AB355: Bill Text

LRB-1270/1

RLR:wlj:jf

2003 - 2004 LEGISLATURE

2003 Assembly BILL 355

May 22, 2003 - Introduced by Representatives Underheim, Coggs, Petrowski, Pocan, Krusick, Olsen, A. Williams, Zepnick, Young, Turner, Musser, Sinicki, Miller, Balow and Albers, cosponsored by Senators Brown, Carpenter, Chvala and Hansen. Referred to Committee on Health.

AB355,1,8 An Act to renumber and amend 450.02 (2); to amend 20.435 (8) (mb), 20.435 (8) (mb), 49.68 (3) (b), 49.683 (2), 49.685 (2), 49.688 (7) (a), 49.692 (6), 146.93 (1) (a) and 149.143 (1) (a); to repeal and recreate 49.45 (49); and to create 20.435 (4) (jg), 20.435 (4) (jh), 20.435 (4) (jt), 20.435 (4) (jx), 40.03 (6) (k), 49.69, 49.692, 149.14 (4c) (c), 441.16 (7), 447.08, 448.075, 450.02 (2) (b) and 450.075 of the statutes; relating to: prescription drugs, providing an exemption from emergency rule procedures, granting rule-making authority, making appropriations, and providing penalties.

Analysis by the Legislative Reference Bureau

Currently, prescription drugs are a covered benefit under the Medical Assistance Program and BadgerCare and under the Health Insurance Risk-Sharing Program (HIRSP). Certain elderly persons are eligible to receive state assistance in purchasing prescription drugs under the program commonly known as Senior Care. Also, the state provides assistance to certain persons who have kidney disease, cystic fibrosis, or hemophilia to cover health care costs, which may include the cost of prescription drugs, under what are commonly referred to as "disease aids programs."

Drug manufacturers are required under federal law to pay rebates on prescription drugs that are purchased under state medical assistance programs. Federal law further requires that, with several exceptions, the price for prescription drugs purchased under state medical assistance programs, after the rebate, must be the lowest price for which the manufacturer sells its prescription drugs. Manufacturers must also pay rebates on prescription drugs purchased under BadgerCare and Senior Care, and in some cases, under the disease aids programs.

Also under current law, the secretary of health and family services is required to appoint a Prescription Drug Prior Authorization Committee (the Committee) that is responsible for advising the Department of Health and Family Services (DHFS) on prior Medical Assistance authorization policies for prescription drugs.

Preferred drug lists

This bill requires DHFS to create two preferred drug lists (PDLs). PDL I is for state-supported health care assistance programs (Medical Assistance, BadgerCare, Senior Care, HIRSP, Wisconcare, and several disease aids programs). PDL II is for health care plans provided to state and local government employees, health care plans provided by private employers to their employees, health care plans negotiated on behalf of a group of persons who purchase their own health insurance, for example through a trade association, and for the Prescription Drug Assistance Program created under the bill (described below).

Creation of the PDLs. DHFS must use the following process to create the PDLs:

1. The Committee must determine the relative clinical efficacy and safety of prescription drugs within a therapeutic class (a group of drugs that are used to treat the same disease or medical condition).

2. DHFS must solicit offers from drug manufacturers to pay a rebate on a prescription drug if it is included on a PDL. Manufacturers may offer a different rebate amount for the two PDLs. The rebate amount for PDL I must be in addition to any rebate amount currently paid under the Medical Assistance Program.

3. DHFS must identify one or more prescription drugs within each therapeutic class that are the most cost-effective and place them on a PDL. DHFS must consider the Committee's determinations of relative clinical efficacy and safety and the cost of each prescription drug in determining cost-effectiveness. In assessing cost, DHFS must consider any manufacturer rebates that are paid under current law or current rebate agreements and any additional rebates offered in response to DHFS solicitations under this bill. Although the determinations regarding relative clinical efficacy and safety of drugs will be the same for the creation of both PDLs, the current and additional rebate amounts may differ, so the drugs identified as most cost-effective may differ between the two PDLs.

4. The bill requires DHFS to enter into agreements with manufacturers to pay the rebates offered under the bill on those drugs that are placed on a PDL and purchased under a program or health insurance plan for which the PDL is used.

5. The bill requires DHFS to place all prescription drugs that are safe and clinically effective for treating acquired immunodeficiency syndrome or the human immunodeficiency virus as well as all reasonably priced generic prescription drugs on both PDLs.

