CORRECTIVE REPRINT PRIOR PRINTER'S NO. 1044 PRINTER'S NO. 1816
No. 888 Session of 2003
INTRODUCED BY VANCE, EACHUS, KENNEY, WALKO, E. Z. TAYLOR, GRUCELA, ADOLPH, BARD, BALDWIN, BARRAR, BASTIAN, BROWNE, BUTKOVITZ, BUXTON, CAPPELLI, CASORIO, CORNELL, CORRIGAN, COSTA, DAILEY, DALLY, J. EVANS, FEESE, FLICK, FREEMAN, GABIG, GERGELY, GILLESPIE, GINGRICH, HARHAI, HARPER, HASAY, HENNESSEY, HERMAN, HERSHEY, HORSEY, JAMES, KELLER, KIRKLAND, LAUGHLIN, LEH, LEWIS, MACKERETH, MAHER, MARSICO, McCALL, McGILL, McNAUGHTON, MELIO, MICOZZIE, R. MILLER, S. MILLER, MUNDY, NAILOR, NICKOL, O'NEILL, PALLONE, PETRARCA, PETRI, PICKETT, PISTELLA, RAYMOND, READSHAW, ROBERTS, ROSS, RUBLEY, SAINATO, SAYLOR, SCAVELLO, SCHRODER, SEMMEL, SHANER, SOLOBAY, STEIL, R. STEVENSON, T. STEVENSON, J. TAYLOR, THOMAS, TIGUE, TRAVAGLIO, TURZAI, WANSACZ, WATSON, WEBER, WILT, WRIGHT, YOUNGBLOOD, YUDICHAK AND ZUG, MARCH 13, 2003
REFERRED TO COMMITTEE ON HEALTH AND HUMAN SERVICES, MARCH 13, 2003
AN ACT 1 Providing for pharmaceutical assistance for the elderly, for 2 pharmaceutical purchasing, for limited prescription drug 3 redistribution within certain health care facilities and for 4 pharmaceutical practices and cost control program; imposing 5 additional powers and duties on the Department of Aging, the 6 Department of Health, the Department of Public Welfare and 7 the Secretary of Administration; and making repeals. 8 TABLE OF CONTENTS 9 Chapter 1. Preliminary Provisions 10 Section 101. Short title. 11 Chapter 3. Pharmaceutical Matters 12 Subchapter A. Pharmaceutical Assistance for the Elderly 13 Section 301. Legislative findings.
1 Section 302. Definitions. 2 Section 303. Determination of eligibility. 3 Section 304. Physician and pharmacy participation. 4 Section 305. Drug utilization review system. 5 Section 306. Reduced assistance. 6 Section 307. Rebates for expenses prohibited. 7 Section 308. Request for proposal. 8 Section 309. Program generally. 9 Section 310. Generic drugs. 10 Section 311. Supply. 11 Section 312. Mail order system. 12 Section 313. Indication of price. 13 Section 314. Reimbursement. 14 Section 315. Nonliability. 15 Section 316. Income verification. 16 Section 317. Contract. 17 Section 318. The Pharmaceutical Assistance Contract for the 18 Elderly Needs Enhancement Tier. 19 Section 319. Board. 20 Section 320. Penalties. 21 Section 321. Prescription Drug Education Program. 22 Section 322. Outreach program. 23 Section 323. Accountability. 24 Subchapter B. Prudent Pharmaceutical Purchasing 25 Section 341. Definitions. 26 Section 342. Rebate agreement. 27 Section 343. Disposition of funds. 28 Subchapter C. Pharmacy Best Practices and Cost Control 29 Program. 30 Section 361. Definitions. 20030H0888B1816 - 2 -
1 Section 362. Committee. 2 Section 363. Program. 3 Chapter 51. Miscellaneous Provisions 4 Section 5101. Federal programs. 5 Section 5102. Repeals. 6 Section 5103. Effective date. 7 The General Assembly of the Commonwealth of Pennsylvania 8 hereby enacts as follows: 9 CHAPTER 1 10 PRELIMINARY PROVISIONS 11 Section 101. Short title. 12 This act shall be known and may be cited as the 13 Pharmaceutical Reform Act. 14 CHAPTER 3 15 PHARMACEUTICAL MATTERS 16 SUBCHAPTER A 17 PHARMACEUTICAL ASSISTANCE FOR THE ELDERLY 18 Section 301. Legislative findings. 19 Finding that an increasing number of this Commonwealth's 20 elderly citizens who are living on fixed incomes are 21 experiencing difficulties in meeting the costs of life- 22 sustaining prescription drugs, the General Assembly, in its 23 responsibilities to provide for the health, welfare and safety 24 of the residents of this Commonwealth, hereby continues a 25 limited State pharmaceutical assistance program for the elderly. 26 Section 302. Definitions. 27 The following words and phrases when used in this subchapter 28 shall have the meanings given to them in this section unless the 29 context clearly indicates otherwise: 30 "A-rated generic therapeutically equivalent drug." A drug 20030H0888B1816 - 3 -
1 product that the Commissioner of Food and Drugs of the United 2 States Food and Drug Administration has approved as safe and 3 effective and has determined to be therapeutically equivalent, 4 as listed in "The Approved Drug Products with Therapeutic 5 Equivalence Evaluations" (Food and Drug Administration "Orange 6 Book"), with a specific "A" code designation only. 7 "Average wholesale cost." The cost of a dispensed drug based 8 upon the price published in a national drug pricing system in 9 current use by the Department of Aging as the average wholesale 10 price of a prescription drug in the most common package size. 11 "Average wholesale price." Average wholesale cost. 12 "Board." The Pharmaceutical Assistance Review Board. 13 "CMS." Center for Medicare and Medicaid Services. 14 "Department." The Department of Aging of the Commonwealth. 15 "Eligible claimant." A resident of this Commonwealth for no 16 less than 90 days, who is 65 years of age and older, whose 17 annual income is less than the maximum annual income and who is 18 not otherwise qualified for public assistance under the act of 19 June 13, 1967 (P.L.31, No.21), known as the Public Welfare Code. 20 "FDA." The United States Food and Drug Administration of the 21 Public Health Service of the Department of Health and Human 22 Services. 23 "Income." All income from whatever source derived, 24 including, but not limited to, salaries, wages, bonuses, 25 commissions, income from self-employment, alimony, support 26 money, cash public assistance and relief, the gross amount of 27 any pensions or annuities, including railroad retirement 28 benefits, all benefits received under the Social Security Act 29 (49 Stat. 620, 42 U.S.C. § 301 et seq.) except Medicare 30 benefits, all benefits received under State unemployment 20030H0888B1816 - 4 -
