Senate File 161 - Introduced
SENATE FILE
BY HATCH, HANCOCK, RIELLY, BEALL,
BOLKCOM, WOOD, SCHOENJAHN,
KIBBIE, McCOY, CONNOLLY, STEWART,
QUIRMBACH, KREIMAN, RAGAN,
FRAISE, DOTZLER, DANIELSON,
WARNSTADT, DVORSKY, and HORN
Passed Senate, Date Passed House, Date
Vote: Ayes Nays Vote: Ayes Nays
Approved
A BILL FOR
1 An Act relating to fair market drug pricing.
2 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
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PAG LIN
1 1 Section 1. FAIR MARKET DRUG PRICING == LEGISLATIVE
1 2 FINDINGS. The general assembly finds that:
1 3 1. In this time of economic difficulty, the state of Iowa
1 4 needs to maximize its financial resources in order to provide
1 5 the maximum amount of health care coverage possible for low=
1 6 income residents. Now more than ever, the state of Iowa needs
1 7 to lower the prices it pays for prescription drugs.
1 8 2. At the same time, approximately one in four Iowans is
1 9 uninsured or underinsured for prescription drug coverage, and
1 10 does not qualify for medical assistance. These uninsured or
1 11 underinsured Iowans pay excessive prices for prescription
1 12 drugs. In many cases, these excessive drug prices have the
1 13 effect of denying Iowans access to medically necessary care,
1 14 thereby threatening their health and safety.
1 15 3. Among these uninsured and underinsured Iowans, many
1 16 require repeated doctor or medical clinic appointments, with
1 17 their health having degenerated because they cannot afford the
1 18 drugs prescribed for them. Many are admitted to or treated at
1 19 hospitals each year because they cannot afford the drugs
1 20 prescribed for them that could have prevented the need for
1 21 hospitalization. Many others enter expensive institutional
1 22 care settings because they cannot afford the prescription
1 23 drugs that could have supported them outside of an
1 24 institution. In each of these circumstances, uninsured and
1 25 underinsured residents too often become medical assistance
1 26 recipients because of their inability to afford prescription
1 27 drugs. Therefore, helping secure lower drug prices for
1 28 uninsured and underinsured Iowans directly benefits and
1 29 supports the medical assistance program.
1 30 4. The state is the only agent that, as a practical
1 31 matter, can play an effective role as a market participant on
1 32 behalf of all Iowans who are uninsured, underinsured, or are
1 33 medical assistance program beneficiaries. The state already
1 34 provides drugs and acts as a prescription benefits manager for
1 35 a variety of programs, and should expand that role to
2 1 negotiate voluntary drug rebates, using these funds to
2 2 maintain and expand medical assistance services while offering
2 3 lower drug prices to the uninsured who do not qualify for
2 4 medical assistance.
2 5 Sec. 2. NEW SECTION. 249A.35 FAIR MARKET DRUG PRICING
2 6 PROGRAM.
2 7 1. PURPOSE. Recognizing that the state already acts as a
2 8 prescription benefits manager for a variety of health plans
2 9 and assistance programs, the purpose of this section is to
2 10 provide prescription drug coverage to new populations by
2 11 expanding the state's role as a participant in the
2 12 prescription drug marketplace, negotiating voluntary rebates
2 13 from drug companies, and using the funds to make prescription
2 14 drugs more affordable to the state medical assistance program
2 15 and to Iowans. Such a program will improve public health and
2 16 welfare, promote the economic strength of our society, and
2 17 both directly and indirectly benefit the state medical
2 18 assistance program.
2 19 2. DEFINITIONS. As used in this section, unless the
2 20 context otherwise requires:
2 21 a. "Federal poverty level" means the federal poverty level
2 22 as defined by the most recently revised poverty income
2 23 guidelines published by the United States department of health
2 24 and human services.
2 25 b. "Labeler" means a person that receives prescription
2 26 drugs from a manufacturer or wholesaler and repackages those
2 27 drugs for later retail sale, and that has a labeler code from
2 28 the federal food and drug administration under 21 C.F.R. }
2 29 270.20.
2 30 c. "Manufacturer" means a manufacturer of prescription
2 31 drugs as defined in 42 U.S.C. } 1396r=8(k)(5), including a
2 32 subsidiary or affiliate of a manufacturer.
