2001 - 2002 LEGISLATURE
February 26, 2002 - Introduced by Representatives Coggs, Morris-Tatum,
Krusick, Kreuser, Pocan, Sinicki, Bock, Young, Turner, Carpenter, Miller,
Black, Plouff, Ryba, Balow, Berceau, Huber, Shilling and Lassa,
cosponsored by Senators Plache, Burke, Decker and
Hansen. Referred to
Committee on Health.
1An Act to renumber and amend
146.82 (2) (a) 17.; and 2to create
20.435 (4) (jf), 20.435 (4) (jg), 49.45 (53), 49.689 and 450.02 (2) (b) of 3
the statutes; relating to: requiring pharmacies and pharmacists, as a
4condition of medical assistance participation, to charge persons for prescription
5drugs no more than specific amounts; specifying requirements for rebate
6agreements between the department of health and family services and drug
7manufacturers or labelers; expanding prior authorization requirements under
8medical assistance; requiring the exercise of rule-making authority; making
9appropriations; and providing penalties.
Analysis by the Legislative Reference Bureau
Under current law, pharmacies and pharmacists that are certified providers of
medical assistance (MA) services are reimbursed, at a rate established by the
department of health and family services (DHFS), for providing certain prescription
drugs to MA recipients. Under the MA program, numerous prescription drugs are
subject to prior authorization and must be authorized by DHFS prior to being
dispensed to MA recipients.
This bill provides that, beginning May 1, 2003, persons who have applied for
and have been found by DHFS to be eligible for prescription drug assistance and who
have paid an enrollment fee of $20 for a 12-month benefit period may use a card,
issued by DHFS, to obtain certain prescription drugs for outpatient care at a rate
that is the average wholesale price minus 11.25% or the maximum allowable cost,
as determined by DHFS, whichever is less, plus a pharmacy dispensing fee that is
not less than the dispensing fee paid under MA, but a pharmacy or pharmacist may
not charge an amount that exceeds the usual and customary charge for the
prescription drug. After November 30, 2003, an eligible person may use the
prescription drug card to obtain prescription drugs by paying this rate, plus the
dispensing fee, minus the amount of any rebate amount received by DHFS under
rebate agreements with drug manufacturers and repackagers of the drugs (labelers).
In determining the amounts discounted by the rebate, DHFS must consider an
average of all rebate payments made under the program, as weighted by the sales
of prescription drugs subject to the rebates over the most recent 12-month period for
which the information is available. The pharmacy or pharmacist who sells the drug
at these reduced prices receives reimbursement for the rebate amount from DHFS.
Persons who are eligible to obtain prescription drugs for these reduced charges are
state residents who have not had private health insurance coverage for outpatient
prescription drugs for at least 30 consecutive days immediately prior to applying for
the program, are not MA recipients, are not enrolled in Badger Care or the
prescription drug assistance program for elderly persons (commonly known as
Senior Care), and do not have a policy issued under the health insurance
risk-sharing plan (HIRSP). The $20 enrollment fee paid by eligible persons is
required to be used for administration of the program.
