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 1Section 1. 20.435 (4) (jf) of the statutes is created to read:
AB857,3,52 20.435 (4) (jf) Prescription drug assistance; manufacturer and labeler rebates.
3All moneys received from rebate payments by manufacturers and labelers under s.
449.689 (6), to be used for payment to pharmacies and pharmacists under s. 49.689
5(7) for prescription drug assistance.
AB857, s. 2 6Section 2. 20.435 (4) (jg) of the statutes is created to read:
AB857,4,3
120.435 (4) (jg) Prescription drug assistance; enrollment fees. All moneys
2received from payment of enrollment fees under s. 49.689 (3), to be used for
3administration of the program under s. 49.689.
AB857, s. 3 4Section 3. 49.45 (53) of the statutes is created to read:
AB857,4,55 49.45 (53) Prior authorization for legend drugs. (a) In this subsection:
AB857,4,96 1. "Labeler" means a person that receives prescription drugs from a
7manufacturer or wholesaler, repackages the prescription drugs for later retail sale,
8and has a labeler code issued by the federal food and drug administration under 21
9CFR 207.20
(b).
AB857,4,1110 2. "Manufacturer" means a manufacturer of prescription drugs and includes
11a subsidiary or affiliate of the manufacturer.
AB857,4,1312 3. "Prescription drug" means a prescription drug, as defined in s. 450.01 (20),
13that is included in the drugs specified under s. 49.46 (2) (b) 6. h.
AB857,4,1714 (b) The department shall promulgate as rules procedures for use in
15determining, under s. 49.689 (6) (c), whether to subject prescription drugs produced
16by a manufacturer or repackaged by a labeler to prior authorization requirements
17under medical assistance. The rules shall include all of the following:
AB857,4,2118 1. Authorization to subject a prescription drug to prior authorization
19requirements only if considerations relating to safety, efficacy, and disease
20management are not compromised by denial of the prior authorization or
21substitution of the drug with an equivalent.
AB857,4,2422 2. A definition of "equivalent" that includes a specific list of alternate
23prescription drugs that could be substituted for a drug that is subject to prior
24authorization requirements.
AB857,5,5
13. Authorization for a pharmacy or pharmacist to be reimbursed for up to one
2month's dosage of a prescription drug that is otherwise subject to prior authorization
3requirements, if the physician prescribing the drug asserts that the equivalent is
4unacceptable or not immediately available and provides evidence that the
5prescription drug is medically necessary under medical assistance standards.
AB857,5,86 4. Standards for review by the department of requests by pharmacies and
7pharmacists for reimbursement for prescription drugs that are subject to prior
8authorization requirements.
AB857,5,119 5. Procedures, including hearings, for appeals of denials of requests by
10pharmacies and pharmacists for reimbursement for prescription drugs that are
11subject to prior authorization requirements.
AB857,5,1412 6. Coverage under medical assistance of a prescription drug that is subject to
13prior authorization during the pendency of an appeal of a denial of a request for
14reimbursement for the drug.
AB857, s. 4 15Section 4. 49.689 of the statutes is created to read:
AB857,5,16 1649.689 Prescription drug assistance. (1) In this section:
AB857,5,2017 (a) "Labeler" means a person that receives prescription drugs from a
18manufacturer or wholesaler, repackages the drugs for later retail sale, and has a
19labeler code issued by the federal food and drug administration under 21 CFR 207.20
20(b).
AB857,5,2221 (b) "Manufacturer" means a manufacturer of prescription drugs and includes
22a subsidiary or affiliate of the manufacturer.
AB857,5,2423 (c) "Prescription drug" means a prescription drug, as defined in s. 450.01 (20),
24that is included in the drugs specified under s. 49.46 (2) (b) 6. h.
AB857,5,2525 (d) "Prescription order" has the meaning given in s. 450.01 (21).
AB857,6,2
1(2) (a) A person to whom all of the following applies is eligible to purchase a
2prescription drug at the amounts specified in sub. (5) (a):
AB857,6,33 1. The person is a resident, as defined in s. 27.01 (10) (a), of this state.
AB857,6,64 2. The person is not a recipient of medical assistance, does not have health care
5coverage under s. 49.665, does not have a policy issued under ch. 149, and is not
6enrolled in the program under s. 49.688.
AB857,6,97 3. The person has not had insurance coverage for prescription drugs for
8outpatient care that is other than that specified in subd. 2. for at least 30 consecutive
9days immediately before applying under par. (b).
AB857,6,1210 (b) A person may apply to the department, on a form provided by the
11department, for a determination of eligibility and issuance of a prescription drug
12card for purchase of prescription drugs under this section.