2 33 d. "Participating retail pharmacy" means a retail pharmacy
2 34 or other business licensed to dispense prescription drugs in
2 35 this state that participates in the state medical assistance
3 1 program, or voluntarily agrees to participate in the
3 2 prescription card program.
3 3 e. "Wholesaler" means wholesaler as defined in section
3 4 155A.3.
3 5 3. DRUG DISCOUNT AND REBATE AGREEMENTS.
3 6 a. In addition to negotiating rebates with drug
3 7 manufacturers pursuant to section 249A.20A, the director shall
3 8 negotiate other discount prices or rebates for prescription
3 9 drugs from drug manufacturers and labelers for the
3 10 prescription card program and other state programs that pay
3 11 for or acquire prescription drugs. A drug manufacturer or
3 12 labeler that sells prescription drugs in this state may
3 13 voluntarily elect to negotiate any of the following:
3 14 (1) Supplemental rebates for the medical assistance
3 15 program over and above those required under 42 U.S.C. } 1396r=
3 16 8 as provided in section 249A.20A.
3 17 (2) Discount prices or rebates for the prescription card
3 18 program.
3 19 (3) Discount prices or rebates for any other state program
3 20 that pays for or acquires prescription drugs.
3 21 b. In negotiating discount prices and rebate terms, the
3 22 director shall take into consideration the rebate calculated
3 23 under the medical assistance rebate program pursuant to 42
3 24 U.S.C. } 1396r=8, any rebate negotiated pursuant to section
3 25 249A.20A, the price provided to eligible entities under 42
3 26 U.S.C. } 256b, and any other available information on
3 27 prescription drug prices, discounts, and rebates.
3 28 c. (1) The director shall determine whether to include
3 29 the products in the formularies or prior authorization
3 30 programs for any state program that pays for or acquires
3 31 prescription drugs, taking into consideration the following:
3 32 (a) The director and a drug manufacturer or labeler fail
3 33 to reach agreement on the terms of a supplemental rebate under
3 34 the medical assistance program or a discount or rebate for the
3 35 prescription card program.
4 1 (b) The discounts or rebates offered by the manufacturer
4 2 or labeler are not as favorable to the state as the prices
4 3 provided to eligible entities under 42 U.S.C. } 256b.
4 4 (2) The names of manufacturers and labelers that do not
4 5 enter into discount pricing or rebate agreements under this
4 6 section are public information and the department shall
4 7 release this information to the public and actively distribute
4 8 the information to doctors, pharmacists, and other health
4 9 professionals.
4 10 4. PRESCRIPTION CARD PROGRAM ESTABLISHED.
4 11 a. The department shall establish the prescription card
4 12 program as a state pharmaceutical assistance program under 42
4 13 U.S.C. } 1396r=8(c)(1)(C), to provide discounts to
4 14 participants for drugs covered by a rebate agreement. Using
4 15 funds from negotiated rebates, the department shall contract
4 16 with wholesalers and participating retail pharmacies to
4 17 deliver discounted prices to prescription card participants.
4 18 b. The drug discounts received by prescription card
4 19 participants shall be calculated by the director on a
4 20 quarterly basis. That calculation shall provide discounts
4 21 approximately equal to the average amount of the negotiated
4 22 drug rebate minus an amount to cover the reasonable
4 23 administrative costs of the prescription card program.
4 24 c. (1) An individual is eligible to participate in the
4 25 prescription card program if the individual is a resident of
4 26 Iowa and is eligible for participation in the Medicare program
4 27 or has a net family income below three hundred percent of the
4 28 federal poverty level.
4 29 (2) An individual is ineligible to participate in the
4 30 prescription card program if the individual is eligible for
4 31 assistance under the medical assistance program or is covered
4 32 by an insurance policy that provides benefits for prescription
4 33 drugs equal to or greater than the benefits provided under the
4 34 prescription card program, as specified by rules adopted by
4 35 the director.
5 1 d. The department shall establish simple procedures for
5 2 enrolling prescription card participants and shall undertake
5 3 outreach efforts to build public awareness of the program and
5 4 maximize enrollment by eligible residents.
5 5 e. (1) The department shall adopt rules requiring
5 6 disclosure by participating retail pharmacies to prescription
5 7 card program participants of the amount of savings provided as
5 8 a result of the prescription card program. The rules shall
5 9 include provisions to protect information that is proprietary
5 10 in nature.
