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91_SB1403
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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.
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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
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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
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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
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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,
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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
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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.
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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.