PRINTER'S NO. 455
No. 434 Session of 2003
INTRODUCED BY CONTI, ERICKSON, SCARNATI AND WONDERLING,
MARCH 11, 2003
REFERRED TO AGING AND YOUTH, MARCH 11, 2003
AN ACT
1 Amending the act of August 26, 1971 (P.L.351, No.91), entitled
2 "An act providing for a State Lottery and administration
3 thereof; authorizing the creation of a State Lottery
4 Commission; prescribing its powers and duties; disposition of
5 funds; violations and penalties therefor; exemption of prizes
6 from State and local taxation and making an appropriation,"
7 further providing for annual income limitations for PACE and
8 PACENET; providing for best price for pharmaceuticals;
9 establishing the Prescription Drug Access Clearinghouse
10 Authority and providing for its powers and duties; providing
11 for the Medicare Managed Care Fair Share Program; and
12 establishing the Medicare Participation Fund.
13 The General Assembly of the Commonwealth of Pennsylvania
14 hereby enacts as follows:
15 Section 1. The definition of "maximum annual income" in
16 section 502 of the act of August 26, 1971 (P.L.351, No.91),
17 known as the State Lottery Law, added November 21, 1996
18 (P.L.741, No.134), is amended to read:
19 Section 502. Definitions.
20 The following words and phrases when used in this chapter
21 shall have the meanings given to them in this section unless the
22 context clearly indicates otherwise:
1 * * *
2 "Maximum annual income."
3 (1) For PACE eligibility, the term shall mean annual income
4 which shall not exceed [$14,000] $15,000 in the case of single
5 persons nor [$17,200] $18,200 in the case of the combined annual
6 income of persons married to each other. Persons may, in
7 reporting income to the Department of Aging, round the amount of
8 each source of income and the income total to the nearest whole
9 dollar, whereby any amount which is less than 50¢ is eliminated.
10 (2) The maximum annual income amounts under this definition
11 shall be increased each year after the effective date of this
12 paragraph by the percentage, if any, by which the Consumer Price
13 Index for the most recent calendar year exceeds the Consumer
14 Price Index for the immediate preceding calendar year.
15 * * *
16 Section 2. Sections 509, 515 and 519 of the act, added
17 November 21, 1996 (P.L.741, No.134), are amended to read:
18 Section 509. Program generally.
19 The program shall include the following:
20 (1) Participating pharmacies shall be paid within 21
21 days of the contracting firm receiving the appropriate
22 substantiation of the transaction. Pharmacies shall be
23 entitled to interest for payment not made within the 21-day
24 period at a rate approved by the board.
25 (2) Collection of the copayment by pharmacies shall be
26 mandatory.
27 (3) Senior citizens participating in the program are not
28 required to maintain records of each transaction.
29 (4) A system of rebates or reimbursements to eligible
30 claimants for pharmaceutical expenses shall be prohibited.
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1 (5) PACE shall include a participant copayment schedule
2 for each prescription. The copayment may increase or decrease
3 on an annual basis by the average percent change of
4 ingredient costs for all prescription drugs, plus a
5 differential to raise the copayment to the next highest 25¢
6 increment. In addition, the department may approve a request
7 for increase or decrease in the level of copayment based upon
8 the financial experience and projections of PACE and after
9 consultation with the board. The department is prohibited
10 from approving adjustments to the copayment on more than an
11 annual basis.
12 (6) The program shall consist of payments to pharmacies
13 on behalf of eligible claimants for 90% of the average
14 wholesale costs of prescription drugs which exceed the
15 copayment, plus a dispensing fee of at least $3.50 or the
16 dispensing fee established by the department by regulation,
17 whichever is greater.
18 (7) In no case shall the Commonwealth or any person
19 enrolled in the program be charged more than the price of the
20 drug at the particular pharmacy on the date of the sale.
21 (8) Payments for multiple source drugs, meeting the
22 criteria set forth in 42 C.F.R. 447.332 (relating to upper
23 limits for multiple source drugs) and § 1927(e) of the Social
24 Security Act (49 Stat. 620, 42 U.S.C. § 301 et seq.), must
25 not exceed an amount based on the limit per unit which the
26 Health Care Financing Administration has determined to be
27 equal to 150% applied to the lowest price listed, in package
28 sizes of 100 units, unless otherwise noted, in any of the
29 published compendia of cost information of drugs.
30 Section 515. Reimbursement.
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1 [For-profit] Health maintenance organizations, for-profit
2 third-party insurers and not-for-profit prescription plans shall
3 be responsible for any payments made by the program to a
4 providing pharmacy or dispensing physician on behalf of a
5 claimant covered by such a third party.
6 Section 519. The Pharmaceutical Assistance Contract for the
7 Elderly Needs Enhancement Tier.
8 (a) Establishment.--There is hereby established within the
9 department a program to be known as the Pharmaceutical
10 Assistance Contract for the Elderly Needs Enhancement Tier
11 (PACENET).
12 (b) PACENET eligibility.--A claimant with an annual income
13 of not less than [$14,000] $15,000 and not more than [$16,000]
14 $17,000 in the case of a single person and of not less than
15 [$17,200] $18,200 and not more than [$19,200] $20,200 in the
16 case of the combined income of persons married to each other
17 shall be eligible for enhanced pharmaceutical assistance under
18 this section. A person may, in reporting income to the
19 department, round the amount of each source of income and the
20 income total to the nearest whole dollar, whereby any amount
21 which is less than 50¢ is eliminated.
