LOTTERY FUND PRESERVATION ACT - REPEALED — 1991 Pa. Act 36 (historical enacted text)

Historical Act text

SENATE AMENDED
PRIOR PRINTER'S NOS. 1686, 1810, 2277 PRINTER'S NO. 2445
INTRODUCED BY TIGUE, STUBAN, EVANS, DeWEESE, KUKOVICH, STABACK,
STETLER, TANGRETTI, JAROLIN, SCRIMENTI, PETRONE, STISH,
BATTISTO, COLE, WILLIAMS, RITTER, VAN HORNE, STEIGHNER,
GEIST, D. R. WRIGHT, JAMES, HANNA, TRICH, BROUJOS AND FAJT,
MAY 15, 1991
SENATOR TILGHMAN, APPROPRIATIONS, IN SENATE, RE-REPORTED AS
AMENDED, AUGUST 3, 1991
AN ACT
1 Providing for the preservation of the State Lottery Fund;
2 further providing for pharmaceutical assistance for the
3 elderly; further providing for transportation assistance to
4 the elderly; providing for pharmaceutical purchasing;
5 conferring powers and duties upon the Department of Aging,
6 the Department of Revenue, and the Department of
7 Transportation; imposing penalties; and making repeals.
8 TABLE OF CONTENTS
9 Chapter 1. Preliminary Provisions
10 Section 101. Short title.
11 Section 102. Declaration of policy.
12 Section 103. Definitions.
13 Chapter 3. Pharmaceutical Assistance for Elderly
14 Section 301. Legislative findings.
15 Section 302. Definitions.
16 Section 303. Responsibilities of department.
17 Section 304. Contract.
18 Section 305. Board.
1 Section 306. Penalties.
2 Section 307. Prescription drug education program.
3 Chapter 5. Prudent Pharmaceutical Purchasing
4 Section 501. Declaration of policy.
5 Section 502. Definitions.
6 Section 503. Rebate agreement.
7 Section 504. Terms of rebate agreement.
8 Section 505. Amount of rebate.
9 Section 506. Exemption.
10 Section 507. Disposition of funds.
11 Section 508. Existing agreements.
12 SECTION 509. EXPIRATION OF CHAPTER. <--
13 Chapter 7. Transportation Services
14 Section 701. Definitions.
15 Section 702. Department of Transportation.
16 SECTION 703. COMMUTER RAIL FARE. <--
17 Section 703 704. Human service shared ride transportation <--
18 services for older adults.
19 Chapter 9. Miscellaneous Provisions
20 Section 901. Savings.
21 Section 902. Severability.
22 Section 903. Repeals.
23 Section 904. Applicability.
24 Section 905. Effective date.
25 The General Assembly of the Commonwealth of Pennsylvania
26 hereby enacts as follows:
27 CHAPTER 1
28 PRELIMINARY PROVISIONS
29 Section 101. Short title.
30 This act shall be known and may be cited as the Lottery Fund
19910H1470B2445 - 2 -
1 Preservation Act.
2 Section 102. Declaration of policy.
3 The General Assembly finds and declares as follows:
4 (1) The State Lottery Fund is the major source of
5 providing assistance and programs to the elderly in this
6 Commonwealth.
7 (2) The State Lottery Fund's revenues are leveling off
8 while the population served by the fund has increased by over
9 500,000 older adults since the fund was created.
10 (3) The State Lottery Fund is experiencing serious
11 financial strain because of increased demand and escalating
12 prices of products and services. Prescription prices have
13 risen an average of 15% annually while transportation costs
14 have increased an average of 10% annually.
15 (4) The following specific programs lack appropriate
16 spending limits and are the major cause of strain on the
17 State Lottery Fund:
18 (i) Pharmaceutical assistance for the elderly.
19 (ii) Shared transportation services for the elderly.
20 (iii) Fixed route transit subsidies for the elderly.
21 (5) The best solution to the problem of ensuring the
22 financial solvency of the State Lottery Fund is the
23 consolidation and regulation of the programs listed in
24 paragraph (4).
25 Section 103. Definitions.
26 The following words and phrases when used in this act shall
27 have the meanings given to them in this section unless the
28 context clearly indicates otherwise:
29 "Department." The Department of Aging of the Commonwealth.
30 "Fund." The State Lottery Fund.
19910H1470B2445 - 3 -
1 CHAPTER 3
2 PHARMACEUTICAL ASSISTANCE FOR ELDERLY
3 Section 301. Legislative findings.
4 Finding that an increasing number of the Commonwealth's
5 elderly citizens who are living on fixed incomes are
6 experiencing difficulties in meeting the costs of life-
7 sustaining prescription drugs, the General Assembly, in its
8 responsibilities to provide for the health, welfare and safety
9 of its residents, hereby establishes a limited State
10 pharmaceutical assistance program for the elderly.
11 Section 302. Definitions.
12 The following words and phrases when used in this chapter
13 shall have the meanings given to them in this section unless the
14 context clearly indicates otherwise:
15 "Average wholesale cost." The cost of a dispensed drug based
16 upon the price published in a national drug pricing system in
17 current use by the Department of Aging as the average wholesale
18 price of a prescription drug in the most common package size.
19 "Average wholesale price." Average wholesale cost.
20 "Board." The Pharmaceutical Assistance Review Board.
21 "Eligible claimant." A resident of the Commonwealth FOR NO <--
22 LESS THAN 90 DAYS, WHO IS 65 years of age and over, whose annual
23 income is less than the maximum annual income, and who is not
24 otherwise qualified for public assistance under the act of June
25 13, 1967 (P.L.31, No.21), known as the Public Welfare Code.