1 insurance laws and veterans' disability payments, all interest 2 received from the Federal Government or any state government or 3 any instrumentality or political subdivision thereof, realized 4 capital gains, rentals, workmen's compensation and the gross 5 amount of loss of time insurance benefits, life insurance 6 benefits and proceeds, except the first $5,000 of the total of 7 death benefits payments, and gifts of cash or property, other 8 than transfers by gift between members of a household, in excess 9 of a total value of $300, but does not include surplus food or 10 other relief in kind supplied by a government agency or property 11 tax rebate. 12 "Mail service program." A program set forth in section 312 13 to dispense prescription drugs by postal delivery service 14 designated and administered by the department and any entity 15 with which it contracts, upon an enrollee's submission of a 16 prescription and the applicable copayment. 17 "Maintenance drug." A prescription drug prescribed to an 18 individual for a chronic condition the use of which is medically 19 necessary for a consecutive period of at least 60 days. 20 "Maximum annual income." For PACE eligibility, annual income 21 which shall not exceed $14,000 in the case of single persons nor 22 $17,200 in the case of the combined annual income of persons 23 married to each other. Persons may, in reporting income to the 24 Department of Aging, round the amount of each source of income 25 and the income total to the nearest whole dollar, whereby any 26 amount which is less than 50¢ is eliminated. 27 "PACE." The Pharmaceutical Assistance Contract for the 28 Elderly program provided for in this subchapter. 29 "PACENET." The Pharmaceutical Assistance Contract for the 30 Elderly Needs Enhancement Tier provided for in this subchapter. 20030H0888B1816 - 5 -
1 "Pharmacy." A pharmacy licensed by the Commonwealth. 2 "Prescription drug." All drugs requiring a prescription in 3 this Commonwealth, insulin, insulin syringes and insulin 4 needles. Experimental drugs or drugs prescribed for wrinkle 5 removal or hair growth are prohibited. 6 "Private contractor." A person, partnership or corporate 7 entity that enters into a contract with the Commonwealth to 8 provide services under the provisions of this subchapter. 9 "Program." The Pharmaceutical Assistance Contract for the 10 Elderly (PACE) and the Pharmaceutical Assistance Contract for 11 the Elderly Needs Enhancement Tier (PACENET) as established by 12 this subchapter, unless otherwise specified. 13 "Provider." A pharmacy or dispensing physician enrolled as a 14 provider in the program. 15 Section 303. Determination of eligibility. 16 The department shall adopt regulations relating to the 17 determination of eligibility of prospective claimants and 18 providers, including dispensing physicians, and the 19 determination and elimination of program abuse. To this end, the 20 department shall establish a compliance unit staffed 21 sufficiently to fulfill this responsibility. The department 22 shall have the power to declare ineligible any claimant or 23 provider who abuses or misuses the established prescription 24 plan. The department shall have the power to investigate cases 25 of suspected provider or recipient fraud. 26 Section 304. Physician and pharmacy participation. 27 Any physician, pharmacist, pharmacy or corporation owned in 28 whole or in part by a physician or pharmacist enrolled as a 29 provider in the program or that has prescribed medication for a 30 claimant in the program who is precluded or excluded for cause 20030H0888B1816 - 6 -
1 from the Department of Public Welfare's medical assistance 2 program shall be precluded or excluded from participation in the 3 program. No physician precluded or excluded from the Department 4 of Public Welfare's medical assistance program shall have claims 5 resulting from prescriptions paid for by the program. 6 Section 305. Drug utilization review system. 7 The department shall ensure that a state-of-the-art 8 therapeutic drug utilization review system is established to 9 monitor and correct misutilization of drug therapies. 10 Section 306. Reduced assistance. 11 Any eligible claimant whose prescription drug costs are 12 covered in part by any other plan of assistance or insurance may 13 be required to receive reduced assistance under the provisions 14 of this subchapter. 15 Section 307. Rebates for expenses prohibited. 16 A system of rebates or reimbursements to the claimant for 17 prescription drugs shall be prohibited. 18 Section 308. Request for proposal. 19 (a) General.--The department shall prepare a request for 20 proposal for the purpose of providing pharmaceutical assistance 21 for the elderly within this Commonwealth. Upon the adoption of 22 the General Fund budget, the Department of Revenue shall be 23 authorized to transmit the appropriated funds in the State 24 Lottery Fund to the State Treasurer to be deposited in the 25 Pharmaceutical Assistance Contract for the Elderly Fund. This 26 fund shall consist of appropriations and interest and shall be 27 created by the State Treasurer to fund the operations of the 28 program by the department and the private contractor. Funds not 29 expended in the fiscal year in which they were appropriated 30 shall not lapse and shall be available for use in the next 20030H0888B1816 - 7 -
1 fiscal year. 2 (b) Additional requests.--To provide for the continued 3 operation of the program, the department shall prepare, as 4 needed, requests for proposals, in addition to that set forth in 5 subsection (a), for the purpose of providing pharmaceutical 6 assistance for the elderly within this Commonwealth. A request 7 for proposal shall require potential private contractors to 8 submit a proposal for a period of time and with monetary 9 limitations as determined by the department. Upon the enactment 10 of an appropriation from the State Lottery Fund, the Department 11 of Revenue shall be authorized to transmit the appropriated 12 amount to the State Treasurer to be deposited in the 13 Pharmaceutical Assistance Contract for the Elderly Fund. Funds 14 not expended in the fiscal year in which they were appropriated 15 shall not lapse and shall be available for use in the next 16 fiscal year. 17 Section 309. Program generally. 18 (a) Parameters of program.--The program shall include the 19 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. 20030H0888B1816 - 8 -
