PRINTER'S NO. 1546
No. 1222 Session of 1999
INTRODUCED BY RHOADES, HELFRICK, SALVATORE, HUGHES, KUKOVICH,
LAVALLE, KITCHEN, TOMLINSON, GERLACH, MUSTO, BELL, BOSCOLA,
PUNT, KASUNIC, SCHWARTZ, BODACK, STOUT, ROBBINS, STAPLETON,
MELLOW, WAGNER, MURPHY, WOZNIAK, MADIGAN, WHITE, O'PAKE,
WENGER, BRIGHTBILL, GREENLEAF, BELAN AND WILLIAMS,
DECEMBER 1, 1999
REFERRED TO PUBLIC HEALTH AND WELFARE, DECEMBER 1, 1999
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
1 Products with Therapeutic Equivalence Evaluations" (Food and
2 Drug Administration "Orange Book"), with a specific "A" code
3 designation only.
4 "Committee" or "DURC." The Drug Utilization Review Committee
5 created in section 5.
6 "Department." The Department of Public Welfare of the
7 Commonwealth.
8 "DESI drug." A drug product for which Federal financial
9 participation is not available under 42 CFR 441.25 (relating to
10 prohibition on FFP for certain prescribed drugs).
11 "Experimental drug." A drug or product currently being
12 investigated under an investigational or new drug application
13 filed with the Food and Drug Administration to determine its
14 safety and effectiveness.
15 "Licensed prescriber." A person currently licensed under the
16 law of a state to order medication for patient treatment.
17 "Pharmaceutical manufacturer." A company which participates
18 under the pharmaceutical services medical assistance program as
19 a manufacturer of prescription drugs, insulin, insulin needles
20 or insulin syringes.
21 "Pharmacy." A pharmacy licensed by the Commonwealth.
22 "Pharmacy benefits manager" or "PBM." An entity under
23 contract with the Department of Public Welfare to administer the
24 departmental program to provide outpatient pharmacy services to
25 eligible medical assistance recipients.
26 "Pharmacy services." Medically necessary prescription drugs
27 and other pharmacy services furnished directly to eligible
28 recipients by pharmacies enrolled as providers in the medical
29 assistance program.
30 "Prescription drug." A drug requiring a prescription in this
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1 Commonwealth, insulin, insulin syringes and insulin needles.
2 Experimental drugs or drugs prescribed for wrinkle removal or
3 hair growth are excluded.
4 "Prior authorization." A procedure established by the
5 Department of Public Welfare under which the delivery of a
6 pharmacy service is either conditioned upon or delayed by a
7 prior determination by the department or its agent that an
8 eligible medical assistance recipient is eligible for a
9 particular pharmacy service, that there is medical necessity for
10 a particular pharmacy service or that a particular pharmacy
11 service is suitable to a particular recipient.
12 "Provider." A pharmacy or licensed prescriber who has signed
13 an agreement with the Department of Public Welfare to
14 participate in the medical assistance program.
15 "Recipient." A person determined to be eligible for medical
16 assistance pharmacy services.
17 "Wholesaler." A licensed person or entity within this
18 Commonwealth which legally purchases pharmaceuticals for resale
19 or distribution to persons other than recipients or consumers.
20 Section 3. Single medical assistance pharmacy benefits manager.
21 The department shall administer a single pharmacy benefits
22 manager program for all eligible medical assistance recipients.
23 To that end, no later than 90 days from the effective date of
24 this section, the department shall issue a request for proposal
25 for a three-year contract with a pharmacy benefits manager to
26 administer outpatient pharmacy services for recipients. The
27 proposal shall require the PBM to perform prospective,
28 concurrent and retrospective drug utilization review and
29 education of licensed providers and benefit recipients. No
30 person, partnership, corporation or entity which holds a 5% or
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1 greater interest in one or more pharmacies, a chain of
2 pharmacies, a pharmacists association, an organization of
3 pharmacies, a drug wholesaler or drug manufacturer and no
4 person, partnership, corporation or entity in which one or more
5 pharmacies, a chain of pharmacies, a pharmacists association, an
6 organization of pharmacies, a drug wholesaler or drug
7 manufacturer has a 5% or greater interest shall be considered
8 eligible to bid. Such contract shall be executed within six
9 months from the effective date of this section.