26 "Income." All income from whatever source derived, including
27 but not limited to salaries, wages, bonuses, commissions, income
28 from self-employment, alimony, support money, cash public
29 assistance and relief, the gross amount of any pensions or
30 annuities including railroad retirement benefits, all benefits
19910H1470B2445 - 4 -
1 received under the Federal Social Security Act (except Medicare
2 benefits), all benefits received under State unemployment
3 insurance laws and veterans' disability payments, all interest
4 received from the Federal Government or any state government, or
5 any instrumentality or political subdivision thereof, realized
6 capital gains, rentals, workmen's compensation and the gross
7 amount of loss of time insurance benefits, life insurance
8 benefits and proceeds, except the first $5,000 of the total of
9 death benefits payments, and gifts of cash or property, other
10 than transfers by gift between members of a household, in excess
11 of a total value of $300, but shall not include surplus food or
12 other relief in kind supplied by a government agency or property
13 tax rebate.
14 "Maximum annual income." Annual income as determined by the
15 department.
16 (1) Except as provided in paragraph (2), such amount
17 shall not exceed $13,000 in the case of single persons nor
18 $16,200 in the case of the combined annual income of married
19 persons.
20 (2) If this chapter takes effect before September 1,
21 1991, the following shall apply:
22 (i) Before September 1, 1991, such amount shall not
23 exceed $12,000 in the case of single persons nor $15,000
24 in the case of the combined annual income of married
25 persons.
26 (ii) After August 31, 1991, such amount shall not
27 exceed $13,000 in the case of single persons nor $16,200
28 in the case of the combined annual income of married
29 persons.
30 "Pharmacy." A pharmacy licensed by the Commonwealth.
19910H1470B2445 - 5 -
1 "Prescription drug." All drugs requiring a prescription in
2 this Commonwealth, insulin, insulin syringes and insulin
3 needles. Experimental drugs are prohibited.
4 (1) Except as provided in paragraph (2), the term
5 excludes drugs which are prescribed for wrinkles or hair
6 growth.
7 (2) If this chapter takes effect before July 1, 1991,
8 then, beginning July 1, 1991, the term excludes drugs which
9 are prescribed for wrinkles or hair growth.
10 "Private contractor." A person, partnership or corporate
11 entity who enters into a contract with the Commonwealth to
12 provide services under the provisions of this chapter.
13 "Program." The pharmaceutical assistance contract for the
14 elderly as established by this chapter.
15 Section 303. Responsibilities of department.
16 (a) Determination of eligibility.--The department shall
17 adopt regulations relating to the determination of eligibility
18 of prospective claimants and providers, including dispensing
19 physicians, and the determination and elimination of program
20 abuse. To this end, the department shall establish a compliance
21 unit staffed sufficiently to fulfill this responsibility. The
22 department shall have the power to declare ineligible any
23 claimant or provider who abuses or misuses the established
24 prescription plan. The department shall have the power to
25 investigate cases of suspected provider or recipient fraud.
26 (b) Physician and pharmacy participation.--Any physician,
27 pharmacist, pharmacy or corporation owned in whole or in part by
28 a physician or pharmacist enrolled as a provider in the program,
29 or who has prescribed medication for a claimant in the program,
30 who is precluded or excluded for cause from the Department of
19910H1470B2445 - 6 -
1 Public Welfare's Medical Assistance Program shall be precluded
2 or excluded from participation in the program. No physician
3 precluded or excluded from the Department of Public Welfare's
4 Medical Assistance Program shall have claims resulting from
5 prescriptions paid for by the program.
6 (c) Drug utilization review system.--The department shall
7 ensure that a state-of-the-art therapeutic drug utilization
8 review system is established to monitor and correct
9 misutilization of drug therapies.
10 (d) Reduced assistance.--Any eligible claimant whose
11 prescription drug costs are covered in part by any other plan of
12 assistance or insurance may be required to receive reduced
13 assistance under the provisions of this chapter at the
14 discretion of the department.
15 (e) Rebates for expenses prohibited.--A system of rebates or
16 reimbursements to the claimant for prescription drugs shall be
17 prohibited.
18 (f) Request for proposal.--The department shall prepare a
19 request for proposal for the purpose of providing pharmaceutical
20 assistance for the elderly within this Commonwealth. Upon the
21 adoption of the General Fund Budget, the Department of Revenue
22 shall be authorized to transmit the appropriated funds in the
23 State Lottery Fund to the State Treasurer to be deposited in the
24 Pharmaceutical Assistance Contract for the Elderly Fund. This
25 fund shall consist of appropriations and interest and shall be
26 created by the State Treasurer to fund the operations of the
27 program by the department and the private contractor. Funds not
28 expended in the fiscal year in which they were appropriated
29 shall not lapse and be available for use in the next fiscal
30 year.
19910H1470B2445 - 7 -
1 (g) Additional requests for proposals.--To provide for the
2 continued operation of the program, the department shall
3 prepare, as needed, requests for proposals in addition to that
4 set forth in subsection (f), for the purpose of providing
5 pharmaceutical assistance for the elderly within this
6 Commonwealth. A request for proposal shall require potential
7 private contractors to submit a proposal for a period of time
8 and with monetary limitations as determined by the department.
9 Upon the enactment of an appropriation from the State Lottery
10 Fund, the Department of Revenue shall be authorized to transmit
11 the appropriated amount to the State Treasurer to be deposited
12 in the Pharmaceutical Assistance Contract for the Elderly Fund.
13 Funds not expended in the fiscal year in which they were
14 appropriated shall not lapse and shall be available for use in
15 the next fiscal year.
