State of Illinois
91st General Assembly

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 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  32%  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 and
19    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)  Household income ceilings contained  in  the  Senior
25    Citizens   and  Disabled  Persons  Property  Tax  Relief  and
26    Pharmaceutical Assistance Act have resulted in a  decline  in
27    the  number  senior citizens qualifying for prescription drug
28    benefits under that Act.
29        (g)  Reducing  the  price  of  prescription  drugs  would
30    benefit the health and  well-being  of  all  Illinois  senior
31    citizens by providing more affordable access to needed drugs.
                            -2-                LRB9111903SMmb
 1        (h)  Drug  prices  on  the  Federal  Supply  Schedule are
 2    negotiated by the Department of Veterans Affairs and are  the
 3    best  publicly  available  indicator  of the prices that drug
 4    companies charge their favored customers.

 5        Section 10.  Purpose.  The purpose of this Program is  to
 6    require the Department of Revenue to establish and administer
 7    a  program  the  will  enable  eligible  senior  citizens  to
 8    purchase prescription drugs at discounted prices.

 9        Section 15.  Definitions.  As used in this Act:
10        "Authorized  pharmacy"  means  any pharmacy registered in
11    this State under  the  Pharmacy  Practice  Act  of  1987  and
12    approved by the Department.
13        "Department" means the Illinois Department of Revenue.
14        "Director" means the Director of Revenue.
15        "Drug  manufacturer"  means  any entity located within or
16    outside Illinois that  is  engaged  in  (i)  the  production,
17    preparation,   propagation,   compounding,   conversion,   or
18    processing  of  prescription  drug products covered under the
19    Program, either directly or  indirectly  by  extraction  from
20    substances  of  natural  origin,  independently  by  means of
21    chemical synthesis, or by a  combination  of  extraction  and
22    chemical   synthesis  or  (ii)  the  packaging,  repackaging,
23    leveling, labeling,  or  distribution  of  prescription  drug
24    products  covered  under  the  Program.  "Drug manufacturer",
25    however, does not include a wholesale distributor of drugs or
26    a retail pharmacy licensed under Illinois law.
27        "Eligible senior" means a person who is (i) a resident of
28    Illinois and (ii) 65 years of age or older.
29        "Federal  Supply  Schedule"  or  "FSS"  means   a   price
30    catalogue  containing goods available for purchase by federal
31    agencies.  Drug prices on  the  FSS  are  negotiated  by  the
32    (U.S.)  Department  of  Veterans'  Affairs  and  are the best
                            -3-                LRB9111903SMmb
 1    publicly available indicator of prices drug companies  charge
 2    favored customers.
 3        "Prescription drug" means any prescribed drug that may be
 4    legally dispensed by an authorized pharmacy.
 5        "Program"  means  the  Senior  Citizen  Prescription Drug
 6    Discount Program created under this Act.
 7        "Reasonable  cost"  means  the  most  current  price  for
 8    prescription drugs as listed on the Federal Supply Schedule.
 9        "Rules" includes rules promulgated and  forms  prescribed
10    by the Department.

11        Section 20. The Senior Citizen Prescription Drug Discount
12    Program.   The  Senior  Citizen  Prescription  Drug  Discount
13    Program is established to protect the health  and  safety  of
14    senior  citizens.   The  Program shall be administered by the
15    Department.  The Department shall (i) enroll eligible seniors
16    into the Program to  qualify  them  for  a  discount  on  the
17    purchase  of  prescription  drugs  at an authorized pharmacy,
18    (ii) enter into rebate agreements  with  drug  manufacturers,
19    and  (iii)  reimburse  pharmacies  for  the cost of providing
20    discounts using the proceeds  from  the  manufacturer  rebate
21    agreements.

