PRINTER'S NO. 206
No. 199 Session of 2001
INTRODUCED BY RHOADES, GERLACH, SCHWARTZ, COSTA, WENGER,
KUKOVICH, TOMLINSON, MUSTO, STOUT, WAGNER, HELFRICK, LAVALLE,
MADIGAN, BELL, GREENLEAF, BOSCOLA, O'PAKE AND TARTAGLIONE,
JANUARY 30, 2001
REFERRED TO PUBLIC HEALTH AND WELFARE, JANUARY 30, 2001
AN ACT
1 Providing for a single pharmacy benefits manager to administer
2 outpatient pharmacy services provided through the medical
3 assistance program.
4 The General Assembly of the Commonwealth of Pennsylvania
5 hereby enacts as follows:
6 Section 1. Short title.
7 This act shall be known and may be cited as the Medical
8 Assistance Single Pharmacy Benefits Manager Act.
9 Section 2. Definitions.
10 The following words and phrases when used in this act shall
11 have the meanings given to them in this section unless the
12 context clearly indicates otherwise:
13 "A-rated generically equivalent drug." A drug product that
14 the Commissioner of Food and Drugs of the Food and Drug
15 Administration has approved as safe and effective and has
16 determined to be equivalent as listed in "The Approved Drug
17 Products with Therapeutic Equivalence Evaluations" (Food and
1 Drug Administration "Orange Book"), with a specific "A" code
2 designation only.
3 "Committee" or "DURC." The Drug Utilization Review Committee
4 created in section 5.
5 "Department." The Department of Public Welfare of the
6 Commonwealth.
7 "DESI drug." A drug product for which Federal financial
8 participation is not available under 42 CFR 441.25 (relating to
9 prohibition on FFP for certain prescribed drugs).
10 "Experimental drug." A drug or product currently being
11 investigated under an investigational or new drug application
12 filed with the Food and Drug Administration to determine its
13 safety and effectiveness.
14 "Licensed prescriber." A person currently licensed under the
15 law of a state to order medication for patient treatment.
16 "Pharmaceutical manufacturer." A company which participates
17 under the pharmaceutical services medical assistance program as
18 a manufacturer of prescription drugs, insulin, insulin needles
19 or insulin syringes.
20 "Pharmacy." A pharmacy licensed by the Commonwealth.
21 "Pharmacy benefits manager" or "PBM." An entity under
22 contract with the Department of Public Welfare to administer the
23 departmental program to provide outpatient pharmacy services to
24 eligible medical assistance recipients.
25 "Pharmacy services." Medically necessary prescription drugs
26 and other pharmacy services furnished directly to eligible
27 recipients by pharmacies enrolled as providers in the medical
28 assistance program.
29 "Prescription drug." A drug requiring a prescription in this
30 Commonwealth, insulin, insulin syringes and insulin needles.
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1 Experimental drugs or drugs prescribed for wrinkle removal or
2 hair growth are excluded.
3 "Prior authorization." A procedure established by the
4 Department of Public Welfare under which the delivery of a
5 pharmacy service is either conditioned upon or delayed by a
6 prior determination by the department or its agent that an
7 eligible medical assistance recipient is eligible for a
8 particular pharmacy service, that there is medical necessity for
9 a particular pharmacy service or that a particular pharmacy
10 service is suitable to a particular recipient.
11 "Provider." A pharmacy or licensed prescriber who has signed
12 an agreement with the Department of Public Welfare to
13 participate in the medical assistance program.
14 "Recipient." A person determined to be eligible for medical
15 assistance pharmacy services.
16 "Wholesaler." A licensed person or entity within this
17 Commonwealth which legally purchases pharmaceuticals for resale
18 or distribution to persons other than recipients or consumers.
19 Section 3. Single medical assistance pharmacy benefits manager.
20 The department shall administer a single pharmacy benefits
21 manager program for all eligible medical assistance recipients.
