker of the House of Representatives.

(D)  The Minority Leader of the House of

Representatives.

(3)  Each legislative appointing authority shall appoint

one member pursuant to paragraph (2)(ii) involved in the

ownership or operation of independent pharmacies and one

member involved in the ownership or operation of chain

pharmacies.

(4)  Members of the committee shall serve without

compensation but shall be reimbursed for their reasonable and

necessary expenses by the Office of Administration.

(5)  Members of the committee shall serve for indefinite

terms at the will of their respective appointing authorities.

(6)  Action by the committee shall require a vote by at

least seven members.

(7)  Members of the committee shall annually elect a

chairperson.

(8)  The advisory committee shall meet twice yearly to

provide advice and recommendations to the program in regard

to its policies and regulations. The advisory committee shall

review the audit manual and rebate agreement yearly and

develop recommendations to the Office of Administration as

needed.

Section 4.  Reimbursement.

(a)  General rule.--Reimbursement to providers shall include

all of the following:

(1)  Payment sufficient to reimburse retail pharmacies

for the reasonable and necessary costs incurred to purchase

drugs.

(2)  Except to the extent otherwise required by Federal

law or regulations, payments to retail pharmacies pursuant to

paragraph (1) shall be based upon the average retail pharmacy

acquisition cost for a medication without regard to customary

prompt pay discounts in the package size most commonly

purchased by retail pharmacies as determined by the Office of

Administration pursuant to subsection (d), or a provider's

actual acquisition cost for a medication, whichever amount is

greater.

(3)  Payment for dispensing costs adequate to cover costs

associated with all of the following:

(i)  Wages and salaries.

(ii)  Costs to store and secure inventory.

(iii)  Patient counseling.

(iv)  Drug utilization review.

(v)  Licensing fees.

(vi)  Taxes.

(vii)  Insurance.

(viii)  Other direct and indirect costs of operating

a pharmacy.

(ix)  A reasonable profit to generate a return on the

investment associated with the costs.

(4)  During the first year this section is in effect,

payments pursuant to paragraph (3) shall be not less than $10

for the dispensing of a single source drug as defined by

section 1927(k)(7)(A)(iv) of the Social Security Act or $15

for the dispensing of a multiple-source drug as defined by

section 1927(k)(7)(A)(iv) of the Social Security Act.

Beginning on January 1 of each subsequent year, payment

pursuant to paragraph (3) shall be not less than the prior

year's minimum payments as adjusted based upon the annual

percentage change in Consumer Price Index for medical care

professional services as published by the Bureau of Labor

Statistics of the United States Department of Labor for the

month of December of the immediately prior year.

(5)  Additional payment for:

(i)  Medication therapy management.

(ii)  Concurrent and retrospective utilization

review.

(iii)  Managing prior authorization requirements.

(iv)  To the extent authorized by section 9.1 of the

Pharmacy Act, implementing drug therapy protocols.

(v)  Compounding prescriptions.

(vi)  Preparing specialized packaging for the

administration of medications in long-term care

facilities.

(vii)  Preparing medications for intravenous

administration.

(viii)  Other reasonable and necessary pharmacy

services.

(b)  Prompt payment.--Providers shall be paid within 21 days

of the Office of Administration's receipt of appropriate

substantiation of the transaction. Providers shall be entitled

to interest at the rate provided by section 806 of the act of

April 9, 1929 (P.L.343, No.176), known as The Fiscal Code, for

any payment not made within the 21-day period.

(c)  Average retail pharmacy acquisition costs.--The Office

of Administration shall determine and publicly make available

through its Internet website the average retail pharmacy

acquisition cost for covered medications pursuant to regulations

approved by the advisory committee in a manner consistent with

the methodology used by the Congressional Budget Office in its

December 26, 2006, report to the Committee on Energy and

Commerce of the United States House of Representatives based

upon a survey of retail pharmacy wholesale invoices or through

the use of commercially available sources of information.

Average pharmacy acquisition costs shall be updated weekly.

(d)  Copayments.--Except for services which are excluded

under the Commonwealth's medical assistance program, the Office

of Administration may require providers to collect a copayment

in an amount set by the program. To the extent a provider is

required by Federal or State law to dispense prescriptions to

persons unable to satisfy copayment obligations, the provider

shall be reimbursed for uncollected copayment amounts. The

Office of Administration shall neither require copayments from

beneficiaries nor deduct copayment amounts from provider

reimbursements for any particular classes of drugs or

prescription drug plan recipients to the extent there is good

cause to conclude that copayment requirements will result in

noncompliance with prescription drug treatment protocols and

will increase overall health care costs or result in imminent

and substantial risk of harm or injury to recipients or other

persons. Except to the extent prohibited by Federal law, the

Office of Administration may accept compensation for the purpose

of reducing or eliminating copayments from drug manufacturers,

distributors, health care plans or other persons or

organizations for the purpose of encouraging therapeutically

desirable compliance with prescription drug treatment protocols.