22        Section 25.  Prescription drug prices.
23        (a)  Prescription  drug  prices  for  eligible seniors at
24    authorized pharmacies may not exceed  prices  listed  on  the
25    Federal  Supply  Schedule  plus  a  dispensing fee calculated
26    consistent with the  Senior  Citizens  and  Disabled  Persons
27    Property   Tax  Relief  and  Pharmaceutical  Assistance  Act.
28    Nothing in this Act precludes any  authorized  pharmacy  from
29    charging  less  than  the  listed price on the Federal Supply
30    Schedule.
31        (b)  In  addition  to  a   dispensing   fee,   authorized
32    pharmacies  are entitled to compensation equal to the Average
                            -4-                LRB9111903SMmb
 1    Wholesale Price (AWP) minus 10% for  pharmaceutical  products
 2    covered  under  this  Act.   The  Department shall compensate
 3    authorized pharmacies for the amount above the Federal Supply
 4    Schedule price charged to a participant in the Program up  to
 5    the  AWP minus 10% for prescription drugs dispensed under the
 6    Program.   For  the  purpose  of  this  Act,  AWP  shall   be
 7    determined  from  the  latest publication of the Blue Book, a
 8    universally subscribed pharmacist  reference  guide  annually
 9    published by the Hearst Corporation.  AWP may also be derived
10    electronically from the drug pricing database synonymous with
11    the  latest publication of the Blue Book and furnished in the
12    National Drug Data File (NDDF) by First Data  Bank  (FDB),  a
13    service of the Hearst Corporation.

14        Section 30.  Manufacturer rebate agreements.
15        (a)  Before  a  prescription  drug may be dispensed under
16    the Program in the State of Illinois, the  manufacturer  must
17    enter  into  and  have  in effect a rebate agreement with the
18    Department  to  cover  the  cost  to   the   Department   for
19    reimbursing  authorized pharmacies under this Act pursuant to
20    subsection (b) of Section 25.   The  rebate  agreement  shall
21    become  effective  the first day of the calendar quarter that
22    begins 60 days after the date the agreement is entered  into.
23    In negotiating these agreements, the Department is authorized
24    to  consider  the  availability of certain prescription drugs
25    essential  to  the  health  of  Illinois  seniors  and  other
26    extenuating circumstances as defined  by  the  Department  by
27    rule.   In  negotiating  these agreements, the Department may
28    also consider whether a discount or rebate agreement  already
29    exists between a manufacturer and an entity that prevents the
30    Department from negotiating a rebate agreement as required by
31    this Section.
32        (b)  The   Department   shall   develop  a  model  rebate
33    agreement for prescription drugs dispensed on and  after  the
                            -5-                LRB9111903SMmb
 1    effective date of this Act.
 2        (c)  Rebate  payment  procedures.  Each drug manufacturer
 3    of prescription drugs covered under the Program must pay  the
 4    rebates  as  calculated pursuant to subsection (b) of Section
 5    25 to the Department not later than 30 days after receipt  of
 6    the information provided by the Department.
 7        (d)  All rebates negotiated under agreements described in
 8    this  Section  shall  be paid to the Department in accordance
 9    with procedures prescribed by the Department.   The  receipts
10    from  the  rebates shall be deposited into the Senior Citizen
11    Prescription Drug Discount Program Fund, a  special  fund  in
12    the   State   treasury,   and   may   be   used,  subject  to
13    appropriation, only to cover the cost of  administering  this
14    Act.

15        Section 35.  Program eligibility.
16        (a)  Any   person   may   apply  to  the  Department  for
17    participation in the Program in the form and manner  required
18    by  the  Department.   The  Department  shall  determine  the
19    eligibility  of each applicant for the Program within 30 days
20    after the date of application.  To participate in the Program
21    an eligible senior whose application has been approved by the
22    Department  must  pay  $25  upon  enrollment   and   annually
23    thereafter  and  shall receive a Program identification card.
24    The Program identification card is proof of  eligibility  for
25    benefits  under  this Act.  If 2 or more persons are eligible
26    for any benefit under this Act and are members  of  the  same
27    household, each participating household member shall apply to
28    the  Department  and  pay the fee required for the purpose of
29    obtaining an identification card.
30        (b)  Proceeds from annual fees, subject to appropriation,
31    shall be used by the Department to offset the  administrative
32    cost  of  this Act.  If annual fees exceed the administrative
33    cost of this Act, the Department, subject  to  appropriation,
                            -6-                LRB9111903SMmb
 1    shall use the excess to lower the professional dispensing fee
 2    per prescription paid under the Program.
 3        (c)  Any   person  who  is  eligible  for  pharmaceutical
 4    assistance under the Senior  Citizens  and  Disabled  Persons
 5    Property  Tax  Relief  and  Pharmaceutical  Assistance Act is
 6    eligible  for  this  Program.   That  person   may   purchase
 7    prescription drugs under this Program that are not covered by
 8    the  pharmaceutical  assistance  program  under by the Senior
 9    Citizens  and  Disabled  Persons  Property  Tax  Relief   and
10    Pharmaceutical  Assistance  Act  by  using the identification
11    card issued under the pharmaceutical assistance program.