16 (h) Program criteria.--The program shall include the
17 following criteria:
18 (1) Participating pharmacies are to be paid within 21
19 days of the contracting firm receiving the appropriate
20 substantiation of the transaction. Pharmacies shall be
21 entitled to interest for payment not made within the 21-day
22 period at a rate approved by the board.
23 (2) Collection of the copayment by pharmacies shall be
24 mandatory.
25 (3) Senior citizens participating in the program are not
26 required to maintain records of each transaction.
27 (4) A system of rebates or reimbursements to eligible
28 claimants for pharmaceutical expenses shall be prohibited.
29 (5) The system established shall include a participant
30 copayment schedule of $4 for each prescription. The copayment
19910H1470B2445 - 8 -
1 shall increase or decrease on the annual basis by the average
2 percent change of ingredient costs for all prescription drugs
3 plus a differential to raise the copayment to the next
4 highest 25¢ increment. In addition, the department may
5 approve a request for increase or decrease in the level of
6 copayment based upon the financial experience and projections
7 of the program and after consultation with the board. The
8 department is prohibited from approving adjustments to the
9 copayment on more than a semiannual basis. The department
10 shall evaluate the feasibility of instituting a bifurcated
11 copayment differentiating between noninnovator multiple-
12 source drugs and single-source or innovator multiple-source
13 drugs. The department shall report its findings to the Aging
14 and Youth Committee of the Senate and the Aging and Youth
15 Committee of the House of Representatives by July 1, 1992.
16 The department shall, by July 1, 1992, institute a bifurcated
17 copayment unless the findings demonstrate that a bifurcated
18 copayment is not cost effective. As used in this paragraph,
19 the terms "innovator multiple-source drugs," "noninnovator
20 multiple-source drugs" and "single-source drugs" shall have
21 the meanings given to them in section 502.
22 (6) The program shall consist of payments to pharmacies
23 on behalf of eligible claimants for the average wholesale
24 cost of drugs, insulin, insulin syringes and insulin needles
25 which exceed the copayment plus a dispensing fee of at least
26 $2.75 or the dispensing fee established by the department by
27 regulation, whichever is greater.
28 (7) The average wholesale cost shall be based on a list
29 of package sizes to be established by the department. The
30 list shall reflect the average wholesale cost of drugs based
19910H1470B2445 - 9 -
1 on the package size listed in the February 1984 "Yellow Book"
2 distributed by the Health Care Financing Administration for
3 the drugs contained on that list. The department shall have
4 the authority to change the package size of drugs on that
5 list and to add drugs and package sizes to that list, with
6 the review and approval of the board. Changes to the list
7 shall take effect upon publication in the Pennsylvania
8 Bulletin. The department shall have the authority to
9 reimburse based upon the package sizes established in this
10 paragraph.
11 (8) In no case shall the Commonwealth be charged more
12 than the price of the drug at the particular pharmacy on the
13 date of the sale.
14 (9) For purposes of this chapter, the eligible claimant
15 shall be liable to pay a fixed differential whenever a more
16 expensive brand name drug is requested by the claimant when
17 the physician permitted substitution of a less expensive
18 generically equivalent drug approved under the provisions of
19 the act of November 24, 1976 (P.L.1163, No.259), referred to
20 as the Generic Equivalent Drug Law.
21 (10) The differential will be charged regardless of the
22 availability of a less expensive generic equivalent in the
23 providing pharmacy. In no case will the claimant bear the
24 cost of the differential when the generic equivalent is not
25 available.
26 (11) The department shall establish a pharmacist
27 consultation reimbursement program for a period of not less
28 than six months, following which the department may continue
29 or discontinue the program. This program shall provide an
30 additional $1 supplemental dispensing fee whenever a
19910H1470B2445 - 10 -
1 pharmacy's documented intervention resulted in a physician
2 changing a prescription for a more expensive brand name
3 product to a prescription allowing substitution of a less
4 expensive generically equivalent drug. This supplemental
5 dispensing fee shall provide the only exception to paragraph
6 (8).
7 (12) Prescription benefits for any single prescription
8 shall be limited to a 30-day supply of the prescription drug
9 or 100 units, whichever is less, except that, in the case of
10 diagnosis for acute conditions, the limitation shall be a 15-
11 day supply.
12 (13) The department may establish a restricted formulary
13 of the drugs which will not be reimbursed by the program.
14 This formulary shall include only experimental drugs and
15 drugs on the Drug Efficacy Study Implementation List prepared
16 by the Health Care Finance Administration. A medical
17 exception may be permitted by the department for
18 reimbursement of a drug on the Drug Efficacy Study
19 Implementation List upon declaration of its necessity on the
20 prescription by the treating physician; except that, for DESI
21 drugs for which the FDA has issued a Notice for Opportunity
22 Hearing (NOOH) for the purpose of withdrawing the New Drug
23 Application approved for that drug, reimbursement coverage
24 shall be discontinued under the provisions of this chapter.
25 (14) The department may not enter into a contract with a
26 private contractor for an exclusive mail order system for the
27 delivery of prescription drugs under this program. Only mail
28 order pharmacy services provided by pharmacies which are
29 licensed by the Commonwealth and which have their principal
30 place of business within this Commonwealth may participate as
19910H1470B2445 - 11 -
1 providers under the program. The department shall develop and
2 promulgate specific regulations governing the practice of
3 mail order pharmacy and other enrolled providers to include
4 the following minimum standards of practice to ensure the
5 health, safety and welfare of program participants:
6 (i) The appropriate method or methods by which such
7 pharmacies shall verify the identity of the program
8 recipient and the authenticity of prescriptions received.