Section 5.  Deposit of funds.

A special fund is established in the State Treasury to be

known as the Special Pharmaceutical Fund. All moneys

appropriated from the State Lottery Fund for PACE operations

shall be deposited in the Special Pharmaceutical Fund. All

Federal moneys received by the Commonwealth per any

pharmaceutical program consolidated into One Pennsylvania under

this act shall be deposited in the Special Pharmaceutical Fund.

Any moneys appropriated from the General Fund for pharmaceutical

purchasing or reimbursement shall be deposited in this fund. All

rebates obtained through prudent pharmaceutical purchasing or

through rebate agreements shall be deposited.

Section 6.  Rebate agreement.

(a)  Required agreements.--Except as provided in subsection

(b), the Office of Administration shall not include on the

formulary of preferred drug list established pursuant to section

3(b)(1) any prescription drug unless the Office of

Administration and the pharmaceutical manufacturer have entered

into a rebate agreement covering that prescription drug on terms

comparable to agreements executed pursuant to section 1927(a),

(b), (c) and (d) of the Social Security Act. The rebate

agreement shall provide that, unless prohibited by Federal law,

the rebate shall be based on the best price and that additional

rebates shall be paid if the pharmaceutical manufacturer

increases the price of the drug by an amount greater than the

increase in the Consumer Price Index for All Urban Consumers.

Nothing in this act shall prevent the Office of Administration

from negotiating agreements for the payment of additional

rebates and discounts for the benefit of the medical assistance

program or from entering into rebate and discount agreements for

other plans which have been consolidated into the program for

greater rebates and discounts than are required pursuant to

section 1927(c) of the Social Security Act.

(b)  Exceptions.--Subsection (a) shall not apply if the

availability of the drug is essential to the health of members

of the pharmacy consolidated benefits program as determined by

the department.

(c)  Contracts.--Pharmaceutical manufacturers must enter into

a rebate agreement with the department to obtain reimbursement

for prescription drugs included under this act. The rebate shall

be paid by the manufacturer not later than 30 days after the

date of receipt of information necessary to calculate the amount

of the rebate. The department shall have the authority to levy a

15% surcharge penalty on any rebate not in dispute that remains

unpaid for 90 or more days.

Section 7.  Adjudications.

Adjudications conducted by the Office of Administration shall

be subject to 2 Pa.C.S. Chs. 5 Subch. A (relating to practice

and procedure of Commonwealth agencies) and 7 Subch. A (relating

to judicial review of Commonwealth agency action). The Office of

Administration shall adopt rules of procedure regarding the

conduct of adjudications involving pharmacies consistent with

the provisions of 67 Pa.C.S. §§ 1102 (relating to hearings

before the bureau), 1103 (relating to supersedeas), 1104

(relating to subpoenas) and 1105 (relating to determinations,

review, appeal and enforcement).

Section 8.  Applicability.

This act shall apply to the medical assistance program except

to the extent the secretary, in consultation with the Secretary

of Public Welfare, determines that the application is a

violation of Federal law or an existing contractual agreement.

Nothing in this act shall supersede or impede an existing

contractual agreement. Contractual agreements in effect on the

effective date of this section shall not be renewed or extended

to the extent inconsistent with the requirements of this act,

and the Office of Administration shall promptly enter into

negotiations to modify any contractual agreements inconsistent

with this act to conform to the requirements of this act.

Section 9.  Prohibited activities.

It shall be unlawful for any individual, partnership or

corporation to solicit, receive, offer or pay any kickback,

bribe or rebate in cash or in kind from or to any person in

connection with the furnishing of services under this act to the

same extent as prohibited with respect to Federal health

programs by section 1128(b)(1) and (2) of the Social Security

Act, subject to the safe harbors from sanctions provided by

sections 1877(a)(1) and 1860D-4(e)(6) of the Social Security

Act. Violations of this section shall be subject to the

sanctions, penalties and remedies under section 1407 of the

Public Welfare Code.

Section 10.  Repeals.

(a)  Intent.--The General Assembly declares that the repeal

under subsection (b) is necessary to effectuate the purposes of

this act.

(b)  Provision.--Section 509 of the act of August 26, 1971

(P.L.351, No.91), known as the State Lottery Law, is repealed.

(c)  General.--All other acts and parts of acts are repealed

insofar as they are inconsistent with this act.

Section 11.  Effective date.

This act shall take effect as follows:

(1)  Sections 3(d), 4(a)(4) and 6 shall take effect

immediately.

(2)  The remainder of this act shall take effect in one

year.