1 (5) There shall be the following copayments: 2 (i) For generic drugs - $5. 3 (ii) For preferred drug list drugs - $10. 4 (iii) For drugs which are not on the preferred drug 5 list - $15. 6 (6) Payments as follows: 7 (i) Except as provided in subparagraph (ii), to 8 pharmacies on behalf of eligible claimants for costs of 9 the prescription drug in excess of the copayment as 10 provided in subsections (b) and (c), plus a dispensing 11 fee of $3.50 or the dispensing fee established by the 12 department by regulation, whichever is greater. 13 (ii) For A-rated generic therapeutically equivalent 14 drugs, to pharmacies on behalf of eligible claimants for 15 the upper limits established under 42 CFR § 447.332 16 (relating to upper limits for multiple source drugs), 17 plus a dispensing fee of $4 or the dispensing fee 18 established by the department by regulations, whichever 19 is greater. 20 (7) In no case shall the Commonwealth or any person 21 enrolled in the program be charged more than the price of the 22 drug at the particular pharmacy on the date of the sale. 23 (b) Multiple-source drugs.--Except for brand name drugs that 24 are certified in accordance with subsection (d), the department 25 payment for multiple-source drugs must not exceed the amount 26 that would result from the application of the specific limits 27 established in accordance with subsection (e). If a specific 28 limit has not been established under subsection (e), then the 29 rule for "other drugs" set forth in subsection (c) applies. 30 (c) Other drugs.--The department payments for brand name 20030H0888B1816 - 9 -
1 drugs certified in accordance with subsection (d) and drugs 2 other than multiple-source drugs for which a specific limit has 3 been established under subsection (e) must not exceed in the 4 aggregate payment levels that the department has determined by 5 applying the lower of the: 6 (1) Estimated acquisition costs plus reasonable 7 dispensing fees established by the department. 8 (2) Providers' usual and customary charges to the 9 general public. 10 (d) Certification of brand-name drugs.-- 11 (1) The upper limit for payments for multiple-source 12 drugs for which a specific limit has been established under 13 subsection (e) does not apply if a physician certifies in his 14 or her own handwriting that a specific brand is medically 15 necessary for a particular recipient. 16 (2) The department must decide what certification form 17 and procedure are used. 18 (3) A checkoff box on a form is not acceptable but a 19 notation like "brand necessary" is allowable. 20 (4) The department may allow providers to keep the 21 certification forms if the forms will be available for 22 inspection by the department. 23 (e) Establishment and issuance of a listing of multiple- 24 source drugs.-- 25 (1) The department will use the CMS listings that 26 identify and set upper limits for multiple-source drugs that 27 meet the following requirements: 28 (i) All of the formulations of the drug approved by 29 the Food and Drug Administration (FDA) have been 30 evaluated as therapeutically equivalent in the most 20030H0888B1816 - 10 -
1 current edition of their publication, Approved Drug 2 Products with Therapeutic Equivalence Evaluations, 3 including supplements or in successor publications. 4 (ii) At least three suppliers list the drug, which 5 has been classified by the FDA as category "A" in its 6 publication, Approved Drug Products with Therapeutic 7 Equivalence Evaluations, including supplements or in 8 successor publications, based on all listings contained 9 in current editions, or updates, of published compendia 10 of cost information for drugs available for sale 11 nationally. 12 (2) The department publishes the list of multiple-source 13 drugs for which upper limits have been established and any 14 revisions to the list in Medicaid program instructions. 15 (3) The department will identify the sources used in 16 compiling these lists. 17 Section 310. Generic drugs. 18 (a) General.--Notwithstanding any other statute or 19 regulation, if an A-rated generic therapeutically equivalent 20 drug is available for dispensing to a claimant, the provider 21 shall dispense the A-rated generic therapeutically equivalent 22 drug to the claimant. The department shall not reimburse 23 providers for brand name products except in the following 24 circumstances: 25 (1) There is no A-rated generic therapeutically 26 equivalent drug available on the market. This paragraph does 27 not apply to the lack of availability of an A-rated generic 28 therapeutically equivalent drug in the providing pharmacy 29 unless it can be shown to the department that the provider 30 made reasonable attempts to obtain the A-rated generic 20030H0888B1816 - 11 -
1 therapeutically equivalent drug or that there was an 2 unforeseeable demand and depletion of the supply of the A- 3 rated generic therapeutically equivalent drug. In either 4 case, the department shall reimburse the provider for 90% of 5 the average wholesale cost plus a dispensing fee based on the 6 least expensive A-rated generic therapeutically equivalent 7 drug for the brand drug dispensed. 8 (2) An A-rated generic therapeutically equivalent drug 9 is deemed by the department, in consultation with a 10 utilization review committee, to have too narrow a 11 therapeutic index for safe and effective dispensing in the 12 community setting. The department shall notify providing 13 pharmacies of A-rated generic therapeutically equivalent 14 drugs that are identified pursuant to this paragraph on a 15 regular basis. 16 (3) The Department of Health has determined that a drug 17 shall not be recognized as an A-rated generic therapeutically 18 equivalent drug for purpose of substitution under section 19 5(b) of the act of November 24, 1976 (P.L.1163, No.259), 20 referred to as the Generic Equivalent Drug Law. 21 (4) At the time of dispensing, the provider has a 22 prescription on which the brand name drug dispensed is billed 23 to the program by the provider at a usual and customary 24 charge which is equal to or less than the least expensive 25 usual and customary charge of any A-rated generic 26 therapeutically equivalent drug reasonably available on the 27 market to the provider. 28 (b) Copayment.--If a claimant chooses not to accept the A- 29 rated generic therapeutically equivalent drug required by 30 subsection (a), the claimant shall be liable for the copayment 20030H0888B1816 - 12 -