9 (ii) The appropriate method or methods by which such
10 pharmacies shall mail or deliver prescription drugs to
11 program recipients ensuring, to the maximum extent
12 possible, that the intended program recipient is the
13 actual ultimate recipient of any prescription dispensed
14 by such pharmacies.
15 (iii) The appropriate method or methods by which
16 such pharmacies shall communicate with program
17 participants in emergency situations.
18 (15) The program must be in place and operational within
19 90 days of the effective date of the contract.
20 (16) For-profit third party insurers and not-for-profit
21 prescription plans shall reimburse the department for any
22 payments made to a providing pharmacy on behalf of a claimant
23 covered by such a third party.
24 (17) Any health care professional rendering service as a
25 member of a utilization review committee for this program
26 shall not be liable for any civil damages as a result of any
27 acts or omissions in rendering the service as a member of any
28 such committee except any acts or omissions intentionally
29 designed to harm or any grossly negligent acts or omissions
30 which result in harm to the person receiving such service.
19910H1470B2445 - 12 -
1 (18) The department shall annually verify the income of
2 eligible claimants. Verification shall be accomplished by a
3 targeted sampling of 5% of the eligible claimants.
4 (i) Reports by department.--The department shall maintain
5 monthly statistical records on the program to effectively
6 determine the cost of the program, level of participation and
7 any patterns of unusual drug usage. Based on this information,
8 the department shall submit a report every six months to the
9 Aging and Youth Committee in the Senate, the Aging and Youth
10 Committee in the House of Representatives and the board. The
11 semiannual report shall contain, but is not limited to, all
12 information relating to the number of persons served by the
13 program, their counties of residence, a breakdown of the numbers
14 and kinds of pharmaceuticals used, the cost of prescriptions and
15 an estimate of actual expenses incurred by pharmacists
16 participating in the program.
17 (j) Adjustments to program.--The department is authorized to
18 enter into discussions with the private contractor pursuant to
19 section 305(c).
20 Section 304. Contract.
21 The department is authorized to enter into a contract
22 providing for prescription drugs to eligible persons pursuant to
23 this chapter. The department shall select a proposal that
24 includes, but is not limited to, the criteria set forth in
25 section 303.
26 Section 305. Board.
27 (a) Establishment.--A Pharmaceutical Assistance Review Board
28 shall be established to ensure that the program is providing and
29 continues to provide the assistance intended in a fiscally
30 responsible manner without excessively hampering the
19910H1470B2445 - 13 -
1 pharmaceutical industry.
2 (b) Composition.--The board shall be comprised of the
3 following seven persons:
4 (1) The Secretary of Aging, who shall serve as its
5 chairman.
6 (2) The Secretary of Revenue.
7 (3) The Secretary of Health.
8 (4) Four public members, one appointed by the President
9 pro tempore of the Senate, one appointed by the Minority
10 Leader of the Senate, one appointed by the Speaker of the
11 House of Representatives and one appointed by the Minority
12 Leader of the House of Representatives. Those appointed shall
13 include two senior citizens, who have not been a part of the
14 pharmaceutical industry, to serve as consumer advocates and
15 two representatives of the pharmaceutical industry, at least
16 one of whom is a practicing Pennsylvania pharmacist. A public
17 member who misses two consecutive meetings without good cause
18 acceptable to the chairman shall be replaced by the
19 appointing authority.
20 (c) Review.--Using the semiannual reports submitted by the
21 department pursuant to section 303(i) and other appropriate data
22 sources, the board shall conduct a semiannual review. The board
23 shall develop recommendations concerning any changes in the
24 level of copayment or in the level of fees paid to participating
25 pharmacists. The board may also recommend other changes in the
26 structure of the program and direct the department to enter into
27 discussions with the private contractor concerning amendments to
28 the contract. The copayment schedule shall only be adjusted on a
29 semiannual basis.
30 Section 306. Penalties.
19910H1470B2445 - 14 -
1 (a) Prohibited acts and criminal penalties.--It shall be
2 unlawful for any person to submit a false or fraudulent claim or
3 application under this chapter; to aid or abet another in the
4 submission of a false or fraudulent claim or application; to
5 receive benefits or reimbursement under a private, Federal or
6 State program for prescription assistance and claim or receive
7 duplicative benefits hereunder; to solicit, receive, offer or
8 pay any kickback, bribe or rebate, in cash or in-kind, from or
9 to any person in connection with the furnishing of services
10 under this chapter; or to otherwise violate any provision of
11 this chapter. Any person who commits a prohibited act shall be
12 charged with a criminal offense pursuant to the provisions of 18
13 Pa.C.S. (relating to crimes and offenses).
14 (b) Suspension of license.--Any provider who has been found
15 guilty under this chapter shall be subject to a suspension of
16 his license to practice for a period of one year.
17 (c) Repayment of gain.--Any provider or recipient who is
18 found guilty under this chapter is subject to repay three times
19 the value of the material gain he received.
20 Section 307. Prescription drug education program.
21 The department, in cooperation with the Department of Health,
22 shall develop and implement a Statewide prescription drug
23 education program designed to inform older adults of the dangers
24 of prescription drug abuse and misuse. The prescription drug
25 education program shall include, but not be limited to,
26 information concerning the following:
27 (1) The hazards of prescription drug overdose.
28 (2) The potential dangers of mixing prescription drugs.
29 (3) The danger of retaining unused prescription drugs
30 after the need to take them no longer exists.