22 (c) Deductible.--Upon enrollment in PACENET, eligible
23 claimants in the income ranges set forth in subsection (b) shall
24 be required to meet [an annual] monthly deductible in
25 unreimbursed prescription drug expenses of [$500] $40 per
26 person. To qualify for the deductible set forth in this
27 subsection the prescription drug must be purchased for the use
28 of the eligible claimant from a provider as defined in this
29 chapter. The department, after consultation with the board, may
30 approve an adjustment in the deductible on an annual basis.
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1 (d) Copayment.--For eligible claimants under this section,
2 the copayment schedule, which may be adjusted by the department
3 on an annual basis after consultation with the board, shall be:
4 (i) eight dollars for noninnovator multiple source
5 drugs as defined in section 702; or
6 (ii) fifteen dollars for single-source drugs and
7 innovator multiple-source drugs as defined in section
8 702.
9 (e) Annual increase in eligibility limits.--The maximum
10 annual income amounts for PACENET eligibility under subsection
11 (b) shall be increased each year after the effective date of
12 this subsection by the percentage, if any, by which the Consumer
13 Price Index for the most recent calendar year exceeds the
14 Consumer Price Index for the immediate preceding calendar year.
15 Section 3. The act is amended by adding chapters to read:
16 CHAPTER 7-A
17 BEST NEGOTIATED PRICE FOR PHARMACEUTICALS
18 Section 701-A. Short title of chapter.
19 This chapter shall be known and may be cited as the Best
20 Price for Pharmaceuticals Act.
21 Section 702-A. Definitions.
22 The following words and phrases when used in this chapter
23 shall have the meanings given to them in this section unless the
24 context clearly indicates otherwise:
25 "A-rated generically equivalent drug." A drug product that
26 the Commissioner of Food and Drugs of the Food and Drug
27 Administration has approved as safe and effective and has
28 determined to be equivalent as listed in "The Approved Drug
29 Products with Therapeutic Equivalence Evaluations" (Food and
30 Drug Administration "Orange Book"), with a specific "A" code
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1 designation only.
2 "Committee." A drug utilization review committee formed in
3 accordance with section 705-A.
4 "DESI drug." A drug product for which Federal financial
5 participation is not available under 42 CFR 441.25 (relating to
6 prohibition on FFP for certain prescribed drugs).
7 "Experimental drug." A drug or product currently being
8 investigated under an investigational or new drug application
9 filed with the Food and Drug Administration to determine its
10 safety and effectiveness.
11 "Licensed prescriber." A person currently licensed under the
12 law of a state to order medication for patient treatment.
13 "PACE." As defined in section 502.
14 "PACENET." As defined in section 502.
15 "Participant." A person who receives pharmacy services from
16 PACE or PACENET.
17 "Pharmaceutical manufacturer." A manufacturer of
18 prescription drugs, insulin, insulin needles or insulin
19 syringes.
20 "Pharmacy." A pharmacy licensed by the Commonwealth.
21 "Pharmacy services." Medically necessary prescription drugs
22 and other pharmacy services furnished directly to eligible
23 participants by pharmacies.
24 "Prescription drug." A drug requiring a prescription in this
25 Commonwealth, insulin, insulin syringes and insulin needles.
26 Experimental drugs or drugs prescribed for wrinkle removal or
27 hair growth are excluded.
28 "Prior authorization." A procedure established by the
29 Secretary of Aging under which the delivery of a pharmacy
30 service is either conditioned upon or delayed by a prior
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1 determination by the Secretary of Aging or his agent that a
2 person is eligible for a particular pharmacy service, that there
3 is medical necessity for a particular pharmacy service or that a
4 particular pharmacy service is suitable to a particular
5 participant.
6 "Private contracted entity." An entity under contract with
7 the Secretary of Aging to administer PACE and PACENET.
8 "Provider." A pharmacy or licensed prescriber who provides
9 pharmacy services to a PACE or PACENET recipient.
10 "Secretary." The Secretary of Aging of the Commonwealth.
11 "Wholesaler." A licensed person or entity within this
12 Commonwealth which legally purchases pharmaceuticals for resale
13 or distribution to persons other than recipients or consumers.
14 Section 703-A. Private contracted entities.
15 (a) Administration.--The secretary shall administer a
16 pharmacy benefits management program for all participants.
17 (b) Request for proposal.--Not later than 90 days from the
18 effective date of this chapter, the secretary shall issue a
19 request for proposal for a three-year contract with four private
20 contracted entities to administer pharmacy services for
21 participants Statewide.
22 (c) Requirements.--The proposal shall require the private
23 contracted entities to perform prospective, concurrent and
24 retrospective drug utilization review and education of providers
25 and participants.
26 (d) Criteria.--The selection process shall include criteria
27 designed to choose the private contracted entities best able to
28 provide a prescription drug benefit program for participants in
29 a way that maximizes savings for the Commonwealth and
30 participants without reducing the quality of prescription drug
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1 benefits now being provided to the participants. The selection
2 process shall also include criteria designed to choose those
3 private contracted entities that offer participants choices
4 among prescription drug benefits with different formulary
5 options and cost-sharing arrangements.
