Print Friendly SENATE BILL NO. 1419 – Prescription drug program
SENATE BILL NO. 1419
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S1419................................................by JUDICIARY AND RULES
PRESCRIPTION DRUG PROGRAM - Adds to existing law to establish the Idaho
Prescription Drug Program; to set program goals; to define terms; to
provide for rebate agreements; to set forth rebate amounts; to provide for
discounted prices for qualified applicants; to provide for operation of the
program; to provide for action regarding nonparticipating manufacturers and
labelers; to establish a dedicated fund; to provide for annual summary
reports; to set forth duties of the department; to provide for third-party
contracting; to provide for the coordination of medical assistance
programs; to authorize rules; and to authorize the department to seek
necessary federal waivers.
03/01 Senate intro - 1st rdg - to printing
03/02 Rpt prt - to Health/Wel
03/15 Rpt out - to 14th Ord
]]]] LEGISLATURE OF THE STATE OF IDAHO ]]]]
Fifty-seventh Legislature Second Regular Session - 2004
IN THE SENATE
SENATE BILL NO. 1419
BY JUDICIARY AND RULES COMMITTEE
1 AN ACT
2 RELATING TO THE IDAHO PRESCRIPTION DRUG PROGRAM; AMENDING TITLE 56, IDAHO
3 CODE, BY THE ADDITION OF A NEW CHAPTER 12, TITLE 56, IDAHO CODE, TO ESTAB-
4 LISH THE IDAHO PRESCRIPTION DRUG PROGRAM, TO SET PROGRAM GOALS, TO DEFINE
5 TERMS, TO PROVIDE FOR REBATE AGREEMENTS, TO SET FORTH REBATE AMOUNTS, TO
6 PROVIDE FOR DISCOUNTED PRICES FOR QUALIFIED APPLICANTS, TO PROVIDE FOR
7 OPERATION OF THE PROGRAM, TO PROVIDE FOR ACTION REGARDING NONPARTICIPATING
8 MANUFACTURERS AND LABELERS, TO ESTABLISH A DEDICATED FUND, TO PROVIDE FOR
9 ANNUAL SUMMARY REPORTS, TO SET FORTH DUTIES OF THE DEPARTMENT, TO PROVIDE
10 FOR THIRD-PARTY CONTRACTING, TO PROVIDE FOR THE COORDINATION OF MEDICAL
11 ASSISTANCE PROGRAMS, TO AUTHORIZE RULES AND TO AUTHORIZE THE DEPARTMENT TO
12 SEEK NECESSARY FEDERAL WAIVERS.
13 Be It Enacted by the Legislature of the State of Idaho:
14 SECTION 1. That Title 56, Idaho Code, be, and the same is hereby amended
15 by the addition thereto of a NEW CHAPTER, to be known and designated as Chap-
16 ter 12, Title 56, Idaho Code, and to read as follows:
17 CHAPTER 12
18 IDAHO PRESCRIPTION DRUG PROGRAM
19 56-1201. PROGRAM ESTABLISHMENT. The "Idaho Prescription Drug Program
20 (Idaho Rx)," referred to in this chapter as the "program," is hereby estab-
21 lished to reduce prescription drug prices for low-income residents and to
22 improve the quality of health care for residents of the state. The program
23 shall be administered by the department of health and welfare and shall uti-
24 lize manufacturer rebates and pharmacy discounts to reduce prescription drug
26 56-1202. PROGRAM GOALS. The legislature finds that affordability is crit-
27 ical in providing access to prescription drugs for Idaho residents. This chap-
28 ter is enacted by the legislature to enable the state to take steps to make
29 prescription drugs more affordable for qualified low-income Idaho residents,
30 thereby increasing the overall health of Idaho residents, promoting healthy
31 communities and protecting the public health and welfare, and to integrate the
32 program as part of any statewide program for the uninsured. It is not the
33 intention of the legislature to discourage employers from offering or paying
34 for prescription drug benefits for their employees or to replace employer-
35 sponsored prescription drug benefit plans that provide benefits comparable to
36 those made available to qualified low-income Idaho residents under this chap-
38 56-1203. DEFINITIONS. As used in this chapter, unless the context other-
39 wise indicates, the following terms have the following meanings:
40 (1) "Average wholesale price" means the wholesale price charged on a spe-
1 cific commodity that is assigned by the drug manufacturer and is listed in a
2 nationally recognized drug pricing file.