12        Section 27.  Eligible pharmacies.
13        (a)  Each pharmacy licensed under the  Pharmacy  Practice
14    Act  of 1987 may participate as an authorized pharmacy unless
15    it has been removed from that status by  the  Department  for
16    cause,  as  defined  by the Department by rule.  Any pharmacy
17    that has been  removed  as  an  authorized  pharmacy  by  the
18    Department  may  apply  for  reinstatement  as  an authorized
19    pharmacy  in  accordance  with   standards   and   procedures
20    established by the Department by rule.
21        (b)  The Department shall annually review the eligibility
22    of pharmacies to participate in the Program.
23        (c)  The   Department   shall  establish  procedures  for
24    properly  contracting  for  pharmacy   services,   validating
25    reimbursement  claims,  validating  compliance  of dispensing
26    pharmacists with the  contracts  for  participation  required
27    under   this   Act,   validating   the  reasonable  costs  of
28    prescription drugs covered under the Program,  and  otherwise
29    providing  for the effective administration of this Act.  The
30    Director may enter into a written  contract  with  any  other
31    State  agency,  instrumentality,  or political subdivision or
32    with a fiscal intermediary for the purpose of making payments
33    to  authorized  pharmacies  pursuant  to  subsection  (b)  of
                            -7-                LRB9111903SMmb
 1    Section 25 and coordinating the Program with  other  programs
 2    that  provide  payments  for prescription drugs covered under
 3    the Program.

 4        Section 30.  The Department  shall  promulgate  rules  to
 5    implement and administer the Program, which shall include the
 6    following:
 7             (1)  Execution   of  contracts  with  pharmacies  to
 8        dispense prescription drugs covered  under  the  Program.
 9        The  contracts  shall  stipulate terms and conditions for
10        the participation of authorized pharmacies and the rights
11        of the State to terminate participation for breach of the
12        contract  or  for  violation  of  this   Act   or   rules
13        promulgated by the Department under this Act.
14             (2)  Establishment  of maximum limits on the size of
15        prescriptions, new or refilled, which shall be in amounts
16        sufficient for 34 days, except as otherwise specified  by
17        rule for medical or utilization control reasons.
18             (3)  Establishment  of liens upon any and all causes
19        of action that accrue to a beneficiary  as  a  result  of
20        injuries  for  which prescription drugs covered under the
21        Program are directly or indirectly required and for which
22        the Director made payment or became liable for under this
23        Act.
24             (4)  Collection of payments from  third  parties  or
25        private  plans  of  assistance  or from other programs of
26        public  assistance  for  any  claim  that   is   properly
27        chargeable  under  the assignment of benefits executed by
28        beneficiaries as a requirement  of  eligibility  for  the
29        Program identification card under this Act.
30             (5)  Inspection of appropriate records and audits of
31        participating  authorized  pharmacies  to ensure contract
32        compliance and to determine any  fraudulent  transactions
33        or practices under this Act.
                            -8-                LRB9111903SMmb
 1        Section  35.   Report  on administration of Program.  The
 2    Department shall report  to  the  Governor  and  the  General
 3    Assembly  by  March 1st of each year on the administration of
 4    the Program under this Act.

 5        Section 990.  The State Finance Act is amended by  adding
 6    Section 5.541 as follows:

 7        (30 ILCS 105/5.541 new)
 8        Sec.   5.541.    The  Senior  Citizen  Prescription  Drug
 9    Discount Program Fund.

10        Section 999.  Effective date.  This Act takes effect July
11    1, 2000.

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