6 (e) Decision.--All participants may choose the private
7 contracted entity of their preference for the delivery of their
8 pharmacy services. Each private contracted entity shall make
9 available information to all potential participants so an
10 informed decision may be made. Participants shall have the
11 option of changing the private contracted entity at their
12 discretion in an open enrollment period every 12 months.
13 (f) Execution.--The contracts under this section shall be
14 executed within six months from the effective date of this
15 chapter.
16 Section 704-A. Private contracted entity functions.
17 (a) Requirements.--The secretary shall require each private
18 contracted entity to:
19 (1) develop and update a formulary of drugs with the
20 advice of its committee utilizing disease and care
21 management. Formulary options may include an open formulary,
22 closed formulary or a modified closed formulary with an
23 opportunity for substitution upon prior authorization;
24 (2) manage a drug formulary;
25 (3) ensure that any pharmacy licensed in this
26 Commonwealth which is willing to accept the terms and
27 conditions of the private contracted entity is eligible to
28 provide pharmacy services according to any regulations in
29 effect on the effective date of this chapter and that
30 regulate pharmacy providers;
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1 (4) negotiate drug rebates with manufacturers;
2 (5) in accordance with the act of November 24, 1976
3 (P.L.1163, No.259), referred to as the Generic Equivalent
4 Drug Law, make provisions for generic substitutions and
5 require pharmacists to disclose any affiliation with a
6 generic manufacturer;
7 (6) provide for prospective drug utilization review
8 which precludes overriding alerts without intervention;
9 (7) provide for prior authorization in accordance with
10 regulations of the secretary;
11 (8) provide for prospective and concurrent and
12 retrospective drug utilization review to ensure that
13 prescriptions are appropriate, medically necessary and not
14 likely to result in adverse medical results and to educate
15 providers and participants and to correct and report
16 misutilization and abuse by licensed prescribers and
17 participants and provide for fraud and abuse audits,
18 coordinating its activities with the secretary to support
19 compliance with applicable laws and regulations;
20 (9) educate providers on disease and care management;
21 (10) provide educational materials for participants on
22 disease and care management;
23 (11) seek best price from pharmaceutical manufacturers
24 under prevailing private market conditions;
25 (12) negotiate with drug manufacturers to maximize
26 savings to the Commonwealth in a way that does not reduce the
27 quality of existing prescription drug services for
28 participants;
29 (13) adjudicate claims through a Statewide point-of-sale
30 electronic verification and claims processing system which
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1 will allow for intervention upon receipt of a prospective
2 drug utilization review alert and will allow for an emergency
3 supply of prescribed medication in the event of equipment
4 failures;
5 (14) create an audit and recoupment system for providers
6 and participants, and third-party medical resources; and
7 (15) reimburse pharmacies on a fee-for-service basis.
8 (b) Formulary.--The private contracted entities, with the
9 advice of their committees, shall prepare a formulary of drugs
10 and, in accordance with the Generic Equivalent Drug Law, include
11 generically equivalent drugs to be used in PACE or PACENET. In
12 evaluating drugs for the formulary, each private contracted
13 entity shall consider their therapeutic efficacy and take into
14 consideration all discounts, rebates or other concessions
15 provided by manufacturers. The formulary must indicate that
16 drugs will not be reimbursed if they are experimental or on the
17 Drug Efficacy Study Implementation list (DESI) prepared by the
18 Health Care Financing Administration. The formulary shall
19 provide for a medical exception for a drug on the latter list
20 upon a handwritten declaration of its necessity on the
21 prescription by the treating prescriber.
22 (c) Conflicts.--In developing the formulary, the private
23 contracted entity shall demonstrate how it will avoid a conflict
24 of interest with any pharmaceutical manufacturer, wholesaler or
25 drug store chain that holds an interest in the private
26 contracted entity or in which the private contracted entity has
27 an interest and shall indicate how it will prevent the sharing
28 of nonpublic information concerning other drug manufacturers'
29 bids, proposals, contracts, prices, rebates or discounts.
30 (d) Considerations.--In preparing and managing the
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1 formulary, the private contracted entity shall ensure that they
2 will consider all discounts, rebates or other concessions
3 offered by manufacturers, drug chains or wholesale drug
4 companies. In no event shall such considerations exclude a drug
5 recommended for inclusion by the committee in its
6 recommendations regarding the clinical basis of the formulary.
7 No formulary or other restriction affecting payment for a drug
8 by the program shall be adopted if it is not supported by the
9 clinical recommendations of the committee.
10 (e) Continuation.--Upon making changes to the formulary the
11 private contracted entities shall allow a participant to
12 continue to receive a drug which is part of an ongoing treatment
13 regimen until such time as the prescriber evaluates the medical
14 need for the specific drug and determines the clinical
15 suitability of a change of therapy. In no event shall a
16 formulary change result in denial of a patient's access to
17 covered care by denial of payment or mandatory switch of therapy
18 as long as previously authorized refills remain for the
19 prescription.