3 (2) "Covered drugs" means drugs that are included in the Idaho medicaid
4 enhanced prior authorization program established and revised by the department
5 pursuant to its authority to operate the Idaho medicaid pharmacy benefit man-
6 agement program.
7 (3) "Department" means the Idaho department of health and welfare.
8 (4) "Director" means the director of the Idaho department of health and
10 (5) "Initial discounted price" for a drug means the price, including any
11 dispensing fee, the department pays Idaho medicaid participating retail phar-
12 macies for that drug for Idaho medicaid members.
13 (6) "Labeler" means an entity or person that receives prescription drugs
14 from a manufacturer or wholesaler and repackages those drugs for later retail
15 sale and that has a labeler code from the federal food and drug administration
16 under 21 CFR 207.20 (1999).
17 (7) "Participating retail pharmacy" or "retail pharmacy" means a retail
18 pharmacy located in Idaho, or another business licensed to dispense prescrip-
19 tion drugs in Idaho, that participates in the program.
20 (8) "Qualified applicant" means a resident of this state:
21 (a) Who has an individual or family income equal to or less than two hun-
22 dred percent (200%) of the federal poverty level; and
23 (b) Who is not covered or has not voluntarily terminated coverage in a
24 health care insurance prescription drug benefit plan within ninety (90)
25 days prior to submitting the program application.
26 (9) "Secondary discounted price" means the initial discounted price minus
27 any further discounts paid for out of the fund.
28 56-1204. REBATE AGREEMENT. A drug manufacturer or labeler that sells pre-
29 scription drugs in this state through a publicly supported pharmaceutical
30 assistance program shall enter into a rebate agreement with the department for
31 the program established in this chapter. The rebate agreement shall require
32 the manufacturer or labeler to make rebate payments to the state each calendar
33 quarter or according to a schedule established by the department.
34 56-1205. REBATE AMOUNT. (1) The director shall negotiate the amount of
35 the rebate required from a manufacturer or labeler in accordance with this
37 (2) The director shall take into consideration the rebate calculated
38 under the medicaid rebate program pursuant to 42 U.S.C. 1396r-8, the average
39 wholesale price of prescription drugs, and any other information on prescrip-
40 tion drug prices and price discounts.
41 (3) The director shall use the director's best efforts to obtain an ini-
42 tial rebate amount equal to or greater than the rebate calculated under the
43 Idaho medicaid program pursuant to 42 U.S.C. 1396r-8.
44 (4) With respect to the rebate taking effect no later than July 1, 2005,
45 the director shall use the director's best efforts to obtain an amount equal
46 to or greater than the amount of any discount, rebate or price reduction for
47 prescription drugs provided to the federal government.
48 56-1206. DISCOUNTED PRICES FOR QUALIFIED APPLICANTS. (1) Each participat-
49 ing retail pharmacy shall sell covered drugs to qualified applicants at the
50 lower of the initial discounted price and the secondary discounted price as
51 such prices are determined by the department pursuant to this subsection.
52 (2) The department shall establish discounted prices for drugs covered by
1 a rebate agreement and shall promote the use of therapeutically interchange-
2 able and reduced-cost drugs, taking into consideration reduced prices for
3 state and federally capped drug programs, differential dispensing fees, admin-
4 istrative overhead and incentive payments.
5 (3) Beginning January 1, 2005, a participating retail pharmacy shall
6 offer the initial discounted price.
7 (4) No later than July 1, 2005, a participating retail pharmacy shall
8 offer the secondary discounted price, if available.
9 (5) The department shall have the authority to require a qualified appli-
10 cant to pay a program application fee not to exceed three dollars ($3.00).
11 56-1207. OPERATION OF PROGRAM. (1) The requirements of this section
12 apply to participating retail pharmacies.
13 (2) The department shall not impose transaction charges under the program
14 on retail pharmacies that submit claims or receive payments under the program.
15 (3) A participating retail pharmacy shall submit claims to the department
16 to verify the amount charged to qualified applicants under section 56-1206,
17 Idaho Code.
18 (4) On a weekly or biweekly basis, the department shall reimburse a par-
19 ticipating retail pharmacy for the difference between the initial discounted
20 price and the secondary discounted price provided to qualified applicants
21 under section 56-1206, Idaho Code.
22 (5) The department shall conduct ongoing quality assurance activities
23 similar to those used in the Idaho medicaid program.