1 and 70% of the average wholesale cost of the brand name drug. 2 (c) Substitution or construction.--The dispensing of an A- 3 rated generic therapeutically equivalent drug in accordance with 4 this subchapter shall not be deemed incorrect substitution under 5 section 6(a) of the Generic Equivalent Drug Law. 6 (d) Medical exception.--A medical exception process shall be 7 established by the department, which shall be published as a 8 notice in the Pennsylvania Bulletin and distributed to providers 9 and recipients in the program. 10 Section 311. Supply. 11 (a) Requirement.--Except as set forth in subsection (b), 12 prescription benefits for any single prescription shall be 13 limited to a 30-day supply of the prescription drug or 100 14 units, whichever is less for acute conditions. 15 (b) Exceptions.-- 16 (1) In the case of diagnosis for acute conditions, 17 prescription benefits for any single prescription shall be 18 limited to a 15-day supply. 19 (2) Subsection (a) shall not apply to topical ointments 20 or gels which are not available in containers which meet the 21 size and supply restrictions set forth in subsection (a). 22 (c) Subsection (a) does not apply to contracts under section 23 312(c). 24 Section 312. Mail service program. 25 (a) General rule.--The department shall require the use of a 26 mail service program for maintenance drugs for eligible 27 claimants. Only mail order pharmacy services provided by 28 pharmacies which are licensed by the Commonwealth and which have 29 their principal place of business within this Commonwealth may 30 participate as providers under the program. 20030H0888B1816 - 13 -
1 (b) Minimum standards of practice.--The department shall 2 develop and promulgate specific regulations governing the 3 practice of mail order pharmacy and other enrolled providers to 4 include the following minimum standards of practice to ensure 5 the health, safety and welfare of program participants: 6 (1) The appropriate method by which pharmacies verify 7 the identity of the eligible claimant and the authenticity of 8 prescriptions received. 9 (2) The appropriate method by which pharmacies mail or 10 deliver prescription drugs ensuring, to the maximum extent 11 possible, that the intended eligible claimant is the actual 12 ultimate recipient of any prescription dispensed. 13 (3) The appropriate method by which pharmacies 14 communicate with eligible claimants in emergency situations. 15 (c) Ninety-day supply.--The department shall negotiate mail 16 order contracts to provide a 90-day supply of drugs to eligible 17 claimants at a single copayment rate equal to a 30-day supply 18 for each order. 19 (d) Requirement.--An eligible claimant shall use the mail 20 service program if the eligible claimant: 21 (1) utilizes a maintenance drug; 22 (2) has filled a prescription; and 23 (3) has refilled the prescription under paragraph (2) at 24 least once. 25 (e) Rebates.--A mail order contract must include a rebate 26 from the prescription drug manufacturer. The rebate must be at 27 least as much as follows: 28 (1) For a brand-name drug, the sum of subparagraphs (i) 29 and (ii): 30 (i) A dispensing fee of at least $6. 20030H0888B1816 - 14 -
1 (ii) The difference between: 2 (A) the average wholesale price; and 3 (B) 20% of that price. 4 (2) For a generic drug, the sum of subparagraphs (i) and 5 (ii): 6 (i) A dispensing fee of at least $6. 7 (ii) The difference between: 8 (A) the average wholesale price; and 9 (B) 50% of that price. 10 (f) Negotiated payments.--The department shall not 11 discriminate against a pharmacy that agrees to accept negotiated 12 payment levels with the same terms and conditions and to adhere 13 to quality standards established by the PACE and PACENET 14 programs. 15 Section 313. Indication of price. 16 The retail price of the prescription shall be indicated on 17 the label of the prescription container or furnished by separate 18 receipt. 19 Section 314. Reimbursement. 20 For-profit third-party insurers and not-for-profit 21 prescription plans shall be responsible for any payments made to 22 a providing pharmacy on behalf of a claimant covered by such a 23 third party. 24 Section 315. Nonliability. 25 (a) General.--Any person rendering service as a member of a 26 utilization review committee for this program shall not be 27 liable for any civil damages as a result of any acts or 28 omissions in rendering the service as a member of any such 29 committee except any acts or omissions intentionally designed to 30 harm or any grossly negligent acts or omissions which result in 20030H0888B1816 - 15 -
1 harm to the person receiving such service. 2 (b) Department personnel.--Any officer or employee of the 3 department rendering service as a member of a utilization review 4 committee for this program shall not be liable for any civil 5 damages as a result of any acts or omissions in rendering the 6 service as a member of any such committee or as a result of any 7 decision or action in connection with the program except any 8 acts or omissions intentionally designed to harm or any grossly 9 negligent acts or omissions which result in harm to the person 10 receiving such service. 11 Section 316. Income verification. 12 (a) General.--The department shall annually verify the 13 income of eligible claimants by requiring income documentation 14 from the claimants. An application for benefits under this 15 subchapter shall constitute a waiver to the department of all 16 relevant confidentiality requirements relating to the claimant's 17 Pennsylvania State income tax information in the possession of 18 the Department of Revenue. The Department of Revenue shall 19 provide the department with the necessary income information 20 shown on the claimant's Pennsylvania State income tax return 21 solely for income verification purposes. 22 (b) Unlawful act.--It shall be unlawful for any officer, 23 agent or employee of the department to divulge or make known in 24 any manner whatsoever any information gained through access to 25 the Department of Revenue information except for official income 26 verification purposes under this subchapter. 27 (c) Penalty.--A person who violates this chapter commits a 28 misdemeanor and shall, upon conviction, be sentenced to pay a 29 fine of not more than $1,000 or to imprisonment for not more 30 than one year, or both, together with the cost of prosecution, 20030H0888B1816 - 16 -
