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91_HB3036eng HB3036 Engrossed LRB9110165SMdvA 1 AN ACT concerning discount prescription drugs for senior 2 citizens. 3 Be it enacted by the People of the State of Illinois, 4 represented in the General Assembly: 5 Section 1. Short title. This Act may be cited as the 6 Senior Citizen Prescription Drug Discount Program Act. 7 Section 5. Findings. The General Assembly finds that: 8 (a) Although senior citizens represent 12% of the 9 population, they use on average 37% of prescription drugs 10 that are dispensed. 11 (b) Senior citizens in the United States without 12 prescription drug insurance coverage pay the highest prices 13 in the world for needed medications. 14 (c) High prescription drug prices force many Illinois 15 seniors to go without proper medication or other necessities, 16 thereby affecting their health and safety. 17 (d) Prescription drug prices in the United States are 18 the world's highest, averaging 32% higher than in Canada, 40% 19 higher than in Mexico, and 60% higher than in Great Britain. 20 (e) Prescription drug prices listed on the Federal 21 Supply Schedule that serve the Veterans Administration, the 22 Department of Defense, and the Coast Guard average 52% below 23 the non-federal average manufacturer's price. 24 (f) Regardless of household income, seniors without 25 prescription drug coverage are often just one serious illness 26 away from poverty. 27 (g) Reducing the price of prescription drugs would 28 benefit the health and well-being of all Illinois senior 29 citizens by providing more affordable access to needed drugs. 30 (h) Drug prices on the Federal Supply Schedule are 31 negotiated by the Department of Veterans Affairs and are the HB3036 Engrossed -2- LRB9110165SMdvA 1 best publicly available indicator of the prices that drug 2 companies charge their favored customers. 3 Section 10. Purpose. The purpose of this Program is to 4 require the Department of Revenue to establish and administer 5 a program that will enable eligible senior citizens to 6 purchase prescription drugs at discounted prices. 7 Section 15. Definitions. As used in this Act: 8 "Authorized pharmacy" means any pharmacy registered in 9 this State under the Pharmacy Practice Act of 1987 and 10 approved by the Department. 11 "AWP" or "Average wholesale price" means the amount 12 determined from the latest publication of the Blue Book, a 13 universally subscribed pharmacist reference guide annually 14 published by the Hearst Corporation. "AWP" or "Average 15 wholesale price" may also be derived electronically from the 16 drug pricing database synonymous with the latest publication 17 of the Blue Book and furnished in the National Drug Data File 18 (NDDF) by First Data Bank (FDB), a service of the Hearst 19 Corporation. 20 "Department" means the Illinois Department of Revenue. 21 "Director" means the Director of Revenue. 22 "Drug manufacturer" means any entity located within or 23 outside Illinois that is engaged in (i) the production, 24 preparation, propagation, compounding, conversion, or 25 processing of prescription drug products covered under the 26 Program, either directly or indirectly by extraction from 27 substances of natural origin, independently by means of 28 chemical synthesis, or by a combination of extraction and 29 chemical synthesis or (ii) the packaging, repackaging, 30 leveling, labeling, or distribution of prescription drug 31 products covered under the Program. "Drug manufacturer", 32 however, does not include a wholesale distributor of drugs or HB3036 Engrossed -3- LRB9110165SMdvA 1 a retail pharmacy licensed under Illinois law. 2 "Eligible senior" means a person who is (i) a resident of 3 Illinois and (ii) 65 years of age or older. 4 "Federal Supply Schedule" or "FSS" means a price 5 catalogue containing goods available for purchase by federal 6 agencies. Drug prices on the FSS are negotiated by the 7 (U.S.) Department of Veterans' Affairs and are the best 8 publicly available indicator of prices drug companies charge 9 favored customers. 10 "Prescription drug" means any prescribed drug that may be 11 legally dispensed by an authorized pharmacy. 12 "Program" means the Senior Citizen Prescription Drug 13 Discount Program created under this Act. 14 "Rules" includes rules promulgated and forms prescribed 15 by the Department. 16 Section 20. The Senior Citizen Prescription Drug Discount 17 Program. The Senior Citizen Prescription Drug Discount 18 Program is established to protect the health and safety of 19 senior citizens. The Program shall be administered by the 20 Department. The Department shall (i) enroll eligible seniors 21 into the Program to qualify them for a discount on the 22 purchase of prescription drugs at an authorized pharmacy, 23 (ii) enter into rebate agreements with drug manufacturers, 24 and (iii) reimburse pharmacies for the cost of providing 25 discounts using the proceeds from the manufacturer rebate 26 agreements. 27 Section 25. Prescription drug prices. 