24 56-1208. ACTION WITH REGARD TO NONPARTICIPATING MANUFACTURERS AND
25 LABELERS. The names of manufacturers and labelers who do and do not enter into
26 rebate agreements pursuant to this chapter are public information. The depart-
27 ment shall release this information to health care providers and the public on
28 a regular basis and shall publicize participation by manufacturers and
29 labelers that is of particular benefit to the public. The department shall
30 impose the prior authorization requirements in the Idaho medicaid program, as
31 permitted by law, to the extent that the department determines it is appropri-
32 ate to do so in order to encourage manufacturer and labeler participation in
33 the program and so long as the additional prior authorization requirements
34 remain consistent with the goals of the Idaho medicaid program and the
35 requirements of the federal social security act.
36 56-1209. DEDICATED FUND. The "Idaho Prescription Drug Program (Idaho Rx)
37 Dedicated Fund," referred to in this chapter as the "fund," is hereby estab-
38 lished to receive revenue from manufacturers and labelers who pay rebates as
39 provided in section 56-1205, Idaho Code, and any appropriations or allocations
40 designated for the fund. The purposes of the fund are to reimburse retail
41 pharmacies for discounted prices provided to qualified applicants pursuant to
42 section 56-1206, Idaho Code, and to reimburse the department for contracted
43 services including pharmacy claims processing fees, administrative and associ-
44 ated computer costs, and other reasonable program costs. The fund is a nonlap-
45 sing dedicated fund. Interest on fund balances accrues to the fund. Surplus
46 funds in the fund must be used for the benefit of the program.
47 56-1210. ANNUAL SUMMARY REPORT. The department shall report the enroll-
48 ment and financial status of the program to the legislature by the second week
49 in January of each year.
50 56-1211. DUTIES OF THE DEPARTMENT. The department shall establish simpli-
1 fied procedures for determining eligibility and issuing Idaho prescription
2 drug program (Idaho Rx) enrollment cards to qualified applicants and shall
3 undertake outreach efforts to build public awareness of the program and maxi-
4 mize enrollment of qualified applicants. The department may adjust the
5 requirements and terms of the program to accommodate any new federally funded
6 prescription drug programs.
7 56-1212. CONTRACTING. The department may contract with a third party or
8 parties to administer any or all components of the program including, but not
9 limited to, outreach, eligibility, claims, administration, and rebate recovery
10 and redistribution.
11 56-1213. MEDICAL ASSISTANCE PROGRAMS. The department shall administer
12 the program and other medical and pharmaceutical assistance programs under
13 this chapter in a manner that is advantageous to the programs and to the
14 enrollees in those programs. In implementing this chapter the department may
15 coordinate the other programs and this program and may take actions to enhance
16 efficiency, reduce the cost of prescription drugs and maximize the benefits to
17 the programs and enrollees, including providing the benefits of this program
18 to enrollees in other programs.
19 56-1214. RULES. The department may adopt rules to implement the provi-
20 sions of this chapter in accordance with the provisions of the Idaho adminis-
21 trative procedure act.
22 56-1215. WAIVERS. The department may seek any waivers of federal law,
23 rule or regulation necessary to implement the provisions of this chapter.
STATEMENT OF PURPOSE
This legislation creates a prescription purchase program known as
Idaho Rx. This program is available to Idaho residents, who do
not qualify for Medicaid, and who have an income level equal to or
less that 200% of federal poverty level. It does not apply to
Idaho residents who are currently covered by a prescription drug
benefit plan or who have voluntarily terminated coverage from such
a plan within 90 days of application for the Idaho Rx purchase
The applicant will be required to pay for prescription medications
but will be able to purchase the medications at a reduced price.
This program should reduce the utilization of visits to the
hospital emergency rooms and utilization of other more costly
health care resources for this part of Idaho's population.
This legislation would be implemented in two phases. The first
phase would begin January 1, 2005 (fiscal year 2005). The second
phase would begin July 1, 2005 (fiscal year 2006). The projected
cost of the program for fiscal year 2005 would be $400,000. The
projected cost for fiscal year 2006 would be $800,000.
The program cost for the first year ($400,000 fiscal year 2005)
would be offset by revenues from the application fees received in
the projected sum of $225,000 (75,000 applications at $3 each
equals $225,000). This would result in a net fiscal impact to the
State of $175,000 for fiscal year 2005.
The cost of the program in fiscal year 2006 would be covered by the
rebates recovered by the Department of Health and Welfare in the
operation of the program. The fiscal impact is based upon the
experience of similar prescription purchase programs in other
Steve J. Tobiason
Joe Gallegos, AARP
STATEMENT OF PURPOSE/FISCAL NOTE S 1419