20 (f) Nontermination.--The private contracted entities shall
21 not terminate any contract currently in existence with any
22 agency or program which cannot be favorably renegotiated.
23 Section 705-A. Drug utilization review committees.
24 (a) Requirement.--The secretary shall require each private
25 contracted entity to form a drug utilization review committee.
26 (b) Composition.--Each committee shall be comprised of nine
27 members, five of whom shall be actively practicing physicians
28 licensed in this Commonwealth and four of whom shall be actively
29 practicing pharmacists licensed in this Commonwealth. None of
30 the members may hold a 5% or greater interest in the private
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1 contracted entity, its parent company or companies, or in a
2 company or companies owned by the private contracted entity.
3 (c) Functions.--
4 (1) The committees shall develop a system that provides
5 prospective, concurrent and retrospective review of drug
6 utilization to ensure that pharmacy services provided are or
7 were appropriate and medically necessary and not likely to
8 result in adverse medical results. The review program shall
9 be designed to educate licensed prescribers and pharmacists
10 as provided in paragraph (4) on the proper utilization of
11 drugs in disease and care management. In reviewing drug
12 utilization, the committee shall assess data on drug use
13 against predetermined standards consistent with the American
14 Hospital Formulary Service Drug Information, the United
15 States Pharmacopoeia-Drug Information, American Medical
16 Association Drug Evaluations or peer-reviewed medical
17 literature.
18 (2) The committees shall develop a system to utilize the
19 compendia and literature referred to in paragraph (1) as its
20 source of standards to screen for potential drug problems
21 before a prescription is filled or delivered to a
22 participant. Prospective drug use review shall include
23 consultation with participants by pharmacists.
24 (3) The secretary and the private contracted entities
25 shall provide data to the committees, through mechanized drug
26 claims processing and retrieval systems, for the ongoing
27 periodic examination of claims data and other records in
28 order to identify patterns of fraud, abuse, gross overuse or
29 inappropriate or medically unnecessary care among licensed
30 prescribers, pharmacists and participants or associated with
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1 specific drugs or groups of drugs. The committees shall, on
2 an ongoing basis, assess data on drug use against explicit
3 predetermined standards using the compendia and literature
4 referred to in this subsection and to introduce, as
5 necessary, remedial strategies to improve the quality of care
6 and to conserve program funds or patient expenditures.
7 (4) The committees shall, using drug use data on common
8 therapy problems, develop active and ongoing educational
9 outreach programs to disseminate information to providers on
10 common drug therapy problems with the aim of improving
11 prescribing or dispensing practices. The educational programs
12 shall include interventions for providers targeting therapy
13 problems or individuals identified in the course of
14 retrospective drug reviews. The committees shall reevaluate
15 interventions from time to time to determine if the
16 interventions were successful in improving the quality of
17 drug therapy and shall make modifications as necessary.
18 Intervention programs shall include:
19 (i) information dissemination sufficient to ensure
20 the ready availability to providers of information
21 concerning the committees' duties, powers and basis for
22 their standards;
23 (ii) written, oral or electronic reminders
24 containing patient-specific and/or drug-specific
25 information and suggested changes in prescribing or
26 dispensing practices, communicated in a manner designed
27 to ensure the privacy of patient-related information;
28 (iii) use of communication between health care
29 professionals who are experts in rational drug therapy
30 and selected prescribers and pharmacists who have been
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1 targeted for educational intervention, including
2 discussion of optimal prescribing, dispensing or pharmacy
3 care practices and follow-up communications; and
4 (iv) intensified review or monitoring of selected
5 prescribers or dispensers.
6 (5) The committees shall, using practices and formats
7 generally accepted in the professional practice of pharmacy,
8 develop recommendations for the structure and specific
9 products to be included on the formulary. The recommendations
10 shall be appropriate for the clinical needs of the enrollee
11 population and shall be entirely independent of any and all
12 financial considerations that may be relevant to the
13 program's implementation of the formulary recommendations.
14 The committee's recommendations shall be consistent with the
15 following:
16 (i) All new drugs shall be available without
17 restriction upon being approved by the Federal Food and
18 Drug Administration and made available in the marketplace
19 until such time as a committee completes its clinical
20 evaluation of the relative place of the new drug on the
21 formulary. A drug is considered "new" for purposes of
22 this subparagraph if the drug is a newly released drug or
23 compound that has never before been marketed or a drug
24 that has been approved by the Federal Food and Drug
25 Administration for a new indication or treatment use. A
26 drug is "available" in the marketplace for purposes of
27 this subparagraph if the drug can be readily obtained in
28 commercial quantities by pharmacies in this Commonwealth.
29 (ii) No drug may be recommended for exclusion from
30 the formulary until is has been included for a period of
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1 at least 12 months to provide a committee with data
2 regarding its use and potential misuse in the enrollee
3 population.
4 (iii) Any recommendation by a committee that access
5 to a drug be restricted either by exclusion from the
6 formulary or by prior authorization that limits
7 conditions of use for a drug shall be based on committee
8 analysis of retrospective data using the criteria to
9 identify a drug whose use is likely not to be medically
10 appropriate or medically necessary or likely to result in
11 adverse medical outcomes in the enrollee population.