1 and, if the offender is an officer or employee of the 2 Commonwealth, he shall be dismissed from office or discharged 3 from employment. 4 (d) Coordination of effort.--To the extent possible, the 5 department and the Department of Public Welfare shall coordinate 6 efforts to facilitate the application and enrollment of eligible 7 older people in the Medicaid Healthy Horizons Program by 8 processing these applications at senior citizens centers and 9 other appropriate facilities providing services to the elderly. 10 Section 317. Contract. 11 The department is authorized to enter into a contract 12 providing for prescription drugs to eligible persons pursuant to 13 this subchapter. The department shall select a proposal that 14 includes, but is not limited to, the criteria set forth in this 15 subchapter. 16 Section 318. The Pharmaceutical Assistance Contract for the 17 Elderly Needs Enhancement Tier. 18 (a) Establishment.--There is hereby established within the 19 department a program to be known as the Pharmaceutical 20 Assistance Contract for the Elderly Needs Enhancement Tier 21 (PACENET). 22 (b) Eligibility.--A claimant with an annual income of not 23 less than $17,000 and not more than $20,000 in the case of a 24 single person and of not less than $20,001 and not more than 25 $23,200 in the case of the combined income of persons married to 26 each other shall be eligible for enhanced pharmaceutical 27 assistance under this section. A person may, in reporting income 28 to the department, round the amount of each source of income and 29 the income total to the nearest whole dollar, whereby any amount 30 which is less than 50¢ is eliminated. 20030H0888B1816 - 17 -
1 (c) Requirements.--Upon enrollment in PACENET, eligible 2 claimants in the income ranges set forth in subsection (b) shall 3 be required to meet a monthly deductible in unreimbursed 4 prescription drug expenses of $50 per person per month. To 5 qualify for the deductible set forth in this subsection the 6 prescription drug must be purchased for the use of the eligible 7 claimant from a provider as defined in this subchapter. The 8 department, after consultation with the board, may approve an 9 adjustment in the deductible on an annual basis. 10 (d) Copayments.--The following are the copayments: 11 (1) For generic drugs - $6. 12 (2) For preferred drug list drugs - $12. 13 (3) For drugs which are not on the preferred drug list - 14 $18. 15 Section 319. Board. 16 (a) General.--The Pharmaceutical Assistance Review Board is 17 continued to ensure that the program is providing and continues 18 to provide the assistance intended in a fiscally responsible 19 manner without excessively hampering the pharmaceutical 20 industry. 21 (b) Membership.--The board shall be comprised of the 22 following eight persons: 23 (1) The Secretary of Aging, who shall serve as its 24 chairman. 25 (2) The Secretary of Revenue. 26 (3) The Secretary of Health. 27 (4) Five public members, one appointed by the President 28 pro tempore of the Senate, one appointed by the Minority 29 Leader of the Senate, one appointed by the Speaker of the 30 House of Representatives, one appointed by the Minority 20030H0888B1816 - 18 -
1 Leader of the House of Representatives and one appointed by 2 the Governor. Those appointed by the legislative officers 3 shall include two senior citizens who have not been a part of 4 the pharmaceutical industry to serve as consumer advocates 5 and two representatives of the pharmaceutical industry, at 6 least one of whom is a practicing Pennsylvania pharmacist. 7 The individual appointed by the Governor must be a physician. 8 A public member who misses two consecutive meetings without 9 good cause acceptable to the chairman shall be replaced by 10 the appointing authority. 11 (c) Annual review.--Using the annual report submitted by the 12 department pursuant to section 2102 of the act of August 26, 13 1971 (P.L.351, No.91), known as the State Lottery Law, and other 14 appropriate data sources, the board shall conduct an annual 15 review. The board shall develop recommendations concerning any 16 changes in the level of copayment, deductible or in the level of 17 fees paid to participating pharmacists. The board shall review 18 the department's therapeutic drug utilization review program on 19 an ongoing basis. The board may also recommend other changes in 20 the structure of the program and direct the department to enter 21 into discussions with the private contractor concerning 22 amendments to the contract, or the department may enter into 23 such discussion if it deems necessary. The copayment or 24 deductible schedule shall only be adjusted on an annual basis. 25 (d) Meetings.--The board shall meet at least two times per 26 year. 27 Section 320. Penalties. 28 (a) General.--It shall be unlawful for any person to: 29 (1) Submit a false or fraudulent claim or application 30 under this subchapter, including, but not limited to: 20030H0888B1816 - 19 -