19910H1470B2445 - 15 -
1 (4) The necessity to carefully question physicians and
2 pharmacists concerning the effects of taking prescription
3 drugs.
4 (5) The advisability of maintaining a prescription drug
5 profile or other record of prescription drug dosage and
6 frequency of dosage.
7 (6) The desirability of advising family members of the
8 types and proper dosage of prescription drugs which are being
9 taken.
10 (7) The dangers of taking prescription drugs in excess
11 of prescribed dosages.
12 (8) The need to obtain complete, detailed directions
13 from the physician or pharmacist concerning the time period a
14 prescription drug should be taken.
15 CHAPTER 5
16 PRUDENT PHARMACEUTICAL PURCHASING
17 Section 501. Declaration of policy. <--
18 The General Assembly finds and declares as follows:
19 (1) The Commonwealth, through assistance programs
20 enacted for the benefit of its citizens, is the largest
21 single payor of prescription medications in Pennsylvania.
22 (2) The Commonwealth is not provided with volume
23 discounts for the purchase of pharmaceutical products which
24 (discounts) are being provided to other large volume
25 purchasers and reimbursers of these products; and, as a
26 result of this harmful practice, the Commonwealth is paying a
27 price in excess of the price established for prescription
28 medications sold to other high volume purchasers.
29 (3) Because of this harmful practice, the Commonwealth
30 is expending public funds appropriated for health and welfare
19910H1470B2445 - 16 -
1 programs in an inefficient manner, thereby jeopardizing
2 essential programs designed to benefit the health and welfare
3 of as many of the Commonwealth's citizens as possible with
4 available public funds.
5 (4) In order to ensure that the Commonwealth, in
6 expending money on behalf of its citizens, is not unduly
7 harmed by being required to pay a price for pharmaceutical
8 products purchased from manufacturers in excess of that
9 established for other purchasers and reimbursers of these
10 products and to ensure that the Commonwealth can efficiently
11 and prudently expend its money and maximize its ability to
12 provide for the health and welfare of as many of its needy
13 citizens as possible, it is reasonable, necessary and in the
14 public interest to require that pharmaceutical manufacturers
15 which offer any discount to any public body, hospital or
16 nonprofit organization must offer a similar discount to the
17 Commonwealth for pharmaceutical products purchased or
18 reimbursed through State agencies.
19 (5) It is in the public interest, and not
20 overburdensome, for pharmaceutical manufacturers to provide
21 the Commonwealth with data relating to the price of
22 pharmaceutical products sold by the manufacturer to public
23 bodies, hospitals, for profit or nonprofit organizations,
24 other manufacturers or wholesalers doing business in this
25 Commonwealth in order to ensure that the Commonwealth can
26 determine that it is being provided with the best prices
27 offered by the manufacturer.
28 (6) On a national level, there has been a recognition
29 that the need for discounts to State Medicaid agencies, which
30 reimburse for a high volume of pharmaceutical products,
19910H1470B2445 - 17 -
1 exists.
2 (7) It is further recognized that some pharmaceutical
3 manufacturers have circumvented the intent of Federal
4 Medicaid legislation by eliminating or decreasing the
5 discounts to purchasers and reimbursers in the Commonwealth.
6 (8) Single-source drugs and innovator multiple-source
7 drugs are the highest-priced drug products on the
8 pharmaceutical market and have been the primary cause of
9 drug-price inflation and the dramatic increase in public
10 funds expended by the PACE Program and General Assistance
11 Program.
12 (9) Manufacturers of single-source drugs experience no
13 competition and an exclusive market for a significant period
14 of time since these drugs are under patent. Once the patent
15 expires on a single-source drug, the price of the drug
16 usually increases dramatically even when noninnovator
17 multiple-source drug competition exists.
18 (10) Manufacturers of noninnovator multiple-source
19 drugs, generics, have experienced a significant expansion in
20 market share from coverage by the PACE Program and General
21 Assistance Program. It is recognized, however, that
22 noninnovator multiple-source drugs are less costly and have
23 significantly less of a profit margin than both single-source
24 drugs and innovator multiple-source drugs.
25 Section 502. Definitions.
26 The following words and phrases when used in this chapter
27 shall have the meanings given to them in this section unless the
28 context clearly indicates otherwise:
29 "Average manufacturers price (AMP)." Within a calendar
30 quarter, the average unit price paid to the manufacturer for a
19910H1470B2445 - 18 -
1 drug in this Commonwealth by wholesalers doing business in this
2 Commonwealth for drugs distributed to the retail pharmacy class
3 of trade, excluding direct sales to hospitals and health
4 maintenance organizations through the Federal supply schedule
5 and excluding direct sales to a distributor where the drug is
6 relabeled under that distributor's national drug code number.
7 The term includes cash discounts and all other price reductions
8 other than rebates under this act. AMP shall be adjusted by the
9 manufacturer if cumulative discounts or other arrangements
10 subsequently adjust the prices actually realized. For capitated
11 sales, the allocation of the discount shall be made
12 proportionately to the dollar value of the units of each drug
13 sold under the capitated arrangement.
14 "Best price."
15 (1) For current covered prescription drugs, the lesser
16 of:
17 (i) the lowest price available for the drug in this
18 Commonwealth from the manufacturer to any wholesaler,
19 retailer, provider, private entity or governmental entity
20 doing business in this Commonwealth during the quarter;
21 or
22 (ii) the lowest price available for the drug, as of
23 July 1, 1990, in this Commonwealth from the manufacturer
24 to any wholesaler, retailer, provider, private entity or
25 governmental entity doing business in this Commonwealth,
26 increased by the percentage increase in the Consumer
27 Price Index-Urban from July 1990 to the month before the
28 beginning of the calendar quarter involved.
