Bill Text: PA HB1676 | 2009-2010 | Regular Session | Amended

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Bill Title: Providing for the definitions of "acquisition cost," "Federal upper payment limits" and "usual charge" or "usual and customary charge"; further providing for program generally, for generic drugs, for indication of price, for the Pharmaceutical Assistance Contract for the Elderly Needs Enhancement Tier and for penalties; providing for the Medication Therapy Management Program; and further providing for terms of rebate agreement, for amount of rebate and for excessive pharmaceutical price inflation discount.

Spectrum: Partisan Bill (Democrat 35-0)

Status: (Introduced - Dead) 2009-07-02 - Re-committed to APPROPRIATIONS [HB1676 Detail]

Download: Pennsylvania-2009-HB1676-Amended.html

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PRIOR PRINTER'S NO. 2117 PRINTER'S NO. 2243
THE GENERAL ASSEMBLY OF PENNSYLVANIA
HOUSE BILL
No. 1676 Session of2009
INTRODUCED BY EACHUS, DeWEESE, STURLA, McCALL, BROWN, K. SMITH, MUNDY, KORTZ, GRUCELA, BISHOP, M. O'BRIEN, SANTONI, HARHAI, DEASY, READSHAW, HARKINS, BOYLE, PASHINSKI, CARROLL, CALTAGIRONE, GEORGE, MELIO, McILVAINE SMITH, BRIGGS, DONATUCCI, LONGIETTI, McGEEHAN, MANN, KULA, STABACK, YOUNGBLOOD, FREEMAN, BELFANTI, SAINATO, SABATINA AND GIBBONS, JUNE 12, 2009
AS REPORTED FROM COMMITTEE ON AGING AND OLDER ADULT SERVICES, HOUSE OF REPRESENTATIVES, AS AMENDED, JUNE 23, 2009
AN ACT
Amending the act of August 26, 1971 (P.L.351, No.91), entitled
"An act providing for a State Lottery and administration
thereof; authorizing the creation of a State Lottery
Commission; prescribing its powers and duties; disposition of
funds; violations and penalties therefor; exemption of prizes
from State and local taxation and making an appropriation,"
providing for the definitions of "acquisition cost," "Federal
upper payment limits" and "usual charge" or "usual and
customary charge"; further providing for program generally,
for generic drugs, for indication of price, for the
Pharmaceutical Assistance Contract for the Elderly Needs
Enhancement Tier and for penalties; providing for the
Medication Therapy Management Program; and further providing
for terms of rebate agreement, for amount of rebate and for
excessive pharmaceutical price inflation discount.
The General Assembly of the Commonwealth of Pennsylvania
hereby enacts as follows:
Section 1. Section 502 of the act of August 26, 1971
(P.L.351, No.91), known as the State Lottery Law, is amended by
adding definitions to read:
Section 502. Definitions.
The following words and phrases when used in this chapter
shall have the meanings given to them in this section unless the
context clearly indicates otherwise:
* * *
"Acquisition cost." The actual price paid by a provider for
a prescription drug dispensed to a claimant, without application
of discounts, including prompt payment discounts, stocking or
other distribution allowances, credits, chargebacks or rebates.
* * *
"Federal upper payment limits." The maximum allowable price
as established in the Medicaid program and published under 42
CFR § 447.514 (relating to upper limits for multiple source
drugs).
* * *
"Usual charge" or "usual and customary charge." The usual
charge as defined in 6 Pa. Code § 22.2 (relating to
definitions).
Section 2. Sections 509 and 510 of the act, amended July 7,
2006 (P.L.1061, No.111), are amended to read:
Section 509. Program generally.
The program shall include the following:
(1) Participating pharmacies shall be paid within [21] <--
nine business days of the contracting firm receiving the
appropriate substantiation of the transaction. Pharmacies
shall be entitled to interest for payment not made within
[the 21-day period] 15 days at a rate approved by the board. <--
(2) Collection of the copayment by pharmacies shall be
mandatory.