28 (a) Beginning on January 1, 2001, the amount paid by 29 eligible seniors enrolled in the Program to authorized 30 pharmacies for prescription drugs may not exceed prices 31 listed on the Federal Supply Schedule plus a dispensing fee 32 calculated as provided in Section 3.16 of the Senior Citizens HB3036 Engrossed -4- LRB9110165SMdvA 1 and Disabled Persons Property Tax Relief and Pharmaceutical 2 Assistance Act. Nothing in this Act precludes any authorized 3 pharmacy from charging less than the listed price on the 4 Federal Supply Schedule. The Department must provide the 5 applicable Federal Supply Schedule to authorized pharmacies. 6 For prescription drugs that are not listed on the Federal 7 Supply Schedule, the amount paid by eligible seniors enrolled 8 in the Program to authorized pharmacies may not exceed the 9 AWP minus 35% plus a dispensing fee calculated as provided in 10 Section 3.16 of the Senior Citizens and Disabled Persons 11 Property Tax Relief and Pharmaceutical Assistance Act. 12 (b) Subject to the requirements of the State Prompt 13 Payment Act, the Department shall compensate authorized 14 pharmacies from the Senior Citizen Prescription Drug Discount 15 Program Fund for the difference between the amount paid by 16 eligible seniors for prescription drugs dispensed under the 17 Program and the AWP minus 10%. 18 Section 30. Manufacturer rebate agreements. 19 (a) Each drug manufacturer that distributes a 20 prescription drug for sale in Illinois and has an agreement 21 with any payor of prescription drug benefits that results in 22 a reduction in price for prescription drugs sold by an 23 authorized pharmacy shall also enter into a rebate agreement 24 with the Department to enable persons eligible for benefits 25 under this Program to purchase prescription drugs at a 26 discounted price. The rebate agreement shall be equal to the 27 cost to the Department for reimbursing authorized pharmacies 28 under this Act pursuant to subsection (b) of Section 25. The 29 rebate agreement shall become effective the first day of the 30 calendar quarter that begins 60 days after the date the 31 agreement is entered into. 32 (b) The Department shall develop a model rebate 33 agreement for prescription drugs dispensed on and after the HB3036 Engrossed -5- LRB9110165SMdvA 1 effective date of this Act. 2 (c) Rebate payment procedures. All rebates negotiated 3 under agreements described in this Section shall be paid to 4 the Department in accordance with procedures prescribed by 5 the Department. All rebates must be remitted to the 6 Department not later than 30 days after receipt of a request 7 for payment by the Department. 8 (d) The receipts from the rebates and moneys transferred 9 under Section 33 shall be deposited into the Senior Citizen 10 Prescription Drug Discount Program Fund, a special fund 11 hereby created in the State treasury, and shall be used, 12 subject to appropriation, to cover the cost of reimbursing 13 authorized pharmacies under this Act pursuant to subsection 14 (b) of Section 25. 15 Section 33. Transfer to Senior Citizen Prescription Drug 16 Discount Program Fund. 17 (a) Within 30 days after the effective date of this 18 amendatory Act of the 91st General Assembly, the State 19 Comptroller shall direct and the State Treasurer shall 20 transfer $27,000,000 from the General Revenue Fund to the 21 Senior Citizen Prescription Drug Discount Program Fund to 22 facilitate the payment of reimbursements to authorized 23 pharmacies. Repayment of principal and interest to the 24 General Revenue Fund shall be made so that the balance in the 25 General Revenue Fund will be restored as if the transfer to 26 the Senior Citizen Prescription Drug Discount Program Fund 27 had not been made. Upon a certification by the Department of 28 Revenue that the obligations under subsection (b) of Section 29 25 are being met, beginning on July 1, 2001, and on the 1st 30 of each month thereafter until the principal amount 31 transferred from the General Revenue Fund plus interest has 32 been repaid, the State Comptroller shall direct and the State 33 Treasurer shall transfer 1/12th of $27,000,000, or so much of HB3036 Engrossed -6- LRB9110165SMdvA 1 that amount as is necessary, from the Senior Citizen 2 Prescription Drug Discount Program Fund to the General 3 Revenue Fund plus accrued interest. The balance of the 4 amount transferred from the General Revenue Fund shall bear 5 interest at the rate of 7.5% per annum until the required 6 transfers back into the General Revenue Fund have been 7 completed. 8 Section 35. Program eligibility. 