Under the bill, DHFS or an entity with which DHFS contracts may enter with
drug manufacturers or labelers into rebate agreements that take into consideration
federal medicaid rebate agreements, the average wholesale price of prescription
drugs, and any other available information on prescription drug prices and price
discounts. In negotiating a rebate agreement, DHFS may also consider the potential
effect of the agreement on MA expenditures. DHFS also may enter into an
agreement with another state or with a private organization that represents other
states to negotiate rebate agreements with manufacturers and labelers. Under the
rebate agreement, the manufacturer or labeler must make payments for the
manufacturer's or labeler's drugs that are prescribed and purchased under the
program. DHFS must collect from pharmacies and pharmacists utilization data
necessary to calculate the amounts to be rebated; patient-identifiable data that is
collected must be treated by DHFS as a patient health care record for purposes of
confidentiality. The amounts of the rebate payments must be paid to the state and,
in turn, paid by DHFS to pharmacies or pharmacists that have reduced charges for
prescription drugs for the eligible persons. If a manufacturer or labeler elects not to
enter into a rebate agreement, DHFS must determine, under procedures that are
required to be established by rule, whether to subject the manufacturer's or labeler's
drugs to prior authorization requirements under MA. DHFS may disseminate to the
public information that specifies the names of manufacturers or labelers that elect
not to enter into rebate agreements and the prices at which the most frequently used
prescription drugs are available to persons under the program. In addition, DHFS
must disseminate to health professionals information about the relative cost of
prescription drugs of manufacturers or labelers that enter into rebate agreements
in comparison with the cost of prescription drugs of manufacturers or labelers that
do not enter into rebate agreements. Discrepancies in amounts claimed by
pharmacies or pharmacists and amounts rebated by a manufacturer or labeler or in
information provided by DHFS to the manufacturer or labeler regarding the rebate
may be reviewed by independent auditors. If the discrepancy continues following the
audit, additional amounts due must be paid, or DHFS must refund excess payment
made, as appropriate. For further controversies, one of the parties may request an
administrative hearing. DHFS must request from the secretary of the federal
department of health and human services a waiver of any federal medicaid laws
necessary to implement the bill's prior authorization requirements under MA.
Under the bill, DHFS must monitor compliance by pharmacies and
pharmacists with the requirement to charge eligible persons for the specified
prescription drugs at the reduced amounts and annually report to the legislature
concerning the compliance. DHFS also must promulgate rules that establish
prohibitions against fraud that are substantially similar to MA fraud provisions; the
bill specifies penalties applicable to violations of these prohibitions.
The bill requires that DHFS promulgate as rules procedures for determining
whether to subject drugs produced by a manufacturer or repackaged by a labeler to
prior authorization requirements under MA. In addition, the pharmacy examining
board must promulgate rules requiring disclosure by a pharmacist to a drug
purchaser who is a participant under the program of the amount of the discount on
the retail price of the drug that is provided to the participant under the program.
For further information see the state fiscal estimate, which will be printed as
an appendix to this bill.
The people of the state of Wisconsin, represented in senate and assembly, do
enact as follows:
AB857, s. 1
20.435 (4) (jf) of the statutes is created to read:
(jf) Prescription drug assistance; manufacturer and labeler rebates. 3
All moneys received from rebate payments by manufacturers and labelers under s. 4
49.689 (6), to be used for payment to pharmacies and pharmacists under s. 49.689 5
(7) for prescription drug assistance.
AB857, s. 2
20.435 (4) (jg) of the statutes is created to read:
(jg) Prescription drug assistance; enrollment fees.
All moneys 2
received from payment of enrollment fees under s. 49.689 (3), to be used for 3
administration of the program under s. 49.689.
AB857, s. 3
49.45 (53) of the statutes is created to read:
49.45 (53) Prior authorization for legend drugs.
(a) In this subsection:
1. "Labeler" means a person that receives prescription drugs from a 7
manufacturer or wholesaler, repackages the prescription drugs for later retail sale, 8
and has a labeler code issued by the federal food and drug administration under 21
2. "Manufacturer" means a manufacturer of prescription drugs and includes 11
a subsidiary or affiliate of the manufacturer.
3. "Prescription drug" means a prescription drug, as defined in s. 450.01 (20), 13
that is included in the drugs specified under s. 49.46 (2) (b) 6. h.
(b) The department shall promulgate as rules procedures for use in 15
determining, under s. 49.689 (6) (c), whether to subject prescription drugs produced 16
by a manufacturer or repackaged by a labeler to prior authorization requirements 17
under medical assistance. The rules shall include all of the following:
1. Authorization to subject a prescription drug to prior authorization 19
requirements only if considerations relating to safety, efficacy, and disease 20
management are not compromised by denial of the prior authorization or 21
substitution of the drug with an equivalent.
2. A definition of "equivalent" that includes a specific list of alternate 23
prescription drugs that could be substituted for a drug that is subject to prior 24
3. Authorization for a pharmacy or pharmacist to be reimbursed for up to one 2
month's dosage of a prescription drug that is otherwise subject to prior authorization 3
requirements, if the physician prescribing the drug asserts that the equivalent is 4
unacceptable or not immediately available and provides evidence that the 5
prescription drug is medically necessary under medical assistance standards.