5 11 (2) A participating retail pharmacy shall verify to the
5 12 department the amounts charged to prescription card
5 13 participants and nonparticipants, and shall provide the
5 14 department with utilization data necessary to calculate
5 15 rebates from manufacturers and labelers. The department shall
5 16 protect the confidentiality of all information subject to
5 17 confidentiality protection under state or federal law, rule,
5 18 or regulation. The department shall not impose transaction
5 19 charges on wholesalers or participating retail pharmacies that
5 20 submit claims or receive payments under the program.
5 21 (3) Wholesalers and participating retail pharmacies shall
5 22 be paid in advance for prescription card discounts or shall be
5 23 reimbursed by the department on a bi=weekly basis.
5 24 f. The department may require a wholesaler or
5 25 participating retail pharmacy to segregate drugs under the
5 26 prescription card program from other drug inventory. The
5 27 department may require a wholesaler or participating retail
5 28 pharmacy to maintain records of acquisition and disposition of
5 29 drugs under the prescription card program separately from the
5 30 wholesaler's or pharmacy's other records.
5 31 g. Disputes or discrepancies in rebate amounts shall be
5 32 resolved using the following process:
5 33 (1) If there is a discrepancy in the manufacturer's or
5 34 labeler's favor between the amount claimed by a pharmacy and
5 35 the amount rebated by the manufacturer or labeler, the
6 1 department, at the department's expense, may hire a mutually
6 2 agreed upon independent auditor. If a discrepancy still
6 3 exists following the audit, the manufacturer or labeler shall
6 4 justify the reason for the discrepancy or make payment to the
6 5 department for any additional amount due.
6 6 (2) If there is a discrepancy against the interest of the
6 7 manufacturer or labeler in the information provided by the
6 8 department to the manufacturer or labeler regarding the
6 9 manufacturer's or labeler's rebate, the manufacturer or
6 10 labeler, at the manufacturer's or labeler's expense, may hire
6 11 a mutually agreed upon independent auditor to verify the
6 12 accuracy of the data supplied to the department. If a
6 13 discrepancy still exists following the audit, the department
6 14 shall justify the reason for the discrepancy or provide a
6 15 refund to the manufacturer or labeler.
6 16 (3) Following the procedures established in subparagraph
6 17 (1) or (2), either the department or the manufacturer or
6 18 labeler may request a hearing. Supporting documentation shall
6 19 accompany the request for a hearing.
6 20 h. Discounts to participants in the prescription card
6 21 program shall begin no later than January 1, 2006.
6 22 5. ADMINISTRATION.
6 23 a. The department shall report the enrollment and
6 24 financial status of the prescription card program and report
6 25 savings from any supplemental medical assistance program
6 26 rebates and any other discounts or rebates to the general
6 27 assembly by February 1, annually.
6 28 b. If the director determines that it is beneficial to
6 29 both the prescription card program and another state program
6 30 to combine drug pricing negotiations to maximize discount
6 31 pricing and drug rebates, the director shall work with the
6 32 other state program to do so.
6 33 c. The department shall adopt rules to implement this
6 34 section.
6 35 d. The department shall seek any waivers of federal law,
7 1 rule, or regulation necessary to implement the provisions of
7 2 this section.
7 3 e. The department shall administer this section in a
7 4 manner that benefits the greatest number of residents while
7 5 remaining in compliance with federal law and regulations. If
7 6 necessary, the director may separate medical assistance
7 7 program negotiations from nonmedical assistance program
7 8 negotiations and preferred drug list decisions, or may limit
7 9 participation in the prescription card program to reduce the
7 10 number of participants.
7 11 6. MEDICAL ASSISTANCE WAIVER DISCOUNT PLAN. In addition
7 12 to the prescription card program established in this section,
7 13 the department shall seek a section 1115 Medicaid waiver from
7 14 the centers for Medicaid and Medicare services of the United
7 15 States department of health and human services to establish a
7 16 pharmacy discount program modeled after the healthy Maine
7 17 prescriptions program. If the waiver is approved, the
7 18 department shall implement the program following consultation
7 19 with the legislative government oversight committee.