29 Under this paragraph, in no case shall the best price be less
30 than 65% of the average wholesale price as published in the
19910H1470B2445 - 19 -
1 Medical Economics Drug Topics Redbook as of July 1, 1990,
2 increased by the percentage increase in the Consumer Price
3 Index-Urban from July 1, 1990, to the month before the
4 beginning of the calendar quarter involved.
5 (2) For new drugs approved for marketing after July 1,
6 1990, the lesser of:
7 (i) the lowest price available for the drug in this
8 Commonwealth from the manufacturer to any wholesaler,
9 retailer, provider, private entity or governmental entity
10 doing business in this Commonwealth during the quarter;
11 or
12 (ii) the lowest price available for the drug, during
13 the first month in which the drug was marketed, in this
14 Commonwealth from the manufacturer to any wholesaler,
15 retailer, provider, private entity or governmental entity
16 doing business in this Commonwealth, increased by the
17 percentage increase in the Consumer Price Index-Urban
18 from the first day of the first month of marketing to the
19 beginning of the calendar quarter involved.
20 (3) The term excludes any price less than 10% of the AMP
21 in the same quarter for which the AMP is computed.
22 (4) The term includes Federal supply schedule prices.
23 (5) Best price shall be determined on a unit basis and
24 shall be adjusted by the manufacturer if cumulative
25 discounts, rebates or other arrangements subsequently adjust
26 the prices actually realized. For capitated sales, the
27 allocation of the discount shall be made proportionately to
28 the dollar value of the units of each drug sold under the
29 capitated arrangement.