(3) Claimants are not required to maintain records of
each transaction.
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(4) A system of rebates or reimbursements to claimants
for pharmaceutical expenses shall be prohibited.
(5) PACE shall include participant copayment schedules
for each prescription, including a copayment for generic or
multiple-source drugs that is less than the copayment for
single-source drugs. The department shall annually calculate
the copayment schedules based on the Prescription Drugs and
Medical Supplies Consumer Price Index. When the aggregate
impact of the Prescription Drugs and Medical Supplies
Consumer Price Index equals or exceeds $1, the department
shall adjust the copayment schedules. Each copayment schedule
shall not be increased by more than $1 in a calendar year.
[(6) The program payment shall be the lower of the
following amounts determined as follows:
(i) 88% of the average wholesale cost of the
prescription drug dispensed:
(A) with the addition of a dispensing fee of the
greater of:
(I) $4 per prescription; or
(II) the amount set by the department by
regulation;
(B) the subtraction of the copayment; and
(C) if required, the subtraction of the generic
differential; or
(ii) the pharmacy's usual charge for the drug
dispensed with the subtraction of the copayment and, if
required, the subtraction of the generic differential; or
(iii) if a generic drug, the most current Federal
upper payment limits established in the Medicaid Program
under 42 CFR § 447.332 (relating to upper limits for
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multiple source drugs), plus a dispensing fee of $4 or
the amount set by the department by regulation, whichever
is greater minus the copayment. The department shall
update the average wholesale costs and the Federal upper
payment limits at least every 30 days.]
(6) (i) The program payment shall be the lower of the
following:
(A) (I) 82% of the average wholesale cost of
the prescription drug dispensed for brand name
drugs; or
(II) 20% of the average wholesale cost of
the prescription drug dispensed for generic
drugs.
(B) The pharmacy's usual charge for the drug
dispensed.
(C) If a generic drug, the most current Federal
upper payment limits.
(D) The acquisition cost of the prescription
drug dispensed.
(ii) Except when payment is made under subparagraph
(i)(B), the program shall pay a dispensing fee of the
greater of:
(A) $12 per prescription for generic drugs or $7
per prescription for brand name drugs.
(B) The amount set by department regulation.
(iii) The copayment shall be paid by the claimant at
the point of sale and the generic differential, if
required, shall be subtracted at the point of sale.
(iv) Neither the Commonwealth nor any claimant shall
be charged more than the price of the drug at the
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particular pharmacy on the date of the sale.
(v) An exception process for selected therapeutic
classes, medications and individual providers shall be
established by the department, which shall be published
as a notice in the Pennsylvania Bulletin and distributed
to providers.
(6.1) The department shall update the average wholesale
cost and the Federal upper payment limits relating to upper
limits for multiple source drugs on a regular basis at least <--
every 30 days daily basis. <--
(6.2) Providers shall provide documentation of their
acquisition costs for each prescription drug dispensed to
claimants to the department within 30 days of a request. The
documentation shall not be discoverable or admissible as
evidence in any civil or administrative action or proceeding,
except that the department may rely on the documentation to
defend against any appeal brought by a provider from an audit
or adverse action regarding program payments. The
documentation shall not be considered to be a public record
or be subject to disclosure under the act of February 14,
2008 (P.L.6, No.3), known as the Right-to-Know Law.
[(7) In no case shall the Commonwealth or any claimant
be charged more than the price of the drug at the particular
pharmacy on the date of the sale.]
(8) The Governor may, based upon certified State Lottery
Fund revenue that is provided to both the chairman and
minority chairman of the Appropriations Committee of the
Senate and the chairman and minority chairman of the
Appropriations Committee of the House of Representatives, and
after consultation with the board, decrease the eligibility
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limits established in this subchapter.
Section 510. Generic drugs.