1 (i) aiding or abetting another in the submission of 2 a false or fraudulent claim or application; 3 (ii) receiving benefits or reimbursement under a 4 Federal, state or a private program for prescription 5 assistance and claiming or receiving duplicative benefits 6 hereunder; 7 (iii) soliciting, receiving, offering or paying any 8 kickback, bribe or rebate, in cash or in kind, from or to 9 any person in connection with the furnishing of services 10 under this subchapter; 11 (iv) engaging in a pattern of submitting claims that 12 repeatedly uses incorrect National Drug Code numbers for 13 the purpose of obtaining wrongful enhanced reimbursement; 14 or 15 (v) otherwise violating any provision of this 16 subchapter. 17 (2) Charge a copay if the amount of the copay exceeds 18 the actual cost of the drug purchased. 19 (b) Civil penalty.--In addition to any appropriate criminal 20 penalty for prohibited acts under this subchapter whether or not 21 that act constitutes a crime under 18 Pa.C.S. (relating to 22 crimes and offenses), a provider who violates this section may 23 be liable for a civil penalty, which shall be collected by the 24 department, in an amount not less than $500 and not more than 25 $10,000 for each violation of this chapter. Each violation 26 constitutes a separate offense. If the department collects three 27 or more civil penalties against the same provider, the provider 28 shall be ineligible to participate in either PACE or PACENET for 29 a period of one year. If more than three civil penalties are 30 collected from any provider, the department may determine that 20030H0888B1816 - 20 -
1 the provider is permanently ineligible to participate in PACE or 2 PACENET. 3 (c) Suspension.--The license of any provider who has been 4 found guilty under this subchapter shall be suspended for a 5 period of one year. The license of any provider who has 6 committed three or more violations of this subchapter may be 7 suspended for a period of one year. 8 (d) Reparation.--Any provider, recipient or other person who 9 is found guilty of a crime for violating this subchapter shall 10 repay three times the value of the material gain received. In 11 addition to the civil penalty authorized pursuant to subsection 12 (b), the department may require the provider, recipient or other 13 person to repay up to three times the value of any material gain 14 to PACE or PACENET. 15 Section 321. Prescription Drug Education Program. 16 The department, in cooperation with the Department of Health, 17 shall develop and implement a Statewide prescription drug 18 education program designed to inform older adults of the dangers 19 of prescription drug abuse and misuse. The prescription dug 20 education program shall include, but not be limited to, 21 information concerning the following: 22 (1) The hazards of prescription drug overdose. 23 (2) The potential dangers of mixing prescription drugs. 24 (3) The danger of retaining unused prescription drugs 25 after the need to take them no longer exists. 26 (4) The necessity to carefully question physicians and 27 pharmacists concerning the effects of taking prescription 28 drugs, including the differences between brand-name drugs and 29 generically equivalent drugs. 30 (5) The advisability of maintaining a prescription drug 20030H0888B1816 - 21 -
1 profile or other record of prescription drug dosage and 2 frequency of dosage. 3 (6) The desirability of advising family members of the 4 types and proper dosage of prescription drugs which are being 5 taken. 6 (7) The dangers of taking prescription drugs in excess 7 of prescribed dosages. 8 (8) The need to obtain complete, detailed directions 9 from the physician or pharmacist concerning the time period a 10 prescription drug should be taken. 11 Section 322. Outreach program. 12 The department, in consultation with appropriate Commonwealth 13 agencies, shall coordinate the development of an outreach plan 14 to inform potential contractors, providers and enrollees 15 regarding eligibility and available benefits of the PACE and 16 PACENET programs. The plan shall include provisions for reaching 17 special populations, including nonwhite and non-English-speaking 18 people; for reaching different geographic areas, including rural 19 and inner-city areas; and for assuring that special efforts are 20 coordinated within the overall outreach activities throughout 21 this Commonwealth. 22 Section 323. Accountability. 23 (a) Audits.--The PACE and PACENET programs shall be subject 24 to an audit by an independent entity at least once each fiscal 25 year. This subsection shall include fiscal audits, provider 26 claims audits, benefits manager administration audits and 27 manufacturer's rebate audits. 28 (b) Conduct of audit.--The audit shall be conducted in 29 accordance with generally accepted auditing standards as 30 prescribed by the American Institute of Certified Public 20030H0888B1816 - 22 -
1 Accountants, the Governmental Accounting Standards Board, the 2 United States General Accounting Office or other professionally 3 recognized entities that prescribe auditing standards. 4 (c) Access.--The auditor shall be entitled to have access to 5 all of the books, accounts, confidential or nonconfidential 6 reports, vouchers or other records of information in the 7 department and its contractors including access to all 8 electronic data. The auditor shall have access to copyrighted or 9 restricted information obtained by the department and its 10 contractors under subscription agreements and utilized in the 11 preparation of economic estimates only for audit purposes. 12 (d) Purpose and report.--The audit shall determine the 13 following: 14 (1) Whether the records, books and accounts of the 15 department and its contractors accurately reflect the 16 financial and fiscal operations. 17 (2) Whether effective accounting control over revenues, 18 obligations, expenditures, assets and liabilities is 19 maintained. 20 (3) Whether the department and its contractors have 21 obligated, expended, received and used State funds in 22 accordance with the purpose for which those funds have been 23 appropriated. 24 (4) Whether the records, books and accounts of the 25 department and its contractors fairly and accurately reflect 26 the financial and fiscal operations relating to the 27 obligation receipt, expenditure and use of State funds. 28 (5) Whether the department and its contractors are 29 managing and utilizing resources, personnel, property, 30 equipment and space in an economical and efficient manner 20030H0888B1816 - 23 -