9 (a) Any person may apply to the Department for 10 participation in the Program in the form and manner required 11 by the Department. The Department shall determine the 12 eligibility of each applicant for the Program within 30 days 13 after the date of application. To participate in the Program 14 an eligible senior whose application has been approved by the 15 Department must pay $25 upon enrollment and annually 16 thereafter and shall receive a Program identification card. 17 The card may be presented to an authorized pharmacy to assist 18 the pharmacy in verifying eligibility under the Program. The 19 Department shall deposit the enrollment fees collected into 20 the Senior Citizen Prescription Drug Discount Program Fund. 21 The monies collected by the Department for enrollment fees 22 and deposited into the Senior Citizen Prescription Drug 23 Discount Program Fund must be separately accounted for by the 24 Department. If 2 or more persons are eligible for any benefit 25 under this Act and are members of the same household, each 26 participating household member shall apply to the Department 27 and pay the fee required for the purpose of obtaining an 28 identification card. 29 (b) Proceeds from annual enrollment fees, subject to 30 appropriation, shall be used by the Department to offset the 31 administrative cost of this Act. The Department may reduce 32 the annual enrollment fee by rule if the revenue from the 33 enrollment fees is in excess of the costs to carry out the HB3036 Engrossed -7- LRB9110165SMdvA 1 Program. 2 (c) Any person who is eligible for pharmaceutical 3 assistance under the Senior Citizens and Disabled Persons 4 Property Tax Relief and Pharmaceutical Assistance Act is 5 presumed to be eligible for this Program. That person may 6 purchase prescription drugs under this Program that are not 7 covered by the pharmaceutical assistance program under the 8 Senior Citizens and Disabled Persons Property Tax Relief and 9 Pharmaceutical Assistance Act by using the identification 10 card issued under the pharmaceutical assistance program. 11 Section 40. Eligible pharmacies. 12 (a) The Department shall promulgate rules to establish 13 standards and procedures for participation in the Program and 14 approve those pharmacies that apply to participate and meet 15 the requirements for participation. The Department may 16 remove the authorization of a pharmacy to participate in this 17 Program for failure to meet the standards and procedures for 18 participation established by the Department by rule. Any 19 pharmacy that has been removed as an authorized pharmacy by 20 the Department may apply for reinstatement as an authorized 21 pharmacy in accordance with standards and procedures 22 established by the Department by rule. 23 (b) The Department shall annually review the eligibility 24 of pharmacies to participate in the Program. 25 (c) The Department shall establish procedures for 26 properly contracting for pharmacy services, validating 27 reimbursement claims, validating compliance of authorized 28 pharmacies with the conditions for participation required 29 under this Act, and otherwise providing for the effective 30 administration of this Act. The Director, in consultation 31 with pharmacists licensed under the Pharmacy Practice Act of 32 1987, may enter into a written contract with any other State 33 agency, instrumentality, or political subdivision or with a HB3036 Engrossed -8- LRB9110165SMdvA 1 fiscal intermediary for the purpose of making payments to 2 authorized pharmacies pursuant to subsection (b) of Section 3 25 and coordinating the Program with other programs that 4 provide payments for prescription drugs covered under the 5 Program. 6 Section 45. The Department shall promulgate rules to 7 implement and administer the Program, which shall include the 8 following: 9 (1) Execution of contracts with pharmacies to 10 participate in the Program. The contracts shall 11 stipulate terms and conditions for the participation of 12 authorized pharmacies and the rights of the State to 13 terminate participation for breach of the contract or for 14 violation of this Act or rules promulgated by the 15 Department under this Act. 16 (2) Establishment of maximum limits on the size of 17 prescriptions that are eligible for a discount under the 18 Program, up to a 90-day supply, except as may be 19 necessary for utilization control reasons. 20 (3) Establishment of liens upon any and all causes 21 of action that accrue to a beneficiary as a result of 22 injuries for which prescription drugs covered under the 23 Program are directly or indirectly required and for which 24 the Director made payment or became liable for under this 25 Act. 26 (4) Inspection of appropriate records and audits of 27 participating authorized pharmacies to ensure contract 28 compliance and to determine any fraudulent transactions 29 or practices under this Act. 30 Section 50. Report on administration of Program. The 31 Department shall report to the Governor and the General 32 Assembly by March 1st of each year on the administration of HB3036 Engrossed -9- LRB9110165SMdvA 1 the Program under this Act. 2 Section 990. The State Finance Act is amended by adding 3 Section 5.541 as follows: 4 (30 ILCS 105/5.541 new) 5 Sec. 5.541. The Senior Citizen Prescription Drug 6 Discount Program Fund. 7 Section 999. Effective date. This Act takes effect July 8 1, 2000.