(a) In general.--Notwithstanding any other statute or
regulation, a brand name product shall be dispensed and not
substituted with an A-rated generic therapeutically equivalent
drug if it is less expensive to the program. If a less expensive
A-rated generic therapeutically equivalent drug is available for
dispensing to a claimant, the provider shall dispense the A-
rated generic therapeutically equivalent drug to the claimant.
The department shall reimburse providers based upon the most
current listing of Federal upper payment limits [established in
the Medicaid Program under 42 CFR § 447.332 (relating to upper
limits for multiple source drugs)], plus a dispensing fee as set
forth in section [509(6)] 509(6)(ii). The department shall
update the average wholesale costs and the Federal upper payment
limits on a [regular basis, at least every 30 days] daily basis. <--
The department shall not reimburse providers for brand name
products except in the following circumstances:
(1) There is no A-rated generic therapeutically
equivalent drug available on the market. This paragraph does
not apply to the lack of availability of an A-rated generic
therapeutically equivalent drug in the providing pharmacy
unless it can be shown to the department that the provider
made reasonable attempts to obtain the A-rated generic
therapeutically equivalent drug or that there was an
unforeseeable demand and depletion of the supply of the A-
rated generic therapeutically equivalent drug. In either
case, the department shall reimburse the provider for [88%]
82% of the average wholesale cost plus a dispensing fee based
on the least expensive A-rated generic therapeutically
20090HB1676PN2243 - 6 -
equivalent drug for the brand drug dispensed.
(2) An A-rated generic therapeutically equivalent drug
is deemed by the department, in consultation with a
utilization review committee, to have too narrow a
therapeutic index for safe and effective dispensing in the
community setting. The department shall notify providing
pharmacies of A-rated generic therapeutically equivalent
drugs that are identified pursuant to this paragraph on a
regular basis.
(3) The Department of Health has determined that a drug
shall not be recognized as an A-rated generic therapeutically
equivalent drug for purpose of substitution under section
5(b) of the act of November 24, 1976 (P.L.1163, No.259),
referred to as the Generic Equivalent Drug Law.
(4) At the time of dispensing, the provider has a
prescription on which the brand name drug dispensed is billed
to the program by the provider at a usual and customary
charge which is equal to or less than the least expensive
usual and customary charge of any A-rated generic
therapeutically equivalent drug reasonably available on the
market to the provider.
(5) The brand name drug is less expensive to the
program.
(b) Generic not accepted.--If a claimant chooses not to
accept the A-rated generic therapeutically equivalent drug
required by subsection (a), the claimant shall be liable for the
copayment and 70% of the average wholesale cost of the brand
name drug.
(c) Generic drugs not deemed incorrect substitution.--The
dispensing of an A-rated generic therapeutically equivalent drug
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in accordance with this subchapter shall not be deemed incorrect
substitution under section 6(a) of the Generic Equivalent Drug
Law.
(d) Medical exception.--A medical exception process shall be
established by the department, which shall be published as a
notice in the Pennsylvania Bulletin and distributed to providers
and [recipients] claimants in the program.
Section 3. Section 514 of the act, added November 21, 1996
(P.L.741. No.134), is amended to read:
Section 514. Indication of price.
(a) Retail price.--The retail price of the prescription
shall be indicated on the label of the prescription container or
furnished by separate receipt.
(b) Invoices.--Providers shall maintain invoices for four
years to document their acquisition costs for prescription drugs
dispensed to claimants.
Section 4. Sections 519 and 521 of the act, amended July 7,
2006 (P.L.1061, No.111), are amended to read:
Section 519. The Pharmaceutical Assistance Contract for the
Elderly Needs Enhancement Tier.
(a) Establishment.--There is hereby established within the
department a program to be known as the Pharmaceutical
Assistance Contract for the Elderly Needs Enhancement Tier
(PACENET).
(b) PACENET eligibility.--A person with an annual income of
not less than $14,500 and not more than [$23,500] $30,000 in the
case of a single person and of not less than $17,700 and not
more than [$31,500] $40,000 in the case of the combined income
of persons married to each other shall be eligible for enhanced
pharmaceutical assistance under this section. A person may, in
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reporting income to the department, round the amount of each
source of income and the income total to the nearest whole
dollar, whereby any amount which is less than 50¢ is eliminated.