1 including causes of inefficiencies or uneconomical practices, 2 inadequacies in management information systems, internal and 3 administrative procedures, organizational structure, use of 4 resources, allocation of personnel, purchasing policies and 5 equipment. 6 (6) Whether financial, program and statistical reports 7 of the department and its contractors contain useful data and 8 are fairly presented. 9 (7) Whether the objectives and intended benefits are 10 being achieved efficiently and effectively. 11 (8) Whether the programs are being performed and 12 administered as authorized and required by law. 13 (9) Whether the benefits manager and pharmacy providers 14 are accurately transmitting and billing PACE and PACENET 15 prescription claims. 16 (e) Report.--The auditor shall submit an annual report of 17 its findings, conclusions and recommendations to the department 18 and its contractors and to the Aging and Youth Committee, the 19 Appropriations Committee and the Public Health and Welfare 20 Committee of the Senate and the Aging and Older Adult Services 21 Committee, the Appropriations Committee and the Health and Human 22 Services Committee of the House of Representatives. 23 (f) Response.--The Department of Aging shall respond to the 24 audit report within 30 days of its release. 25 SUBCHAPTER B 26 PRUDENT PHARMACEUTICAL PURCHASING 27 Section 341. Definitions. 28 The following words and phrases when used in this subchapter 29 shall have the meanings given to them in this section unless the 30 context clearly indicates otherwise: 20030H0888B1816 - 24 -
1 "Covered prescription drug." A legend drug, insulin, an 2 insulin syringe or an insulin needle eligible for payment by the 3 Commonwealth under PACE, PACENET or designated pharmaceutical 4 programs. 5 "Designated pharmaceutical programs." The general assistance 6 program and the Special Pharmaceutical Benefit Program in the 7 Department of Public Welfare and the End Stage Renal Dialysis 8 Program in the Department of Health. 9 "PACE." The program under Subchapter A. 10 "PACENET." The program established under section 318. 11 Section 342. Rebate agreement. 12 PACE, PACENET and designated pharmaceutical programs shall 13 reimburse for any covered prescription drug with a rebate 14 agreement drafted on the same basis as provided in section 1927 15 of Title XIX of the Social Security Act (49 Stat. 620, 42 U.S.C. 16 § 1396 r-8). 17 Section 343. Disposition of funds. 18 (a) PACE and PACENET.--Money received under this subchapter 19 in connection with PACE and PACENET shall be deposited in the 20 Pharmaceutical Assistance Contract for the Elderly Fund. 21 (b) Pharmaceutical programs.--Money received under this 22 subchapter in connection with designated pharmaceutical programs 23 shall be treated as a refund of expenditures to the 24 appropriation which originally provided the funding for the 25 pharmaceutical purchase. 26 SUBCHAPTER C 27 PHARMACY BEST PRACTICES AND COST CONTROL PROGRAM 28 Section 361. Definitions. 29 The following words and phrases when used in this subchapter 30 shall have the meanings given to them in this section unless the 20030H0888B1816 - 25 -
1 context clearly indicates otherwise: 2 "Committee." The Pharmacy Best Practices and Cost Control 3 Advisory Committee established in section 362. 4 "Department." The Department of Aging of the Commonwealth. 5 "Program." The Pharmacy Best Practices and Cost Control 6 Program established in section 363. 7 "Secretary." The Secretary of Aging of the Commonwealth. 8 § 362. Advisory committee. 9 (a) Establishment.--The Pharmacy Best Practices and Cost 10 Control Advisory Committee is established in the department. 11 (b) Members.--The committee is comprised of the following: 12 (1) The secretary or a designee, who shall serve as 13 chairperson. 14 (2) Four members appointed by the Governor. Members 15 under this paragraph must possess expertise in medicine or 16 pharmacy. 17 (3) One member appointed by the President pro tempore of 18 the Senate and one member appointed by the Minority Leader of 19 the Senate. 20 (4) One member appointed by the Speaker of the House of 21 Representatives and one member appointed by the Minority 22 Leader of the House of Representatives. 23 (c) Terms.--Terms are as follows: 24 (1) The secretary shall serve ex officio. 25 (2) A member under subsection (b)(2) shall serve a term 26 of six years. 27 (3) A member under subsection (b)(3) shall serve a term 28 of four years but may be removed at the pleasure of the 29 appointing authority. 30 (4) A member under subsection (b)(4) shall serve a term 20030H0888B1816 - 26 -
1 of two years but may be removed at the pleasure of the 2 appointing authority. 3 (5) An appointment to fill a vacancy shall be for the 4 period of the unexpired term or until a successor is 5 appointed and qualified. 6 (d) Quorum.--A majority of the members of the committee 7 constitutes a quorum. 8 (e) Compensation.--Members shall receive no payment for 9 their services. Members who are not employees of State 10 government shall be reimbursed for necessary and reasonable 11 expenses incurred in the course of their official duties. 12 Section 363. Program. 13 (a) Establishment.--The secretary shall establish a Pharmacy 14 Best Practices and Cost Control Program for PACE and PACENET 15 enrollees designed to reduce the cost of providing prescription 16 drugs, while maintaining high quality in prescription drug 17 therapies. The program shall be implemented consistent with 18 section 1927 of the Social Security Act (49 Stat. 620, 42 U.S.C. 19 § 1396r-8). The program shall include all of the following: 20 (1) A preferred list of covered prescription drugs which 21 identifies preferred choices within selected therapeutic 22 classes for particular diseases and conditions, including 23 generic alternatives. Therapeutic classes and drugs to be 24 preferred in the classes shall be selected by the department 25 upon recommendations by the committee. 26 (2) Utilization review procedures, including a prior 27 authorization review process which meets the requirements of 28 section 1927(d)(5) of the Social Security Act (42 U.S.C. § 29 1396r-8(d)(5)). 30 (3) A supplemental rebate program or any other strategy 20030H0888B1816 - 27 -