22 To that end, no later than 90 days from the effective date of
23 this section, the department shall issue a request for proposal
24 for a three-year contract with a pharmacy benefits manager to
25 administer outpatient pharmacy services for recipients. The
26 proposal shall require the PBM to perform prospective,
27 concurrent and retrospective drug utilization review and
28 education of licensed providers and benefit recipients. No
29 person, partnership, corporation or entity which holds a 5% or
30 greater interest in one or more pharmacies, a chain of
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1 pharmacies, a pharmacists association, an organization of
2 pharmacies, a drug wholesaler or drug manufacturer and no
3 person, partnership, corporation or entity in which one or more
4 pharmacies, a chain of pharmacies, a pharmacists association, an
5 organization of pharmacies, a drug wholesaler or drug
6 manufacturer has a 5% or greater interest shall be considered
7 eligible to bid. Such contract shall be executed within six
8 months from the effective date of this section.
9 Section 4. Pharmacy benefits manager functions.
10 (a) Requirements.--The department shall require the PBM to:
11 (1) Develop and update a formulary of drugs with the
12 advice of the DURC utilizing disease and care management.
13 (2) Manage a drug formulary.
14 (3) Ensure that any pharmacy licensed in this
15 Commonwealth is eligible to provide pharmacy services in this
16 program according to those regulations in effect on the
17 effective date of this section regulating pharmacy providers
18 participating in the fee-for-service program of the medical
19 assistance program of the department.
20 (4) Negotiate drug rebates with manufacturers.
21 (5) In accordance with the act of November 24, 1976
22 (P.L.1163, No.259), referred to as the Generic Equivalent
23 Drug Law, make provisions for generic substitutions and
24 require pharmacists to disclose any affiliation with a
25 generic manufacturer.
26 (6) Provide for prospective drug utilization review
27 which precludes overriding alerts without intervention.
28 (7) Provide for prior authorization in accordance with
29 departmental regulations.
30 (8) Provide for prospective and concurrent and
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1 retrospective drug utilization review to ensure that
2 prescriptions are appropriate, medically necessary and not
3 likely to result in adverse medical results and to educate
4 providers and recipients and to correct and report
5 misutilization and abuse by licensed prescribers and
6 recipients and provide for fraud and abuse audits,
7 coordinating its activities with the department to support
8 compliance with applicable laws and regulations.
9 (9) Educate providers on disease and care management.
10 (10) Provide educational materials for recipients on
11 disease and care management.
12 (11) In accordance with the provisions of the Omnibus
13 Budget Reconciliation Act of 1990 (Public Law 101-508, 104
14 Stat. 1388), bill, recoup and relay to the department
15 manufacturers' drug rebates and excessive consumer price
16 inflation discounts and resolve disputes, as defined in the
17 Omnibus Budget Reconciliation Act of 1990.
18 (12) Adjudicate claims through a Statewide point-of-sale
19 electronic verification and claims processing system which
20 will allow for intervention upon receipt of a prospective
21 drug utilization review alert and will allow for an emergency
22 supply of prescribed medication in the event of equipment
23 failures.
24 (13) Create an audit and recoupment system for providers
25 and recipients, and third-party medical resources.
26 (14) Reimburse pharmacies on a fee-for-service basis.
27 (15) Provide administrative support for the department's
28 appeals process for providers and recipients.
29 (b) Preparation of a formulary.--The PBM, with the advice of
30 the Drug Utilization Review Committee created in section 5,
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1 shall prepare a formulary of drugs and, in accordance with the
2 Generic Equivalent Drug Law, include generically equivalent
3 drugs to be used in the pharmacy services program. In evaluating
4 drugs for the formulary, the PBM shall consider their
5 therapeutic efficacy and take into consideration all discounts,
6 rebates or other concessions provided by manufacturers. The
7 formulary must indicate that drugs will not be reimbursed if
8 they are experimental or on the Drug Efficacy Study
9 Implementation list (DESI) prepared by the Health Care Financing
10 Administration. The formulary shall provide for a medical
11 exception for a drug on the latter list upon a handwritten
12 declaration of its necessity on the prescription by the treating
13 prescriber.
14 (c) Conflict of interest.--In developing the formulary, the
15 single PBM shall demonstrate how it will avoid a conflict of
16 interest with any pharmaceutical manufacturer, wholesaler or
17 drug store chain that holds a less-than-5% interest in the PBM
18 or in which the PBM has a less-than-5% interest and shall
19 indicate how it will prevent the sharing of nonpublic
20 information concerning other drug manufacturers' bids,
21 proposals, contracts, prices, rebates or discounts.