10 Section 4. Pharmacy benefits manager functions.
11 (a) Requirements.--The department shall require the PBM to:
12 (1) Develop and update a formulary of drugs with the
13 advice of the DURC utilizing disease and care management.
14 (2) Manage a drug formulary.
15 (3) Ensure that any pharmacy licensed in this
16 Commonwealth is eligible to provide pharmacy services in this
17 program according to those regulations in effect on the
18 effective date of this section regulating pharmacy providers
19 participating in the fee-for-service program of the medical
20 assistance program of the department.
21 (4) Negotiate drug rebates with manufacturers.
22 (5) In accordance with the act of November 24, 1976
23 (P.L.1163, No.259), referred to as the Generic Equivalent
24 Drug Law, make provisions for generic substitutions and
25 require pharmacists to disclose any affiliation with a
26 generic manufacturer.
27 (6) Provide for prospective drug utilization review
28 which precludes overriding alerts without intervention.
29 (7) Provide for prior authorization in accordance with
30 departmental regulations.
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1 (8) Provide for prospective and concurrent and
2 retrospective drug utilization review to ensure that
3 prescriptions are appropriate, medically necessary and not
4 likely to result in adverse medical results and to educate
5 providers and recipients and to correct and report
6 misutilization and abuse by licensed prescribers and
7 recipients and provide for fraud and abuse audits,
8 coordinating its activities with the department to support
9 compliance with applicable laws and regulations.
10 (9) Educate providers on disease and care management.
11 (10) Provide educational materials for recipients on
12 disease and care management.
13 (11) In accordance with the provisions of the Omnibus
14 Budget Reconciliation Act of 1990 (Public Law 101-508, 104
15 Stat. 1388), bill, recoup and relay to the department
16 manufacturers' drug rebates and excessive consumer price
17 inflation discounts and resolve disputes, as defined in the
18 Omnibus Budget Reconciliation Act of 1990.
19 (12) Adjudicate claims through a Statewide point-of-sale
20 electronic verification and claims processing system which
21 will allow for intervention upon receipt of a prospective
22 drug utilization review alert and will allow for an emergency
23 supply of prescribed medication in the event of equipment
24 failures.
25 (13) Create an audit and recoupment system for providers
26 and recipients, and third-party medical resources.
27 (14) Reimburse pharmacies on a fee-for-service basis.
28 (15) Provide administrative support for the department's
29 appeals process for providers and recipients.
30 (b) Preparation of a formulary.--The PBM, with the advice of
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1 the Drug Utilization Review Committee created in section 5,
2 shall prepare a formulary of drugs and, in accordance with the
3 Generic Equivalent Drug Law, include generically equivalent
4 drugs to be used in the pharmacy services program. In evaluating
5 drugs for the formulary, the PBM shall consider their
6 therapeutic efficacy and take into consideration all discounts,
7 rebates or other concessions provided by manufacturers. The
8 formulary must indicate that drugs will not be reimbursed if
9 they are experimental or on the Drug Efficacy Study
10 Implementation list (DESI) prepared by the Health Care Financing
11 Administration. The formulary shall provide for a medical
12 exception for a drug on the latter list upon a handwritten
13 declaration of its necessity on the prescription by the treating
14 prescriber.
15 (c) Conflict of interest.--In developing the formulary, the
16 single PBM shall demonstrate how it will avoid a conflict of
17 interest with any pharmaceutical manufacturer, wholesaler or
18 drug store chain that holds a less-than-5% interest in the PBM
19 or in which the PBM has a less-than-5% interest and shall
20 indicate how it will prevent the sharing of nonpublic
21 information concerning other drug manufacturers' bids,
22 proposals, contracts, prices, rebates or discounts.
23 (d) Considerations.--In preparing and managing the
24 formulary, the PBM shall ensure that it will consider all
25 discounts, rebates or other concessions offered by
26 manufacturers, drug chains or wholesale drug companies.