12 (iv) Prior authorization shall not be required or
13 utilized for the dispensing or reimbursement of any
14 prescription drug or drugs that are, according to the
15 most recent publication of Drug Facts and Comparisons or
16 a similar publication:
17 (A) classified as an antianxiety, antidepressant
18 or antipsychotic central nervous system drug;
19 (B) cross-indicated for a central nervous system
20 drug classification; or
21 (C) classified in a central nervous system drug
22 category or classification after the effective date
23 of this chapter.
24 (6) A committee shall issue all recommendations
25 regarding the program formulary in writing for at least a 30-
26 day period of public inspection before they are submitted to
27 the program for adoption and implementation.
28 (7) Any interested party, including, but not limited to,
29 physicians, pharmacists, beneficiaries and manufacturers or
30 distributors of the drug proposed to be restricted may submit
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1 additional clinical information relevant to determining the
2 formulary status of the drug. All relevant clinical
3 information shall be considered by a committee before the
4 recommendation is finalized and submitted to the program.
5 (8) Any interested party, including, but not limited to,
6 physicians, pharmacists, beneficiaries and manufacturers or
7 distributors of the drug proposed to be restricted may
8 request an opportunity to make an oral presentation to the
9 committee. Upon timely receipt of a request for an oral
10 hearing, a committee shall schedule a hearing and provide any
11 interested party with an opportunity to express clinical
12 concerns related to the proposed formulary status of such
13 drug. A committee shall consider the record of any hearing
14 prior to submitting its formulary recommendation to the
15 program.
16 (d) Misutilization.--Should licensed prescribers or
17 participants continue to misutilize drugs or abuse the system, a
18 committee shall provide information to the secretary for
19 corrective action. In the case of prescribers, a committee shall
20 submit a report and recommendations to the secretary for
21 appropriate action. The secretary shall inform the private
22 contracted entity and the appropriate Commonwealth licensing
23 body of any final administrative sanctions.
24 (e) Nonliability.--Any person rendering service as a member
25 of a committee for this program shall not be liable for any
26 civil damages as a result of any acts or omissions in rendering
27 the 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 person
30 receiving such service.
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1 (f) Report.--The secretary shall require the committees to
2 provide an annual report describing the committees' activities,
3 including the nature and scope of the prospective, concurrent
4 and retrospective drug reviews, a summary of interventions used,
5 an assessment of the impact of these educational interventions
6 on quality of care and an estimate of the cost savings generated
7 as a result of the program.
8 Section 706-A. Copayments.
9 Except for services which are excluded under the
10 Commonwealth's medical assistance program, a participant is
11 liable for a copayment in an amount set by the secretary, and
12 collection of the copayment by pharmacies shall be mandatory.
13 The amount of the copayment paid to pharmacy providers by
14 participants shall be deducted from the Commonwealth's fee to
15 pharmacy providers.
16 Section 707-A. Administration of contract.
17 (a) Secretary.--The secretary shall administer the contract
18 with the private contracted entities and shall promulgate rules
19 and regulations, as necessary, to carry out the provisions of
20 this chapter.
21 (b) Data.--The secretary and the private contracted entities
22 shall provide data necessary to the committees to develop
23 provider prescribing profiles and participant utilization
24 profiles to perform utilization review and disease and care
25 management through the coordination of health care and pharmacy
26 services to ensure that participants are receiving and complying
27 with appropriate therapies.
28 Section 708-A. Drug prior authorization review process.
29 Any drug prior authorization program shall meet all of the
30 following conditions:
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1 (1) The program shall provide telephone, fax or other
2 electronically transmitted authorization or denial within 24
3 hours after receipt of the prior authorization request.
4 (2) In an emergency situation, including a situation in
5 which a response to a prior authorization request is
6 unavailable while the patient waits in the pharmacy, a 72-
7 hour supply of the prescribed drug shall be dispensed and
8 paid for by the program.
9 (3) A prescription will only be changed upon the orders
10 of the prescriber.
11 Section 709-A. Studies required.
12 (a) General.--
13 (1) The secretary shall select a competent contractor to
14 analyze and compare expenditures, utilization rates and
15 utilization patterns for pharmacy services provided to PACE
16 or PACENET.
17 (2) To effectuate the purposes of this chapter, all
18 participating pharmacy providers, manufacturers, drug chains
19 and wholesalers shall, as a condition of participation, be
20 required to cooperate with the secretary in preparing the
21 required report.
22 (3) The secretary shall report preliminary findings to
23 the President pro tempore of the Senate and the Speaker of
24 the House of Representatives by September 30, 2002. The
25 secretary shall report finally on June 30, 2004.
26 (b) Report.--The Legislative Budget and Finance Committee
27 shall evaluate and prepare a report to be submitted no later
28 than June 30, 2004, to the General Assembly on the best price
29 for pharmaceuticals program under this chapter.
30 Section 710-A. Applicability of chapter.
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1 This chapter shall apply to PACE and PACENET.
2 Section 711-A. Prohibited activities.
3 It shall be unlawful for any individual, partnership or
4 corporation to solicit, receive, offer or pay any kickback,
5 bribe or rebate in cash or in kind from or to any person in
6 connection with the furnishing of services under this chapter.
7 Section 712-A. Expiration of chapter.
8 This chapter shall expire December 31, 2004, unless
9 reauthorized by the General Assembly.