PDL I. The bill requires DHFS to enter into rebate agreements with drug manufacturers by July 1, 2004, under which the manufacturers pay the supplemental rebates offered in response to DHFS solicitations on drugs that are included on PDL I and purchased under the state-supported health care assistance programs. Also by July 1, 2004, DHFS must implement at least one of the following policies to encourage use of PDL I under the state-supported health care assistance programs:

1. DHFS may require prior authorization for the purchase of any prescription drug that is not on PDL I; or

2. DHFS may monitor the prescribing practices of doctors, advanced practice nurses, and dentists to identify those practitioners who routinely prescribe drugs that are not on PDL I without medical justification and request that the applicable examining board, such as the Medical Examining Board, require the practitioner to participate in an education program on using the PDL.

Under the bill, manufacturers pay the supplemental rebates on drugs purchased under the state-supported health care assistance programs to DHFS. DHFS must allocate the supplemental rebate receipts to each of the state-supported health care assistance programs in the proportion in which they were earned.

PDL II. The bill allows DHFS to phase in use of PDL II by enrollees in the Prescription Drug Assistance Program and beneficiaries of health care plans for government employees, private employees, and persons who purchase health insurance coverage individually. To earn the rebates offered by manufacturers whose drugs are included on PDL II, the provider or purchaser of a health care plan must adopt policies that encourage use of the PDL, such as prior authorization requirements or higher copayments for drugs that are not on the PDL, or mandatory PDL education for practitioners who prescribe drugs that are not on the PDL without medical justification.

The state may adopt policies to encourage use of PDL II by nonrepresented state employees at any time. The state may not require represented state employees to adhere to policies to encourage use of PDL II unless the employees agree to such policies through collective bargaining.

A local government, private employer, or entity that negotiates health care coverage for a group of individuals is not eligible to earn the rebates under PDL II unless DHFS approves the policies that the local government, private employer, or entity has adopted to encourage use of the PDL. A local governmental unit may not adopt policies that encourage use of the PDL by represented employees, unless those employees agree to the policies through collective bargaining.

Under the bill, manufacturers pay the supplemental rebates on drugs purchased under health care plans for state employees and under the Prescription Drug Assistance Program to the state. DHFS must designate the recipients of rebates paid under health care plans for local government employees, employees of private employers, and other private group plans.

Prescription Drug Assistance Program

The bill creates a program under which Wisconsin residents who do not have health insurance that covers prescription drugs (except a Medigap policy) may purchase prescription drugs for prices that are established by DHFS. DHFS must issue a Prescription Drug Assistance Program enrollment card to each person who applies for the program, meets the eligibility requirements, and pays an annual enrollment fee. A person who has a prescription drug card and a prescription order written by a practitioner who is licensed in Wisconsin is entitled to purchase prescription drugs from a participating pharmacy or pharmacist for the amounts established by DHFS. Any pharmacy or pharmacist that is licensed in any state within the United States and that agrees to sell drugs to program enrollees for the amounts established by DHFS may participate in the Prescription Drug Assistance Program.

If a program enrollee purchases a prescription drug that is included on PDL II (described above) and for which the manufacturer has entered into a rebate agreement with DHFS, a participating pharmacy or pharmacist may not charge the person an amount that is greater than the maximum price and dispensing fee established by DHFS minus the rebate. The drug manufacturer must pay DHFS the rebate amount on the drug, and DHFS must reimburse the pharmacy or pharmacist the rebate amount.

The bill appropriates child welfare income augmentation funds, subject to the approval of the Joint Committee on Finance, to make initial drug rebate reimbursements to participating pharmacies and pharmacists.

Prescription drug manufacturer gift reporting

The bill requires drug manufacturers to report annually to the Pharmacy Examining Board gifts that the manufacturers make to the following people in connection with marketing or promotional activities: practitioners who may prescribe drugs in Wisconsin; pharmacists; owners and operators of pharmacies; hospitals, nursing homes, or organizations that offer health benefit plans, or employees of hospitals, nursing homes, or such organizations. Manufacturers must report the value, nature, and purpose of any gift that is valued at $25 or more, except that manufacturers are not required to report the provision of free drug samples that are intended to be distributed to patients. A manufacturer who violates the reporting requirements is subject to a $10,000 forfeiture for each violation. The Pharmacy Examining Board must annually report to the legislature on gift disclosures made by drug manufacturers.

HIRSP

The bill also grants DHFS authority, independent of the PDL provisions, to negotiate rebate agreements with drug manufacturers on prescription drugs that are purchased under HIRSP.

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:

AB355, s. 1 Section 1. 20.435 (4) (jg) of the statutes is created to read:

AB355,5,3 20.435 (4) (jg) Prescription drug assistance; enrollment fees. All moneys received from the payment of enrollment fees under s. 49.692 (3), to be used for administration of the program under s. 49.692.