(c.1) Premium.--In those instances in which a PACENET
claimant is not enrolled in Part D pursuant to section 533, the
claimant shall be required to pay a monthly premium equivalent
to the regional benchmark premium.
(d) Copayment.--
(1) For claimants under this section, the copayment
schedule shall be:
(i) eight dollars for noninnovator multiple source
drugs as defined in section 702; or
(ii) fifteen dollars for single-source drugs and
innovator multiple-source drugs as defined in section
702.
(2) The department shall annually calculate the
copayment schedules based on the Prescription Drugs and
Medical Supplies Consumer Price Index. When the aggregate
impact of the Prescription Drugs and Medical Supplies
Consumer Price Index equals or exceeds $1, the department
shall adjust the copayment schedules. Each copayment schedule
shall not be increased by more than $1 in a calendar year.
Section 521. Penalties.
(a) Prohibited acts.--It shall be unlawful for any person to
submit a false or fraudulent claim or application under this
subchapter, including, but not limited to:
(1) aiding or abetting another in the submission of a
false or fraudulent claim or application;
(2) receiving benefits or reimbursement under a private,
Federal or State program for prescription assistance and
20090HB1676PN2243 - 9 -
claiming or receiving duplicative benefits hereunder;
(3) soliciting, receiving, offering or paying any
kickback, bribe or rebate, in cash or in kind, from or to any
person in connection with the furnishing of services under
this subchapter;
(4) engaging in a pattern of submitting claims that
repeatedly uses incorrect National Drug Code numbers; [or]
(4.1) seeking reimbursement from the program for amounts
other than the provider's acquisition costs; or
(5) otherwise violating any provision of this
subchapter.
(b) Civil penalty.--In addition to any appropriate criminal
penalty for prohibited acts under this subchapter whether or not
that act constitutes a crime under 18 Pa.C.S. (relating to
crimes and offenses), a provider who violates this section may
be liable for a civil penalty in an amount not less than $500
and not more than $10,000 for each violation of this act which
shall be collected by the department. Each violation constitutes
a separate offense. If the department collects three or more
civil penalties against the same provider, the provider shall be
ineligible to participate in either PACE or PACENET for a period
of one year. If more than three civil penalties are collected
from any provider, the department may determine that the
provider is permanently ineligible to participate in PACE or
PACENET.
(c) Suspension of license.--The license of any provider who
has been found guilty under this subchapter shall be suspended
for a period of one year. The license of any provider who has
committed three or more violations of this subchapter may be
suspended for a period of one year.
20090HB1676PN2243 - 10 -
(d) Reparation.--Any provider, claimant or other person who
is found guilty of a crime for violating this subchapter shall
repay three times the value of the material gain received. In
addition to the civil penalty authorized pursuant to subsection
(b), the department may require the provider, claimant or other
person to repay up to three times the value of any material gain
to PACE or PACENET.
(e) Repayment.--Any provider who fails to produce invoices,
when requested, documenting its acquisition costs, shall be
liable for repayment of any reimbursements paid by the program
for prescription drugs dispensed to claimants for which invoices
were not produced.
Section 5. The act is amended by adding a section to read:
Section 523. Medication Therapy Management Program.
The department may shall develop and implement a medication <--
therapy management program designed to assist and counsel
claimants, with medical conditions identified by the department,
who receive prescription drugs in selected therapeutic classes
from providers with whom the department has entered into
medication management provider agreements. The department shall <--
administer the program with available funds.
Section 6. Section 704(e) of the act, added November 21,
1996 (P.L.741, No.134), is amended to read:
Section 704. Terms of rebate agreement.