27 (e) Changes to the formulary.--Upon making changes to the
28 formulary the PBM shall allow a benefit recipient to continue to
29 receive a drug which is part of an ongoing treatment regimen for
30 a period of up to 60 days.
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1 Section 5. Drug Utilization Review Committee (DURC).
2 (a) Creation of Drug Utilization Review Committee.--The
3 department shall require the PBM to create a Drug Utilization
4 Review Committee.
5 (b) Composition and number.--The committee shall be
6 comprised of nine members, five of whom shall be actively
7 practicing physicians licensed in this Commonwealth and four of
8 whom shall be actively practicing pharmacists licensed in this
9 Commonwealth. None of the members may hold a 5% or greater
10 interest in the PBM, its parent company or companies, or in a
11 company or companies owned by the PBM.
12 (c) Quality of care.--
13 (1) The DURC shall develop a system that provides
14 prospective, concurrent and retrospective review of drug
15 utilization to ensure that pharmacy services provided are or
16 were appropriate and medically necessary and not likely to
17 result in adverse medical results. The review program shall
18 be designed to educate licensed prescribers and pharmacists
19 as provided in paragraph (4) on the proper utilization of
20 drugs in disease and care management. In reviewing drug
21 utilization, the committee shall assess data on drug use
22 against predetermined standards consistent with the American
23 Hospital Formulary Service Drug Information, the United
24 States Pharmacopeia-Drug Information, American Medical
25 Association Drug Evaluations or peer-reviewed medical
26 literature.
27 (2) The committee shall develop a system to utilize the
28 compendia and literature referred to in paragraph (1) as its
29 source of standards to screen for potential drug problems
30 before a prescription is filled or delivered to a recipient.
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1 Prospective drug use review shall include consultation with
2 recipients by pharmacists.
3 (3) The department and the PBM shall provide data to the
4 committee, through mechanized drug claims processing and
5 retrieval systems, for the ongoing periodic examination of
6 claims data and other records in order to identify patterns
7 of fraud, abuse, gross overuse or inappropriate or medically
8 unnecessary care among licensed prescribers, pharmacists and
9 recipients or associated with specific drugs or groups of
10 drugs. The committee shall, on an ongoing basis, assess data
11 on drug use against explicit predetermined standards using
12 the compendia and literature referred to in this subsection
13 and to introduce, as necessary, remedial strategies to
14 improve the quality of care and to conserve program funds or
15 patient expenditures.
16 (4) The committee shall, using drug use data on common
17 therapy problems, develop active and ongoing educational
18 outreach programs to disseminate information to providers on
19 common drug therapy problems with the aim of improving
20 prescribing or dispensing practices. The educational programs
21 shall include interventions for providers targeting therapy
22 problems or individuals identified in the course of
23 retrospective drug reviews. The committee shall reevaluate
24 interventions from time to time to determine if the
25 interventions were successful in improving the quality of
26 drug therapy and shall make modifications as necessary.
27 Intervention programs shall include:
28 (i) Information dissemination sufficient to ensure
29 the ready availability to providers of information
30 concerning the committee's duties, powers and basis for
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1 its standards.
2 (ii) Written, oral or electronic reminders
3 containing patient-specific and/or drug-specific
4 information and suggested changes in prescribing or
5 dispensing practices, communicated in a manner designed
6 to ensure the privacy of patient-related information.
7 (iii) Use of face-to-face discussions between health
8 care professionals who are experts in rational drug
9 therapy and selected prescribers and pharmacists who have
10 been targeted for educational intervention, including
11 discussion of optimal prescribing, dispensing or pharmacy
12 care practices and follow-up face-to-face discussions.
13 (iv) Intensified review or monitoring of selected
14 prescribers or dispensers.
15 (d) Corrective actions.--Should licensed prescribers or
16 recipients continue to misutilize drugs or abuse the system, the
17 committee shall provide information to the department for
18 corrective action. In the case of prescribers, the committee
19 shall submit a report and recommendations to the department for
20 appropriate action. The department shall inform the PBM and the
21 appropriate Commonwealth licensing body of any final
22 administrative sanctions.