AB355, s. 2 Section 2. 20.435 (4) (jh) of the statutes is created to read:

AB355,5,8 20.435 (4) (jh) Health insurance risk-sharing plan; drug manufacturer rebates. All moneys received from rebate payments by manufacturers under s. 149.14 (4c) (c), to pay a portion of the operating costs of the health insurance risk-sharing plan under ch. 149.

AB355, s. 3 Section 3. 20.435 (4) (jt) of the statutes is created to read:

AB355,5,12 20.435 (4) (jt) Preferred drug lists. All moneys received from the payment of fees under ss. 49.69 (6) (d) and 448.075 (2) to be used for administration of the preferred drug lists created under s. 49.69 (4).

AB355, s. 4 Section 4. 20.435 (4) (jx) of the statutes is created to read:

AB355,5,24 20.435 (4) (jx) Supplemental rebates on prescription drugs. All moneys received from rebate payments by manufacturers and labelers under s. 49.69 (5) and (6) to provide Medical Assistance Program benefits administered under s. 49.45; to be used for the Badger Care health care program for low-income families under s. 49.665; to pay pharmacies and pharmacists under s. 49.688 (7) for prescription drug assistance for elderly persons; to assist victims of disease, as provided in ss. 49.68, 49.683, and 49.685; to pay a portion of the operating costs of the health insurance risk-sharing plan under ch. 149; to purchase primary health care services under s. 146.93; to reimburse pharmacies and pharmacists under s. 49.692 (6); and to be credited to the public employee trust fund. The amounts expended under this paragraph shall be allocated as provided under s. 49.69 (7).

AB355, s. 5 Section 5. 20.435 (8) (mb) of the statutes, as affected by 2001 Wisconsin Act 16, is amended to read:

AB355,6,12 20.435 (8) (mb) Income augmentation services receipts. All moneys that are received under 42 USC 670 to 679a, 42 USC 1395 to 1395ddd, and 42 USC 1396 to 1396v as the result of income augmentation activities for which the state has contracted and all moneys that are received under 42 USC 1396 to 1396v in reimbursement of the cost of providing targeted case management services to children whose care is not eligible for reimbursement under 42 USC 670 to 679a, to be used as provided in s. 46.46 and 2003 Wisconsin Act .... (this act), section 25 (3). All moneys received under this paragraph in excess of the moneys necessary to support the costs specified in s. 46.46 and 2003 Wisconsin Act .... (this act), section 25 (3 ), shall be deposited in the general fund as a nonappropriated receipt.

AB355, s. 6 Section 6 . 20.435 (8) (mb) of the statutes, as affected by 2001 Wisconsin Act 16 and 2003 Wisconsin Act .... (this act), is amended to read:

AB355,6,24 20.435 (8) (mb) Income augmentation services receipts. All moneys that are received under 42 USC 670 to 679a, 42 USC 1395 to 1395ddd, and 42 USC 1396 to 1396v as the result of income augmentation activities for which the state has contracted and all moneys that are received under 42 USC 1396 to 1396v in reimbursement of the cost of providing targeted case management services to children whose care is not eligible for reimbursement under 42 USC 670 to 679a, to be used as provided in s. 46.46 and 2003 Wisconsin Act .... (this act), section 25 (3). All moneys received under this paragraph in excess of the moneys necessary to support the costs specified in s. 46.46 and 2003 Wisconsin Act .... (this act), section 25 (3 ), shall be deposited in the general fund as a nonappropriated receipt.

AB355, s. 7 Section 7. 40.03 (6) (k) of the statutes is created to read:

AB355,7,7 40.03 (6) (k) Upon request of the secretary of the department of health and family services, shall adopt policies that encourage use of the preferred drug list created under s. 49.69 (4) (a) 2. for group health insurance plans offered to state employees, except that for state employees covered by a collective bargaining agreement under subch. I or V of ch. 111 the board may adopt such policies that encourage use of the preferred drug list only if permitted under the collective bargaining agreement.

AB355, s. 8 Section 8. 49.45 (49) of the statutes is repealed and recreated to read:

AB355,7,11 49.45 (49) Prescription drug prior authorization committee. (a) The secretary shall exercise his or her authority under s. 15.04 (1) (c) to create a prescription drug prior authorization committee to do all of the following:

AB355,7,13 1. Advise the department on issues related to prior authorization decisions made concerning prescription drugs on behalf of Medical Assistance recipients.

AB355,7,15 2. Determine the relative clinical efficacy and safety of prescription drugs for the purpose of creating preferred drug lists as required under s. 49.69 (2).

AB355,7,17 (b) The secretary shall appoint as members of the prescription drug prior authorization committee at least the following:

AB355,7,18 1. Two physicians, as defined in s. 448.01 (5), who are currently in practice.

AB355,7,19 2. Two pharmacists, as defined in s. 450.01 (15).