2005 Legislation
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SENATE BILL NO. 1089 – Idaho Prescription Drug Program

SENATE BILL NO. 1089

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S1089.................................................by HEALTH AND WELFARE
IDAHO 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 of Health and
Welfare to seek necessary federal waivers.
                                                                        
02/03    Senate intro - 1st rdg - to printing
02/04    Rpt prt - to Health/Wel

Bill Text


                                                                        
                                                                        
  ]]]]              LEGISLATURE OF THE STATE OF IDAHO             ]]]]
 Fifty-eighth Legislature                   First Regular Session - 2005
                                                                        
                                                                        
                                       IN THE SENATE
                                                                        
                                    SENATE BILL NO. 1089
                                                                        
                              BY HEALTH AND WELFARE 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 14, 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 14, Title 56, Idaho Code, and to read as follows:
                                                                        
 17                                      CHAPTER 14
 18                           IDAHO PRESCRIPTION DRUG PROGRAM
                                                                        
 19        56-1401.  PROGRAM  ESTABLISHMENT.  The  "Idaho  Prescription  Drug Program
 20    (Affordable Rx Idaho)," referred to in  this  chapter  as  the  "program,"  is
 21    hereby established to reduce prescription drug prices for low-income residents
 22    and to improve the quality of health care for residents of the state. The pro-
 23    gram  shall  be administered by the department of health and welfare and shall
 24    utilize manufacturer rebates and pharmacy  discounts  to  reduce  prescription
 25    drug prices.
                                                                        
 26        56-1402.  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-
 37    ter.
                                                                        
 38        56-1403.  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-
                                                                        
                                           2
                                                                        
  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
  9    welfare.
 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  administra-
 16    tion.
 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 fifty percent (250%) 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 by the department to the par-
 28    ticipating retail pharmacy.
                                                                        
 29        56-1404.  REBATE AGREEMENT. A drug manufacturer or labeler that sells pre-
 30    scription drugs in this state  through  a  publicly  supported  pharmaceutical
 31    assistance  program  shall enter into negotiations for a rebate agreement with
 32    the department for the program established in this chapter. The rebate  agree-
 33    ment  shall require the manufacturer or labeler to make rebate payments to the
 34    state each calendar quarter or according to  a  schedule  established  by  the
 35    department.
                                                                        
 36        56-1405.  REBATE  AMOUNT.  (1)  The director shall negotiate the amount of
 37    the rebate required from a manufacturer or labeler  in  accordance  with  this
 38    subsection.
 39        (2)  The  director  shall  take  into  consideration the rebate calculated
 40    under the medicaid rebate program pursuant to 42 U.S.C. section  1396r-8,  the
 41    average  wholesale  price  of prescription drugs, and any other information on
 42    prescription drug prices and price discounts.
 43        (3)  The director shall use the director's best efforts to obtain an  ini-
 44    tial  rebate  amount  equal to or greater than the rebate calculated under the
 45    Idaho medicaid program pursuant to 42 U.S.C. section 1396r-8.
 46        (4)  With respect to the rebate taking effect no  later  than  January  1,
 47    2008,  the  director shall use the director's best efforts to obtain an amount
 48    equal to or greater than the amount of any discount, rebate or price reduction
 49    for prescription drugs provided to the state of Idaho or the  federal  govern-
 50    ment.
                                                                        
 51        56-1406.  DISCOUNTED PRICES FOR QUALIFIED APPLICANTS. (1) Each participat-
 52    ing  retail  pharmacy  shall sell covered drugs to qualified applicants at the
                                                                        
                                           3
                                                                        
  1    lower of the initial discounted price and the secondary  discounted  price  as
  2    such prices are determined by the department pursuant to this subsection.
  3        (2)  The department shall establish discounted prices for drugs covered by
  4    a  rebate  agreement and shall promote the use of therapeutically interchange-
  5    able and reduced-cost drugs, taking  into  consideration  reduced  prices  for
  6    state  and  federally  capped  drug  programs, dispensing fees, administrative
  7    overhead and incentive payments.
  8        (3)  Beginning January 1, 2008,  a  participating  retail  pharmacy  shall
  9    offer  the  initial  discounted  price  and the secondary discounted price, if
 10    available.
 11        (4)  The department shall have the authority to require a qualified appli-
 12    cant to pay a program application fee not to exceed ten dollars  ($10.00)  for
 13    each  individual  applicant  and fifteen dollars ($15.00) for each application
 14    that includes a spouse and/or minor child.
                                                                        
 15        56-1407.  OPERATION OF PROGRAM. (1) The requirements of this section apply
 16    to participating retail pharmacies.
 17        (2)  The department shall not impose transaction charges under the program
 18    on retail pharmacies that submit claims or receive payments under the program.
 19        (3)  A participating retail pharmacy shall submit claims to the department
 20    to verify the amount charged to qualified applicants  under  section  56-1406,
 21    Idaho Code.
 22        (4)  On  a weekly or biweekly basis, the department shall reimburse a par-
 23    ticipating retail pharmacy for the difference between the  initial  discounted
 24    price  and  the  secondary  discounted  price provided to qualified applicants
 25    under section 56-1406, Idaho Code.
 26        (5)  The department shall conduct  ongoing  quality  assurance  activities
 27    similar to those used in the Idaho medicaid program.
                                                                        