* * *
(e) Confidentiality of information.--Information disclosed
by manufacturers, wholesalers or direct sellers under this
chapter is confidential and shall not be [disclosed] considered
to be a public record under the act of February 14, 2008 (P.L.6,
No.3), known as the Right-to-Know Law, nor shall it be subject
20090HB1676PN2243 - 11 -
to disclosure by the department in a form which discloses the
identity of a specific manufacturer, wholesaler or direct seller
or the prices charged for drugs by the manufacturer or
wholesaler, except as the department determines to be necessary
to carry out this chapter and to permit the Department of the
Auditor General and the Office of State Inspector General to
review the information provided.
* * *
Section 7. Section 705(a) of the act, amended November 26,
2003 (P.L.212, No.37), is amended to read:
Section 705. Amount of rebate.
(a) Single-source drugs and innovator multiple-source
drugs.--With respect to single-source drugs and innovator
multiple-source drugs, each manufacturer shall remit a rebate to
the Commonwealth. Except as otherwise provided in this section,
the amount of the rebate to the Commonwealth per calendar
quarter with respect to each dosage form and strength of single-
source drugs and innovator multiple-source drugs shall be as
follows:
(1) For quarters beginning after September 30, 1992, and
ending before January 1, 1997, the product of the total
number of units of each dosage form and strength reimbursed
by PACE and General Assistance in the quarter and the
difference between the average manufacturer price and 85% of
that price, after deducting customary prompt payment
discounts, for the quarter.
(2) For quarters beginning after December 31, 1996, and
ending before January 1, 2003, the product of the total
number of units of each dosage form and strength reimbursed
by PACE, PACENET and designated pharmaceutical programs in
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the quarter and the difference between the average
manufacturer price and 83% of that price, after deducting
customary prompt payment discounts.
(3) For quarters beginning after December 31, 2002, and
ending before January 1, 2009, each manufacturer shall remit
a rebate to the Commonwealth for the total number of units of
each dosage form and strength reimbursed by PACE, PACENET and
designated pharmaceutical programs in the quarter pursuant to
the determination established by section 1927(c)(1) of the
Social Security Act (49 Stat. 620, 42 U.S.C. § 1396r-8(c)
(1)).
(4) For quarters beginning after December 31, 2008, each
manufacturer shall remit a rebate to the Commonwealth for the
total number of units of each dosage form and strength
reimbursed by PACE, PACENET and designated pharmaceutical
programs in the quarter pursuant to the determination
established under section 1927 (c)(1) and (2) of the Social
Security Act (49 Stat. 620, 42 U.S.C. § 1396r-8(c)(1) and
(2)).
* * *
Section 8. Section 706(b) of the act, amended July 7, 2006
(P.L.1061, No.111), is amended to read:
Section 706. Excessive pharmaceutical price inflation discount.
* * *
(b) Revised general rule.--A discount shall be provided to
the department for all covered prescription drugs except those
excluded under subsection (d). The discount shall be calculated
as follows:
(1) For each quarter for which a rebate under section
705(a) and (c) is to be paid after December 31, 1996, and
20090HB1676PN2243 - 13 -
before January 1, 2009, the average manufacturer price for
each dosage form and strength of a covered prescription drug
shall be compared to the average manufacturer price for the
same form and strength in the previous calendar year and a
percentage increase shall be calculated.
(2) For each quarter under paragraph (1), the average
percentage increase in the Consumer Price Index-Urban over
the same quarter in the previous calendar year shall be
calculated.
(3) If the calculation under paragraph (1) is greater
than the calculation under paragraph (2), the discount amount
for each quarter shall be equal to the product of:
(i) the difference between the calculations under
paragraphs (1) and (2); and
(ii) the total number of units of each dosage form
and strength reimbursed by PACE, PACENET and designated
pharmaceutical programs and the average manufacturer
price reported by the manufacturer under section 704(c)
(1).
* * *
Section 9. The amendment of sections 705(a) and 706(b) of
the act shall apply retroactively to January 1, 2009.
Section 10. This act shall take effect July 1, 2009, or
immediately, whichever is later.
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