LRB-1270/1
RLR:wlj:jf
2003 - 2004 LEGISLATURE
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
1An Act to renumber and amend 450.02 (2);
to amend 20.435 (8) (mb), 20.435
2(8) (mb), 49.68 (3) (b), 49.683 (2), 49.685 (2), 49.688 (7) (a), 49.692 (6), 146.93 (1)
3(a) and 149.143 (1) (a);
to repeal and recreate 49.45 (49); and
to create 20.435
4(4) (jg), 20.435 (4) (jh), 20.435 (4) (jt), 20.435 (4) (jx), 40.03 (6) (k), 49.69, 49.692,
5149.14 (4c) (c), 441.16 (7), 447.08, 448.075, 450.02 (2) (b) and 450.075 of the
6statutes;
relating to: prescription drugs, providing an exemption from
7emergency rule procedures, granting rule-making authority, making
8appropriations, 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
1Section
1. 20.435 (4) (jg) of the statutes is created to read:
AB355,5,3
120.435
(4) (jg)
Prescription drug assistance; enrollment fees. All moneys
2received from the payment of enrollment fees under s. 49.692 (3), to be used for
3administration of the program under s. 49.692.
AB355, s. 2
4Section
2. 20.435 (4) (jh) of the statutes is created to read:
AB355,5,85
20.435
(4) (jh)
Health insurance risk-sharing plan; drug manufacturer rebates. 6All moneys received from rebate payments by manufacturers under s. 149.14 (4c) (c),
7to pay a portion of the operating costs of the health insurance risk-sharing plan
8under ch. 149.
AB355, s. 3
9Section
3. 20.435 (4) (jt) of the statutes is created to read:
AB355,5,1210
20.435
(4) (jt)
Preferred drug lists. All moneys received from the payment of
11fees under ss. 49.69 (6) (d) and 448.075 (2) to be used for administration of the
12preferred drug lists created under s. 49.69 (4).
AB355, s. 4
13Section
4. 20.435 (4) (jx) of the statutes is created to read:
AB355,5,2414
20.435
(4) (jx)
Supplemental rebates on prescription drugs. All moneys
15received from rebate payments by manufacturers and labelers under s. 49.69 (5) and
16(6) to provide Medical Assistance Program benefits administered under s. 49.45; to
17be used for the Badger Care health care program for low-income families under s.
1849.665; to pay pharmacies and pharmacists under s. 49.688 (7) for prescription drug
19assistance for elderly persons; to assist victims of disease, as provided in ss. 49.68,
2049.683, and 49.685; to pay a portion of the operating costs of the health insurance
21risk-sharing plan under ch. 149; to purchase primary health care services under s.
22146.93; to reimburse pharmacies and pharmacists under s. 49.692 (6); and to be
23credited to the public employee trust fund. The amounts expended under this
24paragraph shall be allocated as provided under s. 49.69 (7).
AB355,6,123
20.435
(8) (mb)
Income augmentation services receipts. All moneys that are
4received under
42 USC 670 to
679a,
42 USC 1395 to
1395ddd, and
42 USC 1396 to
51396v as the result of income augmentation activities for which the state has
6contracted and all moneys that are received under
42 USC 1396 to
1396v in
7reimbursement of the cost of providing targeted case management services to
8children whose care is not eligible for reimbursement under
42 USC 670 to
679a, to
9be used as provided in s. 46.46
and 2003 Wisconsin Act .... (this act), section 25 (3).
10All moneys received under this paragraph in excess of the moneys necessary to
11support the costs specified in s. 46.46
and 2003 Wisconsin Act .... (this act), section
1225 (3
), shall be deposited in the general fund as a nonappropriated receipt.
AB355,6,2415
20.435
(8) (mb)
Income augmentation services receipts. All moneys that are
16received under
42 USC 670 to
679a,
42 USC 1395 to
1395ddd, and
42 USC 1396 to
171396v as the result of income augmentation activities for which the state has
18contracted and all moneys that are received under
42 USC 1396 to
1396v in
19reimbursement of the cost of providing targeted case management services to
20children whose care is not eligible for reimbursement under
42 USC 670 to
679a, to
21be used as provided in s. 46.46
and 2003 Wisconsin Act .... (this act), section 25 (3).