10 CHAPTER 7-B
11 PRESCRIPTION DRUG ACCESS CLEARINGHOUSE AUTHORITY
12 Section 701-B. Definitions.
13 The following words and phrases when used in this chapter
14 shall have the meanings given to them in this section unless the
15 context clearly indicates otherwise:
16 "Authority." The Prescription Drug Access Clearinghouse
17 Authority established by this chapter.
18 "Board." The board of directors of the Prescription Drug
19 Access Clearinghouse Authority.
20 "Discount plan." A prescription drug discount plan.
21 "Discount program." The Prescription Drug Discount Program
22 under section 707-B.
23 "PACE." As defined in section 502.
24 "PACENET." As defined in section 502.
25 Section 702-B. Establishment and duties of authority.
26 (a) Authority established.--The Prescription Drug Access
27 Clearinghouse Authority is hereby established to assist citizens
28 with accessing prescription drug services at affordable prices.
29 (b) Duties of authority.--The authority shall:
30 (1) Disseminate information and advertise programs that
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1 will assist citizens with purchasing prescription drugs at a
2 lower cost.
3 (2) Provide specific assistance to State residents to
4 facilitate greater participation in the PACE and PACENET
5 programs.
6 (3) Assist State residents with enrolling in programs
7 such as PACE, PACENET and Medicaid and that may provide for
8 prescription drug coverage for which they may be eligible.
9 (4) Assist residents of this Commonwealth with assessing
10 discount programs or insurance programs that may be of
11 benefit to them.
12 (5) Perform studies to identify additional strategies
13 that may help improve access by Commonwealth residents to
14 prescription drugs and provide appropriate reports to the
15 Governor and General Assembly.
16 (6) Serve as a general resource responsible for
17 promoting the interest of residents of this Commonwealth on
18 prescription drug access issues.
19 Section 703-B. Authority board of directors.
20 (a) Membership.--The authority shall be governed by a 13-
21 member board of directors as follows:
22 (1) Four members appointed by the Governor, one of whom
23 shall be a consumer representative and one of whom shall have
24 knowledge of pharmaceutical benefit programs.
25 (2) Two members appointed by the Majority Leader of the
26 Senate, one of whom shall be a practicing pharmacist.
27 (3) Two members appointed by the Minority Leader of the
28 Senate, one of whom shall have knowledge of group procurement
29 practices.
30 (4) Two members appointed by the Majority Leader of the
20030S0434B0455 - 20 -
1 House of Representatives, one of whom shall have experience
2 in operations of group health plans.
3 (5) Two members appointed by the Minority Leader of the
4 House of Representatives, one of whom shall represent
5 individuals in this Commonwealth who are elderly or have
6 disabilities.
7 (6) The executive director of the authority, to be
8 selected by the other members of the board, who shall serve
9 as an ex officio, voting member of the board.
10 (b) Executive director.--The executive director of the
11 authority shall be the chief executive officer of the authority
12 and presiding officer of the board of directors.
13 (c) Compensation.--Except for the executive director,
14 members of the board shall receive no compensation for their
15 services but shall be reimbursed for their necessary expenses
16 incurred while serving as board members.
17 (d) Vacancies.--A vacancy on the board shall be filled by
18 the appointing authority for the balance of the term.
19 (e) Terms of members.--
20 (1) Initial terms of appointed members shall be as
21 follows:
22 (i) The Governor shall appoint one member for two
23 years.
24 (ii) The Majority Leader of the Senate shall appoint
25 one member for two years.
26 (iii) The Minority Leader of the Senate shall
27 appoint one member for two years.
28 (iv) The Majority Leader of the House of
29 Representatives shall appoint one member for two years.
30 (v) The Minority Leader of the House of
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1 Representatives shall appoint one member for two years.
2 (vi) The remaining members shall be appointed for
3 four years.
4 (2) Each subsequent term of a member shall be for four
5 years and until a successor is appointed and qualified.
6 Except for the executive director, members may serve only two
7 consecutive full terms. Any member of the board may be
8 removed by the Governor or by a majority of the other board
9 members for malfeasance in office, failure to attend
10 regularly scheduled meetings, or for any cause that renders
11 the member incapable of for unfit to discharge the duties of
12 a director.
13 (f) Meetings.--Meetings of the board shall be subject to 65
14 Pa.C.S. Ch. 7 (relating to open meetings) and the act of June
15 21, 1957 (P.L.390, No.212), referred to as the Right-to-Know
16 Law. A quorum for a meeting shall be a majority of the total
17 membership of the board. Any action of the board of directors
18 requires the affirmative vote of a majority of a quorum.
19 (g) Conflicts of interest.--No part of the revenues or
20 assets of the authority may inure to the benefit of, or be
21 distributed to, its board of directors or officers or any other
22 private person or entity. Any member of the board of directors
23 and any employee or other agent or advisor of the authority, who
24 has a direct or indirect interest in a pharmaceutical
25 manufacturer, pharmacy, discount program, insurance program or
26 in any contract or transaction with the authority, must disclose
27 this interest to the authority. If a board member has an
28 interest in a transaction, then the member may not participate
29 in the deliberations or voting on such a transaction. The status
30 of the authority's chief executive officer, in and of itself,
20030S0434B0455 - 22 -
1 does not constitute a conflicting interest.