30 SECTION 501. DECLARATION OF POLICY. <--
19910H1470B2445 - 20 -
1 THE GENERAL ASSEMBLY FINDS AND DECLARES AS FOLLOWS:
2 (1) THE COMMONWEALTH, THROUGH ASSISTANCE PROGRAMS
3 ENACTED FOR THE BENEFIT OF ITS CITIZENS, IS THE LARGEST
4 SINGLE PAYOR OF PRESCRIPTION MEDICATIONS IN PENNSYLVANIA.
5 (2) IN ORDER TO ENSURE THAT THE COMMONWEALTH, IN
6 EXPENDING MONEY ON BEHALF OF ITS CITIZENS, IS NOT UNDULY
7 HARMED BY BEING REQUIRED TO PAY A PRICE FOR PHARMACEUTICAL
8 PRODUCTS PURCHASED FROM MANUFACTURERS IN EXCESS OF THAT
9 ESTABLISHED FOR OTHER PURCHASERS AND REIMBURSERS OF THESE
10 PRODUCTS AND TO ENSURE THAT THE COMMONWEALTH CAN EFFICIENTLY
11 AND PRUDENTLY EXPEND ITS MONEY AND MAXIMIZE ITS ABILITY TO
12 PROVIDE FOR THE HEALTH AND WELFARE OF AS MANY OF ITS NEEDY
13 CITIZENS AS POSSIBLE, IT IS REASONABLE, NECESSARY AND IN THE
14 PUBLIC INTEREST TO REQUIRE THAT PHARMACEUTICAL MANUFACTURERS
15 OFFER A DISCOUNT TO THE COMMONWEALTH FOR PHARMACEUTICAL
16 PRODUCTS PURCHASED OR REIMBURSED THROUGH STATE AGENCIES.
17 (3) IT IS IN THE PUBLIC INTEREST FOR PHARMACEUTICAL
18 MANUFACTURERS TO PROVIDE THE COMMONWEALTH WITH DATA RELATING
19 TO THE PRICE OF PHARMACEUTICAL PRODUCTS SOLD BY THE
20 MANUFACTURER TO PUBLIC BODIES, HOSPITALS, FOR-PROFIT OR
21 NONPROFIT ORGANIZATIONS, OTHER MANUFACTURERS OR WHOLESALERS
22 DOING BUSINESS IN THIS COMMONWEALTH IN ORDER TO ENSURE THAT
23 THE COMMONWEALTH CAN DETERMINE THAT IT IS BEING PROVIDED WITH
24 THE BEST PRICES OFFERED BY THE MANUFACTURER.
25 (4) ON A NATIONAL LEVEL, THERE HAS BEEN A RECOGNITION
26 THAT THE NEED FOR DISCOUNTS TO STATE MEDICAID AGENCIES, WHICH
27 REIMBURSE FOR A HIGH VOLUME OF PHARMACEUTICAL PRODUCTS,
28 EXISTS.
29 (5) ON A STATE LEVEL, THE GENERAL ASSEMBLY RECOGNIZES
30 THAT IT IS IN THE BEST INTEREST OF ITS CITIZENS TO PROVIDE
19910H1470B2445 - 21 -
1 PHARMACEUTICAL ASSISTANCE IN A REASONABLE AND COST-EFFICIENT
2 MANNER.
3 SECTION 502. DEFINITIONS.
4 THE FOLLOWING WORDS AND PHRASES WHEN USED IN THIS CHAPTER
5 SHALL HAVE THE MEANINGS GIVEN TO THEM IN THIS SECTION UNLESS THE
6 CONTEXT CLEARLY INDICATES OTHERWISE:
7 "AVERAGE MANUFACTURER PRICE (AMP)." WITH RESPECT TO A
8 COVERED PRESCRIPTION DRUG OF THE MANUFACTURER FOR A CALENDAR
9 QUARTER, THE AVERAGE UNIT PRICE PAID TO THE MANUFACTURER FOR THE
10 DRUG IN THIS COMMONWEALTH BY WHOLESALERS FOR DRUGS DISTRIBUTED
11 TO THE RETAIL PHARMACY CLASS OF TRADE, EXCEPT FOR DIRECT SALES
12 TO HOSPITALS, HEALTH MAINTENANCE ORGANIZATIONS AND TO
13 WHOLESALERS WHERE THE DRUG IS RELABELED UNDER THAT DISTRIBUTOR'S
14 NATIONAL DRUG CODE NUMBER. FEDERAL SUPPLY SCHEDULE PRICES SHALL
15 NOT BE INCLUDED IN THE CALCULATION OF AMP. THE TERM INCLUDES
16 CASH DISCOUNTS AND ALL OTHER PRICE REDUCTIONS, OTHER THAN
17 REBATES UNDER THIS ACT AND SECTION 1927 OF TITLE XIX OF THE
18 SOCIAL SECURITY ACT (PUBLIC LAW 74-271, 42 U.S.C. § 301 ET
19 SEQ.), ADDED NOVEMBER 5, 1990 (PUBLIC LAW 101-508, TITLE IV,
20 SECTION 4401(A)(3), 104 STAT. 1388-143), WHICH REDUCE THE ACTUAL
21 PRICE PAID. FOR BUNDLED OR CAPITATED SALES, THE ALLOCATION OF
22 THE DISCOUNT SHALL BE MADE PROPORTIONATELY TO THE DOLLAR VALUE
23 OF THE UNITS OF EACH COVERED PRESCRIPTION DRUG SOLD UNDER THE
24 BUNDLED OR CAPITATED ARRANGEMENT. THE AMP FOR A QUARTER SHALL BE
25 ADJUSTED BY THE MANUFACTURER IF CUMULATIVE DISCOUNTS OR OTHER
26 ARRANGEMENTS SUBSEQUENTLY ADJUST THE PRICES ACTUALLY REALIZED.
27 "Capitated BUNDLED OR CAPITATED sales." The packaging of <--
28 drugs of different types where:
29 (1) the condition of rebate or discount is that more
30 than one drug type is purchased; or
19910H1470B2445 - 22 -
1 (2) the resulting discount or rebate is greater than
2 that which would have been received had the drug products
3 been purchased separately.
4 "Consumer Price Index-Urban." The index of consumer prices <--
5 developed and updated by the Bureau of Labor Statistics of the
6 United States Department of Labor.
7 "Covered prescription drug." A legend drug, insulin, an
8 insulin syringe or an insulin needle eligible for payment by the
9 Commonwealth under the PACE Program or under the General
10 Assistance Program.
11 "Depot price." The price available to any depot of the
12 Federal government for purchase of drugs from the manufacturer
13 through the depot system of procurement.
14 "Direct seller." Any person, partnership, corporation,
15 institution or entity engaged in the selling of pharmaceutical
16 products directly to consumers in this Commonwealth.
17 "Distributor." A private entity under contract with the
18 original labeler or holder of the national drug code number to
19 manufacture, package or market the covered prescription drug.
20 "Doing business in this Commonwealth." The direct or
21 indirect selling or the making of covered prescription drugs
22 available for sale in a continuous and systematic manner with
23 the reasonable expectation that these products will be sold to
24 consumers in this Commonwealth.
25 "FDA." The Food and Drug Administration of the Public Health
26 Service of the Department of Health and Human Services.
27 "General Assistance Program." The General Assistance Program
28 of the Department of Public Welfare.
29 "Innovator multiple-source drugs." A multiple-source drug
30 that was originally marketed under a new drug application
19910H1470B2445 - 23 -
1 approved by the FDA. The term includes:
2 (1) covered prescription drugs approved under Product
3 License Approval (PLA), Establishment License Approval (ELA)
4 or Antibiotic Drug Approval (ADA); and
5 (2) a covered prescription drug marketed by a cross-
6 licensed producer or distributor under the approved Amended <--
7 ABBREVIATED New Drug Application (ANDA) when the drug product <--
8 meets this definition.
9 "Manufacturer."
10 (1) An entity which is engaged in any of the following:
11 (i) The production, preparation, propagation,
12 compounding, conversion or processing of prescription
13 drug products:
14 (A) directly or indirectly by extraction from
15 substances of natural origin;
16 (B) independently by means of chemical
17 synthesis; or
18 (C) by a combination of extraction and chemical
19 synthesis.
20 (ii) The packaging, repackaging, labeling or
21 relabeling, or distribution of prescription drug
22 products.
23 (2) The entity holding legal title to or possession of
24 the National Drug Code number for the covered prescription
25 drug.
26 (3) The term does not include a wholesale distributor of
27 drugs, drugstore chain organization or retail pharmacy
28 licensed by the Commonwealth.
29 "National drug code number." The identifying drug number
30 maintained by the FDA. The complete eleven digit number must
19910H1470B2445 - 24 -
1 include the labeler code, product code and package size code.
2 "New drug." A covered prescription drug approved as a new
3 drug under section 201(p) of the Federal Food, Drug, and
4 Cosmetic Act (52 Stat. 1040, 21 U.S.C. § 321(p)).
5 "Noninnovator multiple-source drug." Any of the following:
6 (1) A covered prescription drug which is not an
7 innovator multiple-source drug approved under an Amended <--
8 ABBREVIATED New Drug Application (ANDA) or an Amended <--
9 Antibiotic Drug Approval (AADA).
10 (2) A drug that has been approved for substitution under
11 the act of November 24, 1976 (P.L.1163, No.259), referred to
12 as the Generic Equivalent Drug Law.
13 "PACE Program." The program under Chapter 3.