AB857,6,17 13(3) The department shall devise and distribute a form for applying for the
14program under sub. (2), shall determine eligibility for each 12-month benefit period
15of applicants, and, after payment by the applicant of a program enrollment fee of $20
16for each 12-month benefit period, shall issue to eligible persons a prescription drug
17card for use in purchasing prescription drugs, as specified in sub. (4).
AB857,6,23 18(4) Beginning May 1, 2003, as a condition of participation by a pharmacy or
19pharmacist in the program under ss. 49.45, 49.46, or 49.47, the pharmacy or
20pharmacist may not charge a person who presents a valid prescription order and a
21card indicating that he or she meets eligibility requirements under sub. (2) an
22amount for a prescription drug under the order that exceeds the amounts specified
23in sub. (5) (a).
AB857,6,25 24(5) (a) The amounts that a pharmacy or pharmacist may charge a person
25specified in sub. (3) in a 12-month period for a prescription drug are the following:
AB857,7,1
11. After April 31, 2003, and before December 1, 2003, the lesser of the following:
AB857,7,52 a. The average wholesale price minus 11.25% or the maximum allowable cost,
3as determined by the department, whichever is less, plus a dispensing fee that is
4specified by the department but is not less than the dispensing fee paid under the
5medical assistance program.
AB857,7,76 b. The usual and customary charge of the pharmacy or pharmacist for the
7proscription drug.
AB857,7,158 2. After November 30, 2003, the rate specified in subd. 1., plus the dispensing
9fee specified in subd. 1., minus the amount of any rebate payment made by a
10manufacturer or labeler that is applicable to the prescription drug, as determined by
11the department. In determining the amount by which a prescription drug shall be
12discounted under this subdivision, the department shall consider an average of all
13rebate payments made under the program, as weighted by the sales of prescription
14drugs subject to the rebates over the most recent 12-month period for which the
15information is available.
AB857,7,1916 (b) The department shall calculate and transmit to pharmacies and
17pharmacists that are certified providers of medical assistance amounts that may be
18used in calculating charges under par. (a). The department shall periodically update
19this information and transmit the updated amounts to pharmacies and pharmacists.
AB857,8,12 20(6) (a) The department or an entity with which the department contracts may
21enter into a rebate agreement that takes into consideration the rebate agreement
22specified under 42 USC 1396r-8, the average wholesale price of prescription drugs,
23and any other available information on prescription drug prices and price discounts,
24with a manufacturer that sells prescription drugs in this state or with a labeler that
25repackages prescription drugs for sale in this state. The department or the entity

1with which the department contracts may also enter into an agreement with another
2state or with a private organization that represents another state, to negotiate
3rebate agreements with manufacturers and labelers for prescription drugs produced
4by the manufacturer or repackaged by the labelers that are purchased by persons
5who are eligible under sub. (2). In negotiating a rebate agreement, the department
6or entity with which the department contracts may consider the potential effect of
7the agreement on expenditures under medical assistance. A rebate agreement, if
8negotiated under this paragraph, shall require that the manufacturer or labeler
9make rebate payments for each prescription drug of the manufacturer or labeler that
10is purchased by persons who are eligible under sub. (2), to the state treasurer to be
11credited to the appropriation under s. 20.435 (4) (jf), each calendar quarter or
12according to a schedule established by the department.
AB857,8,1713 (b) The department shall collect from pharmacies and pharmacists utilization
14data necessary to calculate the amounts to be rebated under a rebate agreement
15under par. (a). Any patient-identifiable data, as defined in s. 153.50 (1) (b) 1. or 2.
16or as specified in s. 153.50 (3) (b) 1. to 7., that is collected under this paragraph shall
17be treated as a patient health care record for purposes of s. 146.82.
AB857,8,2218 (c) If a manufacturer or labeler elects not to enter into a rebate agreement
19under par. (a), the department shall determine, under procedures established by rule
20by the department under s. 49.45 (53), whether to subject the prescription drugs
21produced by the manufacturer or repackaged by the labeler to prior authorization
22requirements under the medical assistance program.
AB857,9,223 (d) The department may disseminate to the public, by use of the Internet or
24other means, information that specifies the names of manufacturers or labelers that
25elect not to enter into rebate agreements and the prices at which the most frequently

1used prescription drugs are available to persons issued a prescription drug card
2under sub. (3).
AB857,9,83 (e) The department shall disseminate to physicians, pharmacies, pharmacists,
4and, as determined by the department, other health professionals information about
5the relative cost of prescription drugs produced by manufacturers or repackaged by
6labelers that enter into rebate agreements in comparison with the cost of
7prescription drugs produced by manufacturers or repackaged by labelers that do not
8enter into rebate agreements.