7 20 EXPLANATION
7 21 This bill directs the director of human services, in
7 22 addition to negotiating rebates with drug manufacturers
7 23 pursuant to the Medicaid preferred drug list program, to
7 24 negotiate other discount prices or rebates for prescription
7 25 drugs from drug manufacturers and labelers for the
7 26 prescription card program and other state programs that pay
7 27 for or acquire prescription drugs.
7 28 The bill provides that the director is to determine whether
7 29 to include the products of labelers and manufacturers in the
7 30 formularies or prior authorization programs for any state
7 31 program that pays for or acquires prescription drugs, taking
7 32 into consideration: (a) if the director and a drug
7 33 manufacturer or labeler fail to reach agreement on the terms
7 34 of a supplemental rebate under the medical assistance program
7 35 or a discount or rebate for the prescription card program; or
8 1 (b) whether the discounts or rebates offered by the
8 2 manufacturer or labeler are not as favorable to the state as
8 3 the prices provided to eligible entities under 42 U.S.C. }
8 4 256b. The bill also provides that the names of manufacturers
8 5 and labelers that do not enter into discount pricing or rebate
8 6 agreements are public information and the department of human
8 7 services is to release this information to the public and
8 8 actively distribute the information to doctors, pharmacists,
8 9 and other health professionals.
8 10 The bill establishes the prescription card program as a
8 11 state pharmaceutical assistance program to provide discounts
8 12 to participants for drugs covered by a rebate agreement.
8 13 Using funds from negotiated rebates, the department is
8 14 directed to contract with wholesalers and participating retail
8 15 pharmacies to deliver discounted prices to prescription card
8 16 participants. An individual is eligible to participate in the
8 17 prescription card program if the individual is a resident of
8 18 Iowa and is eligible for participation in the Medicare program
8 19 or has a net family income below 300 percent of the federal
8 20 poverty level. An individual is ineligible to participate in
8 21 the prescription card program if the individual is eligible
8 22 for assistance under the medical assistance program or is
8 23 covered by an insurance policy that provides benefits for
8 24 prescription drugs equal to or greater than the benefits
8 25 provided under the prescription card program. The bill
8 26 directs the department to establish simple procedures for
8 27 enrolling prescription card participants and to undertake
8 28 outreach efforts to build public awareness of the program and
8 29 maximize enrollment by eligible residents. The bill directs
8 30 the department to adopt rules requiring disclosure by
8 31 participating retail pharmacies to prescription card program
8 32 participants of the amount of savings provided as a result of
8 33 the prescription card program. The rules are to include
8 34 provisions to protect information that is proprietary in
8 35 nature. The bill specifies requirements for participating
9 1 retail pharmacies and wholesalers, provides for payment of
9 2 wholesalers and participating retail pharmacies, and provides
9 3 a process for addressing discrepancies or disputes in rebate
9 4 amounts. The bill provides that discounts to participants in
9 5 the prescription card program are to begin no later than
9 6 January 1, 2006.
9 7 The bill directs the department to report the enrollment
9 8 and financial status of the prescription card program and
9 9 report savings from any supplemental medical assistance
9 10 program rebates and any other discounts or rebates to the
9 11 general assembly by February 1, annually; provides that if the
9 12 director determines that it is beneficial to both the
9 13 prescription card program and another state program to combine
9 14 drug pricing negotiations to maximize discount pricing and
9 15 drug rebates, the director shall work with the other state
9 16 program to do so; directs the department to adopt rules to
9 17 implement the provisions of the bill; directs the department
9 18 to seek any waivers of federal law, rule, or regulation
9 19 necessary to implement the provisions of the bill; directs the
9 20 department to administer the bill in a manner that benefits
9 21 the greatest number of residents while remaining in compliance
9 22 with federal law and regulation; and provides that if
9 23 necessary, the director may separate medical assistance
9 24 program negotiations from nonmedical assistance program
9 25 negotiations and preferred drug list decisions, or may limit
9 26 participation in the prescription card program to reduce the
9 27 number of participants.
9 28 The bill also directs the department to seek a Medicaid
9 29 waiver from the centers for Medicaid and Medicare services of
9 30 the United States department of health and human services to
9 31 establish a pharmacy discount program modeled after the
9 32 healthy Maine prescriptions program. If the waiver is
9 33 approved, the bill directs the department to implement the
9 34 program following consultation with the legislative government
9 35 oversight committee.
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