22All moneys received under this paragraph in excess of the moneys necessary to
23support the costs specified in s. 46.46
and 2003 Wisconsin Act .... (this act), section
2425 (3
), shall be deposited in the general fund as a nonappropriated receipt.
AB355, s. 7
25Section
7. 40.03 (6) (k) of the statutes is created to read:
AB355,7,7
140.03
(6) (k) Upon request of the secretary of the department of health and
2family services, shall adopt policies that encourage use of the preferred drug list
3created under s. 49.69 (4) (a) 2. for group health insurance plans offered to state
4employees, except that for state employees covered by a collective bargaining
5agreement under subch. I or V of ch. 111 the board may adopt such policies that
6encourage use of the preferred drug list only if permitted under the collective
7bargaining agreement.
AB355, s. 8
8Section
8. 49.45 (49) of the statutes is repealed and recreated to read:
AB355,7,119
49.45
(49) Prescription drug prior authorization committee. (a) The
10secretary shall exercise his or her authority under s. 15.04 (1) (c) to create a
11prescription drug prior authorization committee to do all of the following:
AB355,7,1312
1. Advise the department on issues related to prior authorization decisions
13made concerning prescription drugs on behalf of Medical Assistance recipients.
AB355,7,1514
2. Determine the relative clinical efficacy and safety of prescription drugs for
15the purpose of creating preferred drug lists as required under s. 49.69 (2).
AB355,7,1716
(b) The secretary shall appoint as members of the prescription drug prior
17authorization committee at least the following:
AB355,7,1818
1. Two physicians, as defined in s. 448.01 (5), who are currently in practice.
AB355,7,1919
2. Two pharmacists, as defined in s. 450.01 (15).
AB355,7,2220
3. One advocate for recipients of Medical Assistance who has sufficient medical
21background, as determined by the department, to evaluate the relative and clinical
22efficacy and safety of a prescription drug.
AB355,8,223
4. For the purpose of making determinations under s. 49.69 (2) regarding the
24relative clinical efficacy and safety of prescription drugs within a particular
1therapeutic class, persons who have medical expertise with respect to the disease or
2medical condition that the prescription drugs are intended to treat.
AB355,8,123
(c) A member of the prescription drug prior authorization committee may not
4be employed by or be a party to a contract with a manufacturer, as defined in s. 450.01
5(12), a distributor, as defined in s. 450.01 (9), or a labeler, as defined in s. 49.69 (1)
6(d). Each committee member shall disclose any potential conflicts of interest related
7to an issue on which the committee acts and shall disclose the receipt of grant funding
8within the previous 36 months from a manufacturer, distributor, or labeler or
9ownership of stock in a manufacturer, distributor, or labeler. A member may not vote
10on an item if the member or the member's employer has a conflict of interest in the
11outcome of the vote. A member who may not vote on an item due to conflict of interest
12may participate in discussions related to the item.
AB355,8,1713
(d) Notwithstanding the requirement under s. 15.04 (1) (c) that members of
14committees serve without compensation, members of the prescription drug prior
15authorization committee who are not officers or employees of this state shall be paid
16$100 for each day on which they are actually and necessarily engaged in performance
17of their duties.
AB355,8,2218
(e) The prescription drug prior authorization committee shall accept
19information or commentary from representatives of the pharmaceutical
20manufacturing industry and from consumer advocates in the committee's review of
21prior authorization policies and in its determinations regarding the relative clinical
22efficacy and safety of prescription drugs.
AB355, s. 9
23Section
9. 49.68 (3) (b) of the statutes is amended to read:
AB355,9,1524
49.68
(3) (b) From the appropriation accounts under ss. 20.435 (4) (e)
and, (je),
25and (jx) the state shall pay the cost of medical treatment required as a direct result
1of chronic renal disease of certified patients from the date of certification, including
2the cost of administering recombinant human erythropoietin to appropriate
3patients, whether the treatment is rendered in an approved facility in the state or
4in a dialysis or transplantation center which is approved as such by a contiguous
5state, subject to the conditions specified under par. (d). Approved facilities may
6include a hospital in-center dialysis unit or a nonhospital dialysis center which is
7closely affiliated with a home dialysis program supervised by an approved facility.