2 (h) Personnel.--A State employee who elects to become an
3 employee of the authority shall receive full credit from the
4 authority for sick leave and annual leave accrued while employed
5 by the State. The authority may establish and administer its own
6 personnel program, including a wage and benefit structure for
7 authority employees. Authority employees may participate in and
8 be eligible for enrollment in the Commonwealth retirement system
9 established pursuant to 71 Pa.C.S. Pt. XXV (relating to
10 retirement for State employees and officers).
11 Section 704-B. General powers of authority.
12 The authority shall have the general powers of an independent
13 corporate entity, including the following:
14 (1) To have the duties, privileges, immunities, rights,
15 powers, liabilities and obligations of a body corporate and
16 politic.
17 (2) To enroll residents in State programs offering a
18 prescription drug benefit after entering into a memorandum of
19 understanding with the relevant agency regarding coordination
20 of enrollment procedures.
21 (3) To provide counseling and guidance to residents of
22 this Commonwealth regarding existing Federal, State or
23 private programs, including manufacturer assistance programs,
24 that may be available to help address individual needs.
25 (4) To evaluate or rate prescription drug programs,
26 insurance programs and discount programs according to
27 criteria determined by the authority in advance, so long as
28 the authority deems the evaluation or ratings useful to
29 members of the public.
30 (5) To advertise the availability of any public or
20030S0434B0455 - 23 -
1 private program offering prescription drug benefits to
2 members of the public in accordance with criteria the
3 authority determines will advance the public's ability to
4 acquire quality prescription drugs at lower cost.
5 (6) To enter into any contract, agreement or other
6 instrument necessary or convenient in the exercise of the
7 powers and functions of the authority that are not
8 inconsistent with the laws of this Commonwealth.
9 (7) To manage its own finances and deposit funds into
10 independent banking accounts.
11 (8) To contract for and to accept any grants and loans
12 of funds, property or any other aid in any form from the
13 Federal or State government sources, or any other source, or
14 any combination thereof.
15 (9) To appoint agents, employees and professional and
16 business advisers as may from time to time be necessary in
17 its judgment to accomplish the purposes of the authority and
18 to fix the compensation of its officers, employees, agents
19 and advisers, and to establish the powers and duties of its
20 agents, officers, employees and other persons contracting
21 with the authority.
22 Section 705-B. Construction.
23 Nothing in this chapter shall be construed as a restriction
24 or limitation upon any other powers which the authority might
25 otherwise have under any other law of this Commonwealth.
26 Section 706-B. Exemption from taxation.
27 Any real property acquired, maintained and operated by the
28 authority under this act shall not be subject to taxation by any
29 political subdivision or local taxing authority. The authority
30 is exempt from sales and use taxes imposed under Article II of
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1 the act of March 4, 1971 (P.L.6, No.2), known as the Tax Reform
2 Code of 1971, for purchases acquired and used for its public
3 purposes.
4 Section 707-B. Availability of discount programs.
5 (a) General rule.--The authority shall administer a
6 prescription drug discount program. The authority shall
7 establish public-private partnerships using a process to
8 identify multiple-private sector prescription drug discount
9 plans that will accept enrollment from any eligible resident of
10 this Commonwealth; provide enrollees with enhanced access to
11 prescription drugs; and engage in ongoing competition for
12 enrollees on the basis of access, cost and quality of service
13 and product offered.
14 (b) Contract standards.--The authority shall issue requests
15 for proposals for participation by private sector prescription
16 drug discount plans on an annual or biannual basis as necessary,
17 to ensure that residents of this Commonwealth have access to
18 multiple plans throughout this Commonwealth.
19 (c) Eligibility.--Any resident of this Commonwealth is
20 eligible for the discount program under this chapter.
21 (d) Subsidy.--The Commonwealth shall subsidize
22 administrative costs associated with the discount program,
23 including the authority's efforts to actively endorse and
24 promote the selected discount plans. The Commonwealth is not
25 responsible for subsidizing the direct cost of prescription
26 drugs under this discount program.
27 (e) Out-of-pocket costs.--Enrollees in the discount program
28 are responsible for all costs of prescription drugs that they
29 may purchase at discounted rates as available under competing
30 prescription drug plans participating in the discount program.
20030S0434B0455 - 25 -
1 (f) Enrollment.--Participation in the discount program is
2 contingent upon enrollment and selection of a discount plan. The
3 authority shall establish an annual open enrollment period and
4 may prevent residents from changing plans during the course of a
5 year unless a discount plan's contract is revoked or the
6 discount plan becomes unable to deliver services.
7 (g) Participation.--Participation in the discount program is
8 voluntary. Enrollees are permitted to purchase prescription
9 drugs outside of the discount program at any time.
10 (h) Enrollment fee.--The authority may authorize discount
11 plans to collect a modest enrollment fee up to $25 from each
12 individual enrolling in the discount plans on a sliding fee
13 schedule.
14 (i) Consumer choice.--Eligible residents shall be given a
15 choice of discount plans in which to participate. The authority
16 may, at its discretion, create categories of plans to address
17 different consumer needs.