4. Standards for review by the department of requests by pharmacies and 7
pharmacists for reimbursement for prescription drugs that are subject to prior 8
5. Procedures, including hearings, for appeals of denials of requests by 10
pharmacies and pharmacists for reimbursement for prescription drugs that are 11
subject to prior authorization requirements.
6. Coverage under medical assistance of a prescription drug that is subject to 13
prior authorization during the pendency of an appeal of a denial of a request for 14
reimbursement for the drug.
AB857, s. 4
49.689 of the statutes is created to read:
1649.689 Prescription drug assistance. (1)
In this section:
(a) "Labeler" means a person that receives prescription drugs from a 18
manufacturer or wholesaler, repackages the drugs for later retail sale, and has a 19
labeler code issued by the federal food and drug administration under 21 CFR 207.20 20
(b) "Manufacturer" means a manufacturer of prescription drugs and includes 22
a subsidiary or affiliate of the manufacturer.
(c) "Prescription drug" means a prescription drug, as defined in s. 450.01 (20), 24
that is included in the drugs specified under s. 49.46 (2) (b) 6. h.
(d) "Prescription order" has the meaning given in s. 450.01 (21).
(a) A person to whom all of the following applies is eligible to purchase a 2
prescription drug at the amounts specified in sub. (5) (a):
1. The person is a resident, as defined in s. 27.01 (10) (a), of this state.
2. The person is not a recipient of medical assistance, does not have health care 5
coverage under s. 49.665, does not have a policy issued under ch. 149, and is not 6
enrolled in the program under s. 49.688.
3. The person has not had insurance coverage for prescription drugs for 8
outpatient care that is other than that specified in subd. 2. for at least 30 consecutive 9
days immediately before applying under par. (b).
(b) A person may apply to the department, on a form provided by the 11
department, for a determination of eligibility and issuance of a prescription drug 12
card for purchase of prescription drugs under this section.
The department shall devise and distribute a form for applying for the 14
program under sub. (2), shall determine eligibility for each 12-month benefit period 15
of applicants, and, after payment by the applicant of a program enrollment fee of $20 16
for each 12-month benefit period, shall issue to eligible persons a prescription drug 17
card for use in purchasing prescription drugs, as specified in sub. (4).
Beginning May 1, 2003, as a condition of participation by a pharmacy or 19
pharmacist in the program under ss. 49.45, 49.46, or 49.47, the pharmacy or 20
pharmacist may not charge a person who presents a valid prescription order and a 21
card indicating that he or she meets eligibility requirements under sub. (2) an 22
amount for a prescription drug under the order that exceeds the amounts specified 23
in sub. (5) (a).
(a) The amounts that a pharmacy or pharmacist may charge a person 25
specified in sub. (3) in a 12-month period for a prescription drug are the following:
1. After April 31, 2003, and before December 1, 2003, the lesser of the following:
a. The average wholesale price minus 11.25% or the maximum allowable cost, 3
as determined by the department, whichever is less, plus a dispensing fee that is 4
specified by the department but is not less than the dispensing fee paid under the 5
medical assistance program.
b. The usual and customary charge of the pharmacy or pharmacist for the 7
2. After November 30, 2003, the rate specified in subd. 1., plus the dispensing 9
fee specified in subd. 1., minus the amount of any rebate payment made by a 10
manufacturer or labeler that is applicable to the prescription drug, as determined by 11
the department. In determining the amount by which a prescription drug shall be 12
discounted under this subdivision, the department shall consider an average of all 13
rebate payments made under the program, as weighted by the sales of prescription 14
drugs subject to the rebates over the most recent 12-month period for which the 15
information is available.
(b) The department shall calculate and transmit to pharmacies and 17
pharmacists that are certified providers of medical assistance amounts that may be 18
used in calculating charges under par. (a). The department shall periodically update 19
this information and transmit the updated amounts to pharmacies and pharmacists.