 28        56-1408.  ACTION   WITH   REGARD  TO  NONPARTICIPATING  MANUFACTURERS  AND
 29    LABELERS. The names of manufacturers and labelers who do and do not enter into
 30    rebate agreements pursuant to this chapter are public information. The depart-
 31    ment shall release this information to health care providers and the public on
 32    a regular  basis  and  shall  publicize  participation  by  manufacturers  and
 33    labelers that is of particular benefit to the public.
                                                                        
 34        56-1409.  DEDICATED FUND. The "Idaho Prescription Drug Program (Affordable
 35    Rx  Idaho)  Dedicated  Fund,"  referred  to  in this chapter as the "fund," is
 36    hereby established to receive revenue from manufacturers and labelers who  pay
 37    rebates  as provided in section 56-1405, Idaho Code, and any appropriations or
 38    allocations designated for the fund. The purposes of the fund are to reimburse
 39    retail pharmacies for discounted prices provided to qualified applicants  pur-
 40    suant to section 56-1406, Idaho Code, and to reimburse the department for con-
 41    tracted  services  including  pharmacy  claims processing fees, administrative
 42    costs, and other reasonable program costs. The fund is a nonlapsing  dedicated
 43    fund. Interest on fund balances accrues to the fund. Surplus funds in the fund
 44    must be used for the benefit of the program.
                                                                        
 45        56-1410.  ANNUAL  SUMMARY  REPORT. The department shall report the enroll-
 46    ment and financial status of the program to the legislature by the second week
 47    in January of each year.
                                                                        
 48        56-1411.  DUTIES OF THE DEPARTMENT. The department shall establish simpli-
 49    fied procedures for determining eligibility  and  issuing  Idaho  prescription
 50    drug  program  (Affordable  Rx Idaho) enrollment cards to qualified applicants
                                                                        
                                           4
                                                                        
  1    and shall undertake outreach efforts  to build public awareness of the program
  2    and maximize enrollment of qualified applicants. The department may adopt  and
  3    implement  the prior authorization requirements of the Idaho medicaid program,
  4    as permitted by law, to the extent the department determines it is appropriate
  5    to do so in order to encourage manufacturer and labeler participation  in  the
  6    program.  The  department may adjust the requirements and terms of the program
  7    to accommodate any new federally funded prescription drug programs.
                                                                        
  8        56-1412.  CONTRACTING. The department may contract with a third  party  or
  9    parties  to administer any or all components of the program including, but not
 10    limited to, outreach, eligibility, claims, administration, and rebate recovery
 11    and redistribution.
                                                                        
 12        56-1413.  MEDICAL ASSISTANCE PROGRAMS. The department shall administer the
 13    program in a manner that is advantageous to the program and to  the  enrollees
 14    in  the  program.  In  implementing this chapter the department may coordinate
 15    this program with any other program and may  take  actions  to  enhance  effi-
 16    ciency, reduce the cost of prescription drugs and maximize the benefits to the
 17    programs  and  enrollees,  including providing the benefits of this program to
 18    enrollees in other programs.
                                                                        
 19        56-1414.  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        56-1415.  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 / Fiscal Impact


                    STATEMENT OF PURPOSE

                           RS 14745
        
	This legislation creates a prescription purchase program 
known as Affordable Rx Idaho.  This program is available to 
Idaho residents, who do not qualify for Medicaid, and who have 
an income level equal to or less that 250% of federal poverty 
level.  It does not apply to Idaho residents who are currently 
covered by a health insurance prescription drug benefit plan 
or who have voluntarily terminated coverage from such a plan 
within 90 days of application for the Affordable Rx Idaho 
purchase card.

	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.


                          FISCAL IMPACT

	This legislation would be implemented in two phases.  The 
first phase would begin January 1, 2007 (fiscal year 2007).  
The second phase would begin July 1, 2007 (fiscal year 2008).  
The projected cost of the program for fiscal year 2007 would 
be $475,000.  The projected cost for fiscal year 2008 would be 
$575,000.  

        The program cost for the first year ($475,000 – fiscal 
year 2007) would be offset by revenues from the application 
fees received in the projected sum of $300,000(30,000 
applications at $10 each equals $300,000).  This would result 
in a net fiscal impact to the State of $175,000 for fiscal 
year 2007.  
        
        The cost of the program in fiscal year 2008 would be 
covered by both the application fees and manufacturer 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 
states.



Contact:	Steve J. Tobiason, #342-4545
    		Joe Gallegos, AARP, #855-4005

STATEMENT OF PURPOSE/FISCAL NOTE                 S 1089