PRINTER'S NO. 633
No. 539 Session of 2003
INTRODUCED BY GANNON, ALLEN, BELFANTI, CAPPELLI, CAWLEY,
CREIGHTON, CURRY, DAILEY, FRANKEL, HARHAI, HENNESSEY, HORSEY,
JAMES, MACKERETH, McILHATTAN, MELIO, SEMMEL, SOLOBAY,
T. STEVENSON, TANGRETTI, E. Z. TAYLOR, THOMAS, WALKO,
WASHINGTON AND YOUNGBLOOD, FEBRUARY 26, 2003
REFERRED TO COMMITTEE ON HEALTH AND HUMAN SERVICES,
FEBRUARY 26, 2003
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 which
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." The Drug Utilization Review Committee
5 established 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." An entity under contract with
23 the Department of Public Welfare to administer the departmental
24 program to provide outpatient pharmacy services to eligible
25 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. The
2 term does not include experimental drugs or drugs prescribed for
3 wrinkle removal or hair growth.
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 that 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 (a) Program.--The department shall administer a single
22 pharmacy benefits manager program for all eligible medical
23 assistance recipients. To that end, no later than 90 days from
24 the effective date of this section, the department shall issue a
25 request for proposal for a three-year contract with a pharmacy
26 benefits manager to administer outpatient pharmacy services for
27 recipients. The proposal shall require the pharmacy benefits
28 manager to perform prospective, concurrent and retrospective
29 drug utilization review and education of licensed providers and
30 benefit recipients. None of the following are eligible to bid:
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1 (1) Any person, partnership, corporation or entity that
2 holds a 5% or greater interest in one or more pharmacies.
3 (2) A chain of pharmacies.
4 (3) A pharmacists association.
5 (4) An organization of pharmacies.
6 (5) A drug wholesaler or drug manufacturer.
7 (6) A person, partnership, corporation or entity in
8 which an entity under paragraphs (1) through (4) has a 5% or
9 greater interest shall be considered eligible to bid.
10 (b) Execution.--The contract shall be executed within six
11 months from the effective date of this section.
12 Section 4. Pharmacy benefits manager functions.
13 (a) Requirements.--The department shall require the pharmacy
14 benefits manager to do all of the following:
15 (1) Develop and update a formulary of drugs with the
16 advice of the committee utilizing disease and care
17 management.
18 (2) Manage a drug formulary.
19 (3) Ensure that any pharmacy licensed in this
20 Commonwealth is eligible to provide pharmacy services in this
21 program according to those regulations in effect on the
22 effective date of this section regulating pharmacy providers
23 participating in the fee-for-service program of the medical
24 assistance program of the department.
25 (4) Negotiate drug rebates with manufacturers.
26 (5) In accordance with the act of November 24, 1976
27 (P.L.1163, No.259), referred to as the Generic Equivalent
28 Drug Law, make provisions for generic substitutions and
29 require pharmacists to disclose any affiliation with a
30 generic manufacturer.
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1 (6) Provide for prospective drug utilization review
2 which precludes overriding alerts without intervention.
3 (7) Provide for prior authorization in accordance with
4 departmental regulations.
5 (8) Provide for prospective and concurrent and
6 retrospective drug utilization review to ensure that
7 prescriptions are appropriate, medically necessary and not
8 likely to result in adverse medical results and to educate
9 providers and recipients and correct and report
10 misutilization and abuse by licensed prescribers and
11 recipients and provide for fraud and abuse audits,
12 coordinating its activities with the department to support
13 compliance with applicable laws and regulations.
14 (9) Educate providers on disease and care management.
15 (10) Provide educational materials for recipients on
16 disease and care management.
17 (11) In accordance with the provisions of the Omnibus
18 Budget Reconciliation Act of 1990 (Public Law 101-508, 104
19 Stat. 1388), bill, recoup and relay to the department
20 manufacturers' drug rebates and excessive consumer price
21 inflation discounts and resolve disputes, as defined in the
22 Omnibus Budget Reconciliation Act of 1990.
23 (12) Adjudicate claims through a Statewide point-of-sale
24 electronic verification and claims processing system which
25 will allow for intervention upon receipt of a prospective
26 drug utilization review alert and will allow for an emergency
27 supply of prescribed medication in the event of equipment
28 failures.
29 (13) Create an audit and recoupment system for providers
30 and recipients, and third-party medical resources.
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1 (14) Reimburse pharmacies on a fee-for-service basis.
2 (15) Provide administrative support for the department's
3 appeals process for providers and recipients.