1 designed to negotiate with pharmaceutical manufacturers to 2 lower the cost of prescription drugs for the department's 3 Medicaid program. 4 (4) Education programs, including a counterdetailing 5 program, designed to provide information and education on the 6 therapeutic and cost-effective utilization of prescription 7 drugs to physicians, pharmacists and other health care 8 professionals authorized to prescribe and dispense 9 prescription drugs. 10 (5) Any other cost containment activity adopted by the 11 department which is designed to reduce the cost of providing 12 prescription drugs while maintaining high quality in 13 prescription drug therapies. 14 (b) Pooling.--The secretary shall evaluate the benefits of 15 participating, but is not required to participate, in joint 16 prescription drug purchasing agreements or pooling arrangements 17 with other states. Such actions shall include: 18 (1) The execution of any lawful joint purchasing or 19 pooling agreements with other participating states which the 20 secretary determines will lower the Medicaid cost of 21 prescription drugs while maintaining high quality in 22 prescription drug therapies. 23 (2) Renegotiation and amendment of existing contracts to 24 which the department is a party if renegotiation and 25 amendment will be of economic benefit to the department. 26 (c) Reports.--The secretary shall report quarterly to the 27 committee on the department's progress in securing participation 28 in joint purchasing or pooling agreements. 29 (d) Authorized coverage.--The program shall authorize 30 pharmacy benefit coverage when a patient's health care provider 20030H0888B1816 - 28 -
1 prescribes a prescription drug not on the preferred drug list or 2 a prescription drug which is not the list's preferred choice 3 under the same terms as coverage for preferred choice drugs if 4 any of the following apply: 5 (1) The preferred choice has not been effective or, with 6 reasonable certainty, is not expected to be effective in 7 treating the patient's condition. 8 (2) The preferred choice causes or is reasonably 9 expected to cause adverse or harmful reactions in the 10 patient. 11 (3) Other clinical criteria recommended by the committee 12 and approved by the department is complied with. 13 (4) If the prescriber does not wish substitution to take 14 place, the prescriber shall write "brand necessary" or "no 15 substitution" in the prescriber's own handwriting on the 16 prescription blank, together with a written statement that 17 the generic or therapeutic equivalent has not been effective, 18 or with reasonable certainty is not expected to be effective, 19 in treating the patient's medical condition or causes or is 20 reasonably expected to cause adverse or harmful reactions in 21 the patient. In the case of an unwritten prescription, there 22 shall be no substitution if the prescriber expressly 23 indicates to the pharmacist that the brand name drug is 24 necessary and substitution is not allowed because the generic 25 or therapeutic equivalent has not been effective, or with 26 reasonable certainty is not expected to be effective, in 27 treating the patient's medical condition or causes or is 28 reasonably expected to cause adverse or harmful reactions in 29 the patient. 30 (e) Exclusions.--The department, with recommendations from 20030H0888B1816 - 29 -
1 the committee, shall determine diseases and therapeutic classes 2 relating to treatment for diseases excluded from the program as 3 to Medicaid enrollees already taking specified drugs at the time 4 the program is implemented. 5 (f) Response.--The program's prior authorization process 6 shall ensure that there will be a response to a request for 7 prior authorization by telephone or other telecommunication 8 device within 24 hours after receipt of the request for prior 9 authorization and that a 72-hour supply of the drug prescribed 10 will be provided in an emergency or when the program does not 11 provide a response within 24 hours. The prior authorization 12 process shall be designed to minimize administrative burdens on 13 prescribers, pharmacists and consumers. 14 (g) Procedure.--The program shall establish procedures for 15 the timely review of prescription drugs newly approved by the 16 Food and Drug Administration, including procedures for the 17 review of newly approved prescription drugs in emergency 18 circumstances. 19 (h) Reports.--The department shall submit annual reports on 20 the programs under subsection (a) and (b) to the Aging and Youth 21 Committee, the Appropriations Committee and the Public Health 22 and Welfare Committee of the Senate and the Aging and Older 23 Adult Services Committee, the Appropriations Committee and the 24 Health and Human Services Committee of the House of 25 Representatives. The reports shall include classes of drugs, 26 exceptions, cost effectiveness, movement of market share and 27 increased utilization of generic drugs. 28 CHAPTER 51 29 MISCELLANEOUS PROVISIONS 30 Section 5101. Federal programs. 20030H0888B1816 - 30 -
1 If the Federal Government enacts programs similar to PACE or 2 PACENET, the State programs shall be construed to only 3 supplement the Federal programs and all persons qualified for 4 coverage under the Federal program shall utilize that Federal 5 program before utilizing any State program. 6 Section 5102. Repeals. 7 (a) Specific.--Chapters 5 and 7 of the act of August 26, 8 1971 (P.L.351, No.91), known as the State Lottery Law, are 9 repealed. 10 (b) General.--All other acts and parts of acts are repealed 11 insofar as they are inconsistent with this act. 12 Section 5103. Effective date. 13 This act shall take effect immediately. C3L67VDL/20030H0888B1816 - 31 -