8Aid shall also be provided for all reasonable expenses incurred by a potential
9living-related donor, including evaluation, hospitalization, surgical costs and
10postoperative follow-up to the extent that these costs are not reimbursable under the
11federal medicare program or other insurance. In addition, all expenses incurred in
12the procurement, transportation
, and preservation of cadaveric donor kidneys shall
13be covered to the extent that these costs are not otherwise reimbursable. All
14donor-related costs are chargeable to the recipient and reimbursable under this
15subsection.
AB355, s. 10
16Section
10. 49.683 (2) of the statutes is amended to read:
AB355,9,1817
49.683
(2) Approved costs for medical care under sub. (1) shall be paid from the
18appropriation accounts under s. 20.435 (4) (e)
and, (je)
, and (jx).
AB355, s. 11
19Section
11. 49.685 (2) of the statutes is amended to read:
AB355,9,2520
49.685
(2) Assistance program. From the appropriation accounts under s.
2120.435 (4) (e)
and, (je),
and (jx) the department shall establish a program of financial
22assistance to persons suffering from hemophilia and other related congenital
23bleeding disorders. The program shall assist such persons to purchase the blood
24derivatives and supplies necessary for home care. The program shall be
25administered through the comprehensive hemophilia treatment centers.
AB355, s. 12
1Section
12. 49.688 (7) (a) of the statutes is amended to read:
AB355,10,182
49.688
(7) (a) Except as provided in par. (b), from the appropriation accounts
3under s. 20.435 (4) (bv)
and, (j),
beginning on September 1, 2002, and (jx) the
4department shall, under a schedule that is identical to that used by the department
5for payment of pharmacy provider claims under medical assistance, provide to
6pharmacies and pharmacists payments for prescription drugs sold by the
7pharmacies or pharmacists to persons eligible under sub. (2) who have paid the
8deductible specified under sub. (3) (b) 1. or 2. or who, under sub. (3) (b) 1., are not
9required to pay a deductible. The payment for each prescription drug under this
10paragraph shall be at the program payment rate, minus any copayment paid by the
11person under sub. (5) (a) 2. or 4., and plus, if applicable, incentive payments that are
12similar to those provided under s. 49.45 (8v). The department shall devise and
13distribute a claim form for use by pharmacies and pharmacists under this paragraph
14and may limit payment under this paragraph to those prescription drugs for which
15payment claims are submitted by pharmacists or pharmacies directly to the
16department. The department may apply to the program under this section the same
17utilization and cost control procedures that apply under rules promulgated by the
18department to medical assistance under subch. IV of ch. 49.
AB355, s. 13
19Section
13. 49.69 of the statutes is created to read:
AB355,10,21
2049.69 Preferred drug lists; prescription drug cost containment. (1) In
21this section:
AB355,10,2322
(a) "Committee" means the prescription drug prior authorization committee
23created under s. 49.45 (49).
AB355,10,2424
(b) "Generic name" has the meaning given in s. 450.12 (1) (b).
AB355,11,2
1(c) "Health care coverage plan for government employees" means a health care
2coverage plan offered by the state or by a local governmental unit to its employees.
AB355,11,63
(d) "Labeler" means a person that receives prescription drugs from a
4manufacturer or wholesaler and repackages those drugs for later retail sale, and has
5a labeler code issued by the federal food and drug administration under
21 CFR
6207.20 (b).
AB355,11,107
(e) "Local governmental unit" means a political subdivision of this state, a
8special purpose district in this state, an instrumentality or corporation of the
9political subdivision or special purpose district or a combination or subunit of any of
10the foregoing.
AB355,11,1211
(f) "Manufacturer" means a person engaged in the production, preparation,
12propagation, compounding, conversion, or processing of prescription drugs.