22 (d) Considerations.--In preparing and managing the
23 formulary, the PBM shall ensure that it will consider all
24 discounts, rebates or other concessions offered by
25 manufacturers, drug chains or wholesale drug companies.
26 (e) Changes to the formulary.--Upon making changes to the
27 formulary the PBM shall allow a benefit recipient to continue to
28 receive a drug which is part of an ongoing treatment regimen for
29 a period of up to 60 days.
30 Section 5. Drug Utilization Review Committee (DURC).
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1 (a) Creation of Drug Utilization Review Committee.--The
2 department shall require the PBM to create a Drug Utilization
3 Review Committee.
4 (b) Composition and number.--The committee shall be
5 comprised of nine members, five of whom shall be actively
6 practicing physicians licensed in this Commonwealth and four of
7 whom shall be actively practicing pharmacists licensed in this
8 Commonwealth. None of the members may hold a 5% or greater
9 interest in the PBM, its parent company or companies, or in a
10 company or companies owned by the PBM.
11 (c) Quality of care.--
12 (1) The DURC shall develop a system that provides
13 prospective, concurrent and retrospective review of drug
14 utilization to ensure that pharmacy services provided are or
15 were appropriate and medically necessary and not likely to
16 result in adverse medical results. The review program shall
17 be designed to educate licensed prescribers and pharmacists
18 as provided in paragraph (4) on the proper utilization of
19 drugs in disease and care management. In reviewing drug
20 utilization, the committee shall assess data on drug use
21 against predetermined standards consistent with the American
22 Hospital Formulary Service Drug Information, the United
23 States Pharmacopeia-Drug Information, American Medical
24 Association Drug Evaluations or peer-reviewed medical
25 literature.
26 (2) The committee shall develop a system to utilize the
27 compendia and literature referred to in paragraph (1) as its
28 source of standards to screen for potential drug problems
29 before a prescription is filled or delivered to a recipient.
30 Prospective drug use review shall include consultation with
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1 recipients by pharmacists.
2 (3) The department and the PBM shall provide data to the
3 committee, through mechanized drug claims processing and
4 retrieval systems, for the ongoing periodic examination of
5 claims data and other records in order to identify patterns
6 of fraud, abuse, gross overuse or inappropriate or medically
7 unnecessary care among licensed prescribers, pharmacists and
8 recipients or associated with specific drugs or groups of
9 drugs. The committee shall, on an ongoing basis, assess data
10 on drug use against explicit predetermined standards using
11 the compendia and literature referred to in this subsection
12 and to introduce, as necessary, remedial strategies to
13 improve the quality of care and to conserve program funds or
14 patient expenditures.
15 (4) The committee shall, using drug use data on common
16 therapy problems, develop active and ongoing educational
17 outreach programs to disseminate information to providers on
18 common drug therapy problems with the aim of improving
19 prescribing or dispensing practices. The educational programs
20 shall include interventions for providers targeting therapy
21 problems or individuals identified in the course of
22 retrospective drug reviews. The committee shall reevaluate
23 interventions from time to time to determine if the
24 interventions were successful in improving the quality of
25 drug therapy and shall make modifications as necessary.
26 Intervention programs shall include:
27 (i) Information dissemination sufficient to ensure
28 the ready availability to providers of information
29 concerning the committee's duties, powers and basis for
30 its standards.
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1 (ii) Written, oral or electronic reminders
2 containing patient-specific and/or drug-specific
3 information and suggested changes in prescribing or
4 dispensing practices, communicated in a manner designed
5 to ensure the privacy of patient-related information.
6 (iii) Use of face-to-face discussions between health
7 care professionals who are experts in rational drug
8 therapy and selected prescribers and pharmacists who have
9 been targeted for educational intervention, including
10 discussion of optimal prescribing, dispensing or pharmacy
11 care practices and follow-up face-to-face discussions.
12 (iv) Intensified review or monitoring of selected
13 prescribers or dispensers.