AB857,9,149 (f) l. If a discrepancy exists in the manufacturer's or labeler's favor between the
10amount claimed by a pharmacy or pharmacist under sub. (7) and the amount rebated
11by the manufacturer or labeler under this subsection, the department may hire an
12independent auditor who is agreed on by the parties to review the discrepancy. If the
13discrepancy continues following the audit, the manufacturer or labeler shall justify
14the reason for the discrepancy or pay to the department any additional amount due.
AB857,9,2215 2. If a discrepancy exists that is not in favor of the manufacturer or labeler in
16the information provided by the department to the manufacturer or labeler
17regarding the manufacturer's or labeler's rebate, the manufacturer or labeler may
18hire an independent auditor who is agreed on by the parties to verify the accuracy
19of the data supplied by the department. If a discrepancy continues following the
20audit, the department shall justify the reason for the discrepancy to the
21manufacturer or labeler or refund to the manufacturer or labeler any excess payment
22made by the manufacturer or labeler.
AB857,9,2423 3. If a controversy continues after the procedures under subd. 1. or 2. have been
24carried out, the department or the manufacturer or labeler may request a hearing

1before the division of hearings and appeals of the department of administration as
2a contested case under ch. 227.
AB857,10,15 3(7) From revenue received under the appropriation account under s. 20.435 (4)
4(jf), the department shall, on a weekly or biweekly basis, pay a pharmacy or
5pharmacist for a prescription drug purchased as specified under sub. (4) an amount
6that is equal to the pharmacy's or pharmacists share of the rebate amount, if any, for
7the prescription drug, as determined by the department under sub. (5) (a) 2. The
8department shall devise and distribute a form for reports by pharmacies and
9pharmacists under this subsection and may limit payment under this subsection to
10those prescription drugs for which payment claims are submitted by pharmacies or
11pharmacists directly to the department. The department may apply to the program
12under this section the same utilization and cost control procedures that apply under
13rules promulgated by the department to medical assistance under subch. IV. The
14department may not impose transaction charges on pharmacies or pharmacists that
15submit claims or receive payments under this subsection.
AB857,10,16 16(8) The department shall do all of the following:
AB857,10,2217 (a) Under methods promulgated by the department by rule, monitor
18compliance by pharmacies and pharmacists that are certified providers of medical
19assistance with the requirements of sub. (4) and report annually to the legislature
20under s. 13.172 (2) concerning the compliance. The report shall include information
21on any pharmacies or pharmacists that discontinue participation as certified
22providers of medical assistance and the reasons given for the discontinuance.
AB857,10,2523 (b) Request from the secretary of the federal department of health and human
24services a waiver of any federal medicaid laws necessary to implement prior
25authorization requirements specified in sub. (6) (c).
AB857,11,3
1(c) Promote the use of efficacious and reduced-cost prescription drugs, taking
2into consideration differential dispensing fees, administrative overhead, and
3incentive payments.
AB857,11,54 (d) Undertake outreach efforts to build public awareness of the program under
5this section and to maximize enrollment by eligible persons.
AB857,11,76 (e) Promulgate rules relating to prohibitions on fraud that are substantially
7similar to applicable provisions under s. 49.49 (1) (a).
AB857,11,11 8(9) The department may, except as provided in subs. (6) (c) and (8), and except
9for the department's rule-making requirements and authority, enter into a contract
10with an entity to perform the duties and exercise the powers of the department under
11this section.
AB857,11,15 12(10) (a) A person who is convicted of violating a rule promulgated by the
13department under sub. (8) (e) in connection with that person's furnishing of
14prescription drugs under this section may be fined not more than $25,000, or
15imprisoned for not more than 7 years and 6 months, or both.
AB857,11,1816 (b) A person other than a person specified in par. (a) who is convicted of
17violating a rule promulgated by the department under sub. (8) (e) may be fined not
18more than $10,000, or imprisoned for not more than one year, or both.
AB857, s. 5 19Section 5. 146.82 (2) (a) 17. of the statutes is amended to read:
AB857,11,2020 146.82 (2) (a) 17. To the department under s. 49.689 (6) (b) or 50.53 (2).
AB857, s. 6 21Section 6. 450.02 (2) of the statutes is renumbered 450.02 (2) (intro.) and
22amended to read:
AB857,11,2423 450.02 (2) (intro.) The board shall adopt rules defining promulgate all of the
24following rules, which apply to all applicants for licensure under s. 450.05:
AB857,12,2
1(a) Defining the active practice of pharmacy. The rules shall apply to all
2applicants for licensure under s. 450.05.
AB857, s. 7 3Section 7. 450.02 (2) (b) of the statutes is created to read:
AB857,12,74 450.02 (2) (b) Requiring disclosure by a pharmacist to a prescription drug
5purchaser who is a program participant under s. 49.689 of the amount of the discount
6on the retail price of the prescription drug that is provided to the participant as the
7result of the program under s. 49.689.
AB857,12,88 (End)
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