4 (b) Preparation of a formulary.--The pharmacy benefits
5 manager, with the advice of the committee, shall prepare a
6 formulary of drugs and, in accordance with the Generic
7 Equivalent Drug Law, include generically equivalent drugs to be
8 used in the pharmacy services program. In evaluating drugs for
9 the formulary, the pharmacy benefits manager shall consider
10 their therapeutic efficacy and take into consideration all
11 discounts, rebates or other concessions provided by
12 manufacturers. The formulary must indicate that drugs will not
13 be reimbursed if they are experimental or on the Drug Efficacy
14 Study Implementation list (DESI) prepared by the Health Care
15 Financing Administration. The formulary shall provide for a
16 medical exception for a drug on the latter list upon a
17 handwritten declaration of its necessity on the prescription by
18 the treating prescriber.
19 (c) Conflict of interest.--In developing the formulary, the
20 pharmacy benefits manager shall demonstrate how it will avoid a
21 conflict of interest with any pharmaceutical manufacturer,
22 wholesaler or drug store chain that holds a less-than-5%
23 interest in the pharmacy benefits manager or in which the
24 pharmacy benefits manager has a less-than-5% interest and shall
25 indicate how it will prevent the sharing of nonpublic
26 information concerning other drug manufacturers' bids,
27 proposals, contracts, prices, rebates or discounts.
28 (d) Considerations.--In preparing and managing the
29 formulary, the pharmacy benefits manager shall ensure that it
30 will consider all discounts, rebates or other concessions
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1 offered by manufacturers, drug chains or wholesale drug
2 companies.
3 (e) Changes to the formulary.--Upon making changes to the
4 formulary the pharmacy benefits manager shall allow a benefit
5 recipient to continue to receive a drug which is part of an
6 ongoing treatment regimen for a period of up to 60 days.
7 Section 5. Committee.
8 (a) Establishment.--The department shall require the
9 pharmacy benefits manager to establish a Drug Utilization Review
10 Committee.
11 (b) Composition and number.--The committee shall be
12 comprised of nine members, five of whom must be actively
13 practicing physicians licensed in this Commonwealth and four of
14 whom must be actively practicing pharmacists licensed in this
15 Commonwealth. None of the members may hold a 5% or greater
16 interest in the pharmacy benefits manager, its parent company or
17 companies, or in a company or companies owned by the pharmacy
18 benefits manager.
19 (c) Quality of care.--
20 (1) The committee shall develop a system which provides
21 prospective, concurrent and retrospective review of drug
22 utilization to ensure that pharmacy services provided are or
23 were appropriate and medically necessary and not likely to
24 result in adverse medical results. The review program shall
25 be designed to educate licensed prescribers and pharmacists
26 as provided in paragraph (4) on the proper utilization of
27 drugs in disease and care management. In reviewing drug
28 utilization, the committee shall assess data on drug use
29 against predetermined standards consistent with the American
30 Hospital Formulary Service Drug Information, the United
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1 States Pharmacopeia-Drug Information, American Medical
2 Association Drug Evaluations or peer-reviewed medical
3 literature.
4 (2) The committee shall develop a system to utilize the
5 compendia and literature referred to in paragraph (1) as its
6 source of standards to screen for potential drug problems
7 before a prescription is filled or delivered to a recipient.
8 Prospective drug use review shall include consultation with
9 recipients by pharmacists.
10 (3) The department and the pharmacy benefits manager
11 shall provide data to the committee, through mechanized drug
12 claims processing and retrieval systems, for the ongoing
13 periodic examination of claims data and other records in
14 order to identify patterns of fraud, abuse, gross overuse or
15 inappropriate or medically unnecessary care among licensed
16 prescribers, pharmacists and recipients or associated with
17 specific drugs or groups of drugs. The committee shall, on an
18 ongoing basis, assess data on drug use against explicit
19 predetermined standards using the compendia and literature
20 referred to in this subsection and to introduce, as
21 necessary, remedial strategies to improve the quality of care
22 and to conserve program funds or patient expenditures.
23 (4) The committee shall, using drug use data on common
24 therapy problems, develop active and ongoing educational
25 outreach programs to disseminate information to providers on
26 common drug therapy problems with the aim of improving
27 prescribing or dispensing practices. The educational programs
28 shall include interventions for providers targeting therapy
29 problems or individuals identified in the course of
30 retrospective drug reviews. The committee shall reevaluate
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1 interventions to determine if the interventions were
2 successful in improving the quality of drug therapy and shall
3 make modifications as necessary. Intervention programs shall
4 include:
5 (i) Information dissemination sufficient to ensure
6 the ready availability to providers of information
7 concerning the committee's duties, powers and basis for
8 its standards.
9 (ii) Written, oral or electronic reminders
10 containing patient-specific or drug-specific information
11 and suggested changes in prescribing or dispensing
12 practices, communicated in a manner designed to ensure
13 the privacy of patient-related information.