14 (d) Corrective actions.--Should licensed prescribers or
15 recipients continue to misutilize drugs or abuse the system, the
16 committee shall provide information to the department for
17 corrective action. In the case of prescribers, the committee
18 shall submit a report and recommendations to the department for
19 appropriate action. The department shall inform the PBM and the
20 appropriate Commonwealth licensing body of any final
21 administrative sanctions.
22 (e) Nonliability.--Any person rendering service as a member
23 of a utilization review committee for this program shall not be
24 liable for any civil damages as a result of any acts or
25 omissions in rendering the service as a member of any such
26 committee except any acts or omissions intentionally designed to
27 harm or any grossly negligent acts or omissions which result in
28 harm to the person receiving such service.
29 (f) Annual report.--The department shall require the
30 committee to provide an annual report describing the committee's
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1 activities, including the nature and scope of the prospective,
2 concurrent and retrospective drug reviews, a summary of
3 interventions used, an assessment of the impact of these
4 educational interventions on quality of care and an estimate of
5 the cost savings generated as a result of the program.
6 Section 6. Reimbursement.
7 (a) General rule.--The PBM shall reimburse pharmacies on a
8 fee-for-service basis, using formulas established by
9 departmental regulation. Pharmacies reimbursed under this act
10 shall be paid at fee-for-service rates no less than the rates in
11 effect on the effective date of this act. Pharmacies shall be
12 paid within 21 days of the PBM's receipt of appropriate
13 substantiation of the transaction. Pharmacies shall be entitled
14 to interest at a rate approved by the department for any payment
15 not made within the 21-day period. The department shall not
16 reimburse the PBM for interest paid.
17 (b) Copayments.--Except for services which are excluded
18 under the Commonwealth's medical assistance program, a recipient
19 is liable for a copayment in an amount set by the department,
20 and collection of the copayment by pharmacies shall be
21 mandatory. The amount of the copayment paid to pharmacy
22 providers by recipients shall be deducted from the
23 Commonwealth's medical assistance fee to pharmacy providers.
24 Section 7. Administration by department.
25 (a) Administration of contract.--The department shall
26 administer the contract with the PBM and shall promulgate rules
27 and regulations, as necessary, to carry out the provisions of
28 this act.
29 (b) Provision of data.--The department and the PBM shall
30 provide data necessary to the committee to develop provider
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1 prescribing profiles and recipient utilization profiles to
2 perform utilization review and disease and care management
3 through the coordination of health care and pharmacy services to
4 ensure that recipients are receiving and complying with
5 appropriate therapies.
6 Section 8. Studies required.
7 (a) Selection of contractor.--The department shall select a
8 competent contractor to analyze and compare expenditures,
9 utilization rates and utilization patterns for pharmacy services
10 for medical assistance recipients in the managed care plans
11 under current contracts with the department and in the single
12 pharmacy benefits management program established under this act.
13 To effectuate the purposes of this act, all participating
14 pharmacy providers, manufacturers, drug chains and wholesalers
15 shall, as a condition of participation, be required to cooperate
16 with the department in preparing the required report. The
17 department shall report preliminary findings to the President
18 pro tempore of the Senate and the Speaker of the House of
19 Representatives by September 30, 2003. The department shall
20 report finally on June 30, 2004. That report shall include
21 recommendations to the General Assembly on whether to continue
22 the single medical assistance pharmacy benefits manager program
23 which shall terminate on December 31, 2004.
24 (b) Report.--The Legislative Budget and Finance Committee
25 shall evaluate and prepare a report to be submitted no later
26 than June 30, 2004, to the General Assembly on the single
27 pharmacy benefits manager selected under this act.
28 Section 9. Applicability.
29 This act shall apply to the provision of all pharmacy
30 benefits under the medical assistance program to eligible
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1 recipients by any managed health care plan, pharmaceutical
2 manufacturer, licensed pharmacy, chain of pharmacies or
3 wholesaler.
4 Section 10. Prohibited activities.
5 It shall be unlawful for any individual, partnership or
6 corporation to solicit, receive, offer or pay any kickback,
7 bribe or rebate in cash or in-kind from or to any person in
8 connection with the furnishing of services under this act.
9 Section 11. Repeals.
10 All acts and parts of acts are repealed insofar as they are
11 inconsistent with this act.
12 Section 12. Effective date.
13 This act shall take effect in 60 days.
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