23 (e) Nonliability.--Any person rendering service as a member
24 of a utilization review committee for this program shall not be
25 liable for any civil damages as a result of any acts or
26 omissions in rendering the service as a member of any such
27 committee except any acts or omissions intentionally designed to
28 harm or any grossly negligent acts or omissions which result in
29 harm to the person receiving such service.
30 (f) Annual report.--The department shall require the
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1 committee to provide an annual report describing the committee's
2 activities, including the nature and scope of the prospective,
3 concurrent and retrospective drug reviews, a summary of
4 interventions used, an assessment of the impact of these
5 educational interventions on quality of care and an estimate of
6 the cost savings generated as a result of the program.
7 Section 6. Reimbursement.
8 (a) General rule.--The PBM shall reimburse pharmacies on a
9 fee-for-service basis, using formulas established by
10 departmental regulation. Pharmacies reimbursed under this act
11 shall be paid at fee-for-service rates no less than the rates in
12 effect on the effective date of this act. Pharmacies shall be
13 paid within 21 days of the PBM's receipt of appropriate
14 substantiation of the transaction. Pharmacies shall be entitled
15 to interest at a rate approved by the department for any payment
16 not made within the 21-day period. The department shall not
17 reimburse the PBM for interest paid.
18 (b) Copayments.--Except for services which are excluded
19 under the Commonwealth's medical assistance program, a recipient
20 is liable for a copayment in an amount set by the department,
21 and collection of the copayment by pharmacies shall be
22 mandatory. The amount of the copayment paid to pharmacy
23 providers by recipients shall be deducted from the
24 Commonwealth's medical assistance fee to pharmacy providers.
25 Section 7. Administration by department.
26 (a) Administration of contract.--The department shall
27 administer the contract with the PBM and shall promulgate rules
28 and regulations, as necessary, to carry out the provisions of
29 this act.
30 (b) Provision of data.--The department and the PBM shall
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1 provide data necessary to the committee to develop provider
2 prescribing profiles and recipient utilization profiles to
3 perform utilization review and disease and care management
4 through the coordination of health care and pharmacy services to
5 ensure that recipients are receiving and complying with
6 appropriate therapies.
7 Section 8. Studies required.
8 (a) Selection of contractor.--The department shall select a
9 competent contractor to analyze and compare expenditures,
10 utilization rates and utilization patterns for pharmacy services
11 for medical assistance recipients in the managed care plans
12 under current contracts with the department and in the single
13 pharmacy benefits management program established under this act.
14 To effectuate the purposes of this act, all participating
15 pharmacy providers, manufacturers, drug chains and wholesalers
16 shall, as a condition of participation, be required to cooperate
17 with the department in preparing the required report. The
18 department shall report preliminary findings to the President
19 pro tempore of the Senate and the Speaker of the House of
20 Representatives by September 30, 2001. The department shall
21 report finally on June 30, 2003. That report shall include
22 recommendations to the General Assembly on whether to continue
23 the single medical assistance pharmacy benefits manager program
24 which shall terminate on December 31, 2003.
25 (b) Report.--The Legislative Budget and Finance Committee
26 shall evaluate and prepare a report to be submitted no later
27 than June 30, 2003, to the General Assembly on the single
28 pharmacy benefits manager selected under this act.
29 Section 9. Applicability.
30 This act shall apply to the provision of all pharmacy
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1 benefits under the medical assistance program to eligible
2 recipients by any managed health care plan, pharmaceutical
3 manufacturer, licensed pharmacy, chain of pharmacies or
4 wholesaler.
5 Section 10. Prohibited activities.
6 It shall be unlawful for any individual, partnership or
7 corporation to solicit, receive, offer or pay any kickback,
8 bribe or rebate in cash or in-kind from or to any person in
9 connection with the furnishing of services under this act.
10 Section 11. Repeals.
11 All acts and parts of acts are repealed insofar as they are
12 inconsistent with this act.
13 Section 12. Effective date.
14 This act shall take effect in 60 days.
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