14 (iii) Use of face-to-face discussions between health
15 care professionals who are experts in rational drug
16 therapy and selected prescribers and pharmacists who have
17 been targeted for educational intervention, including
18 discussion of optimal prescribing, dispensing or pharmacy
19 care practices and follow-up face-to-face discussions.
20 (iv) Intensified review or monitoring of selected
21 prescribers or dispensers.
22 (d) Corrective actions.--If licensed prescribers or
23 recipients continue to misutilize drugs or abuse the system, the
24 committee shall provide information to the department for
25 corrective action. In the case of prescribers, the committee
26 shall submit a report and recommendations to the department for
27 appropriate action. The department shall inform the pharmacy
28 benefits manager and the appropriate Commonwealth licensing body
29 of any final administrative sanctions.
30 (e) Nonliability.--Any individual rendering service as a
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1 member of the committee for this program shall not be liable for
2 any civil damages as a result of any acts or omissions in
3 rendering the service as a member of the committee except any
4 acts or omissions intentionally designed to harm or any grossly
5 negligent acts or omissions which result in harm to the person
6 receiving service.
7 (f) Annual report.--The department shall require the
8 committee to provide an annual report describing the committee's
9 activities, including the nature and scope of the prospective,
10 concurrent and retrospective drug reviews; a summary of
11 interventions used; an assessment of the impact of these
12 educational interventions on quality of care; and an estimate of
13 the cost savings generated as a result of the program.
14 Section 6. Reimbursement.
15 (a) General rule.--The pharmacy benefits manager shall
16 reimburse pharmacies on a fee-for-service basis, using formulas
17 established by departmental regulation. Pharmacies reimbursed
18 under this act shall be paid at fee-for-service rates no less
19 than the rates in effect on the effective date of this act.
20 Pharmacies shall be paid within 21 days of the pharmacy benefits
21 manager's receipt of appropriate substantiation of the
22 transaction. Pharmacies shall be entitled to interest at a rate
23 approved by the department for any payment not made within the
24 21-day period. The department shall not reimburse the pharmacy
25 benefits manager for interest paid.
26 (b) Copayments.--Except for services which are excluded
27 under the Commonwealth's medical assistance program, a recipient
28 is liable for a copayment in an amount set by the department;
29 and collection of the copayment by pharmacies shall be
30 mandatory. The amount of the copayment paid to pharmacy
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1 providers by recipients shall be deducted from the
2 Commonwealth's medical assistance fee to pharmacy providers.
3 Section 7. Administration by department.
4 (a) Administration of contract.--The department shall
5 administer the contract with the pharmacy benefits manager and
6 shall promulgate regulations necessary to carry out the
7 provisions of this act.
8 (b) Provision of data.--The department and the pharmacy
9 benefits manager shall provide data necessary to the committee
10 to develop provider prescribing profiles and recipient
11 utilization profiles to perform utilization review and disease
12 and care management through the coordination of health care and
13 pharmacy services to ensure that recipients are receiving and
14 complying with appropriate therapies.
15 Section 8. Studies required.
16 (a) Selection of contractor.--The department shall select a
17 competent contractor to analyze and compare expenditures,
18 utilization rates and utilization patterns for pharmacy services
19 for medical assistance recipients in the managed care plans
20 under current contracts with the department and in the single
21 pharmacy benefits management program established under this act.
22 To effectuate the purposes of this act, all participating
23 pharmacy providers, manufacturers, drug chains and wholesalers
24 shall, as a condition of participation, be required to cooperate
25 with the department in preparing the required report. The
26 department shall report preliminary findings to the President
27 pro tempore of the Senate and the Speaker of the House of
28 Representatives by September 30, 2005. The department shall
29 report finally on June 30, 2006. That report shall include
30 recommendations to the General Assembly on whether to continue
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1 the single medical assistance pharmacy benefits manager program,
2 which shall terminate on December 31, 2006.
3 (b) Report.--The Legislative Budget and Finance Committee
4 shall evaluate and prepare a report to be submitted by June 30,
5 2006, to the General Assembly on the pharmacy benefits manager
6 selected under this act.
7 Section 9. Applicability.
8 This act shall apply to the provision of all pharmacy
9 benefits under the medical assistance program to eligible
10 recipients by any managed health care plan, pharmaceutical
11 manufacturer, licensed pharmacy, chain of pharmacies or
12 wholesaler.
13 Section 10. Prohibited activities.
14 It shall be unlawful for any individual, partnership or
15 corporation to solicit, receive, offer or pay any kickback,
16 bribe or rebate in cash or in-kind from or to any person in
17 connection with the furnishing of services under this act.
18 Section 31. Repeals.
19 All acts and parts of acts are repealed insofar as they are
20 inconsistent with this act.
21 Section 32. Effective date.
22 This act shall take effect in 60 days.
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