18 (j) Nonexclusivity.--Residents of this Commonwealth may
19 enroll in a discount plan regardless of whether they have other
20 prescription drug insurance coverage or other coverage.
21 (k) Plan selection.--Subject to public notice and comment
22 and in consultation with industry representatives, the authority
23 shall issue requests for proposals from discount plans, such as
24 discount card programs, pharmacy chain discount programs,
25 pharmaceutical benefit managers and other qualifying entities
26 capable of delivering lower prices to residents of this
27 Commonwealth. In designing the criteria for evaluating the
28 responses, the authority shall take into account the quality of
29 the services to be provided and the savings generated for
30 residents of this Commonwealth. The authority may take into
20030S0434B0455 - 26 -
1 account other factors, including geographic coverage, product
2 differentiation, the need to target different populations within
3 this Commonwealth, mail order service, coverage of rural areas
4 and other factors as determined by the authority. If the
5 authority receives multiple qualifying proposals in a category,
6 the authority must approve at least two contractors in each
7 category, but may, at its sole discretion, limit the maximum
8 number of contractors in each category.
9 (l) Applicability.--The discount program applies to
10 medically necessary prescription drugs and biologicals provided
11 to patients in outpatient pharmacies. Under all circumstances,
12 there must be at least two drugs equally available to enrollees
13 in each therapeutic class or subclass of pharmaceutical agents.
14 The authority, through the contracting process, shall ensure
15 adequate access to medically necessary prescription drugs.
16 CHAPTER 7-C
17 MEDICARE MANAGED CARE FAIR SHARE PROGRAM
18 Section 701-C. Short title of chapter.
19 This chapter shall be known and may be cited as the Medicare
20 Managed Care Fair Share Program.
21 Section 702-C. Declaration of policy.
22 The General Assembly finds and declares as follows:
23 (1) The PACE program provides prescription drug coverage
24 to this Commonwealth's low-income seniors who do not qualify
25 for Medicaid.
26 (2) Presently, out of the 11 Medicare managed care
27 providers who operate in this Commonwealth, one Medicare
28 managed care provider does not provide prescription drug
29 coverage to its Medicare beneficiaries.
30 (3) A total of 43,300 low-income Medicare beneficiaries
20030S0434B0455 - 27 -
1 who are enrolled in Medicare managed care receive their
2 prescription drug benefit through the State-administered PACE
3 program.
4 (4) A Medicare managed care provider who does not
5 provide prescription drug coverage to its Medicare enrollees
6 benefits from the Commonwealth's provision of a
7 pharmaceutical benefit through the PACE program.
8 (5) Prescription drugs are a cost-effective therapy that
9 has been shown to offer significant savings in other aspects
10 of health care, particularly in the hospital and urgent-care
11 setting.
12 (6) Medicare managed care providers who directly benefit
13 in terms of cost savings as a result of healthier seniors who
14 participate in the PACE program should be required to
15 contribute their fair share of costs presently borne by the
16 Commonwealth in its administration of the PACE program.
17 Section 703-C. Definitions.
18 The following words and phrases when used in this chapter
19 shall have the meanings given to them in this section unless the
20 context clearly indicates otherwise:
21 "Contribution amount." The amount due to the Commonwealth
22 under the Medicare Managed Care Fair Share Program.
23 "Covered Medicare manage care provider." A managed care
24 entity, plan or provider that participates in the Medicare
25 program and does not provide outpatient prescription drug
26 coverage as a covered benefit to its Medicare beneficiaries.
27 "Department." The Department of Aging of the Commonwealth.
28 "Fund." The Medicare Participation Fund established under
29 section 705-C.
30 "Program." The Medicare Managed Care Fair Share Program
20030S0434B0455 - 28 -
1 established under this chapter.
2 Section 704-C. Program administration.
3 The program shall be administered by the department. The
4 department shall promulgate and adopt rules and regulations as
5 are necessary to implement the program in a cost-effective
6 manner and that are consistent with the purposes outlined in
7 this chapter.
8 Section 705-C. Contribution amount and fund.
9 (a) Fund.--There is hereby established a separate account in
10 the State Treasury to be known as the Medicare Participation
11 Fund. Moneys collected from covered Medicare managed care
12 providers under subsection (b) shall be deposited in the fund.
13 All moneys in the fund are continuously appropriated to the
14 department solely for purposes of the PACE program. The
15 department shall collect the contributions under subsection (b)
16 on a quarterly basis.
17 (b) Collection of contribution.--The department shall
18 collect a contribution amount from covered Medicare managed care
19 providers in an amount equal to a $20 charge per patient per
20 month for each patient who is:
21 (1) enrolled and participates in a covered Medicare
22 managed care provider plan; and
23 (2) enrolled and participates in the PACE program.
24 (c) Adjustments.--The department may consider adjustments to
25 the contribution amount on an annual basis.
26 Section 706-C. Annual report.
27 The department shall prepare and submit annually a report to
28 the Governor and General Assembly which shall include the
29 department's findings and recommendations relating to the
30 program's cost and effectiveness, including recommended
20030S0434B0455 - 29 -
1 adjustments to the contribution amount.
2 Section 4. This act shall take effect in 60 days.
B26L72RLE/20030S0434B0455 - 30 -