14 "Price." Any consideration paid for a drug. The term <--
15 includes cash discounts, free goods, volume discounts and
16 rebates, educational grants or subsidies and other financial
17 incentives that a manufacturer offers, as an inducement to buy
18 the manufacturer's drug, to wholesalers; retailers; providers;
19 private and government entities, including, but not limited to,
20 hospitals and health maintenance organizations. Price is
21 determined regardless of special packaging labeling or
22 identifiers on the dosage form or product or package. The term
23 does not include depot prices of agencies of the Federal
24 Government or rebates under this chapter or research and
25 development grants made to medical institutions for educational
26 purposes.
27 "Private entity." Includes a for-profit entity and a
28 nonprofit entity.
29 "Provider." A pharmacy or dispensing physician enrolled as a
30 provider in the PACE Program or the General Assistance Program
19910H1470B2445 - 25 -
1 or a pharmacy licensed by the Commonwealth.
2 "Secretary." The Secretary of Aging of the Commonwealth.
3 "Single-source drugs." Legend drug products for which the
4 FDA has not approved an Amended ABBREVIATED New Drug Application <--
5 (ANDA).
6 "Unit." A discreet unit of a product, including but not <--
7 limited to a tablet or capsule, milliliters for liquid
8 formulations and grams for ointments and creams.
9 "UNIT." A DRUG UNIT IN THE LOWEST IDENTIFIABLE AMOUNT, SUCH <--
10 AS TABLET OR CAPSULE FOR SOLID DOSAGE FORMS, MILLILITER FOR
11 LIQUID FORMS AND GRAM FOR OINTMENTS OR CREAMS. THE MANUFACTURER
12 SHALL SPECIFY THE UNIT FOR EACH DOSAGE FORM AND STRENGTH OF EACH
13 COVERED PRESCRIPTION DRUG IN ACCORDANCE WITH THE INSTRUCTIONS
14 DEVELOPED BY THE HEALTH CARE FINANCING ADMINISTRATION FOR
15 PURPOSES OF THE FEDERAL MEDICAID REBATE PROGRAM UNDER SECTION
16 1927 OF TITLE XIX OF THE SOCIAL SECURITY ACT (PUBLIC LAW 74-271,
17 42 U.S.C. § 301 ET SEQ.).
18 "Wholesaler." Any person, partnership, corporation,
19 institution or entity to which the manufacturer sells the
20 covered prescription drug, including a pharmacy or chain of
21 pharmacies, but that does not relabel or repackage the covered
22 prescription drug.
23 Section 503. Rebate agreement.
24 (a) Requirement.--The PACE Program and the General
25 Assistance Program shall not reimburse for any covered
26 prescription drug without a rebate agreement between the
27 department and the manufacturer of the covered prescription
28 drug.
29 (b) Exception.--Subsection (a) shall not apply if all of the <--
30 following apply:
19910H1470B2445 - 26 -
1 (1) The covered prescription drug is rated "1-A,
2 'important' new drug," by the FDA.
3 (2) The availability of the drug is essential to the
4 health of eligible claimants as determined by the department.
5 (B) EXCEPTION.--SUBSECTION (A) SHALL NOT APPLY IF THE <--
6 AVAILABILITY OF THE DRUG IS ESSENTIAL TO THE HEALTH OF ELIGIBLE
7 CLAIMANTS AS DETERMINED BY THE DEPARTMENT.
8 (c) Agreements.--Manufacturers of prescription drugs
9 reimbursed under the PACE Program and the General Assistance
10 Program must enter into a rebate agreement with the department
11 within 60 120 days of the effective date of this chapter. If a <--
12 manufacturer has not entered into an agreement within the 60-day <--
13 120-DAY period, an agreement subsequently entered into shall not <--
14 be effective until the first day of the calendar quarter that
15 begins 60 120 days after the date the agreement is entered into. <--
16 (d) Notice.--The department shall notify enrolled providers
17 of the PACE Program on an annual basis and as appropriate of all
18 manufacturers who have entered into a rebate agreement.
19 (E) DRUG FORMULARY.--THERE SHALL BE NO DRUG FORMULARY, PRIOR <--
20 OR RETROACTIVE APPROVAL SYSTEM OR ANY SIMILAR RESTRICTION
21 IMPOSED ON THE COVERAGE OF OUTPATIENT DRUGS MADE BY
22 MANUFACTURERS WHO HAVE ENTERED INTO AGREEMENTS WITH THE
23 COMMONWEALTH TO PAY REBATES FOR DRUGS UTILIZED IN THE PACE
24 PROGRAM, PROVIDED THAT SUCH OUTPATIENT DRUGS WERE APPROVED FOR
25 MARKETING BY THE FOOD AND DRUG ADMINISTRATION PRIOR TO JULY 1,
26 1991.
27 Section 504. Terms of rebate agreement.
28 (a) Quarterly basis.--A rebate agreement shall require any
29 manufacturer of covered prescription drugs to provide to the
30 department a rebate each calendar quarter in an amount specified
19910H1470B2445 - 27 -
1 in section 505 for covered prescription drugs of the
2 manufacturer reimbursed during the quarter. The rebate shall be
3 paid by the manufacturer not later than 30 days after the date
4 of receipt of the information described in subsection (b) for
5 the period involved.
6 (b) Information.--
7 (1) The department shall report to each manufacturer,
8 not later than 60 days after the end of each calendar
9 quarter, information BY ZIP CODE OF PROVIDER on the total <--
10 number of dosage units of each covered prescription drug
11 reimbursed under the PACE Program and under the General
12 Assistance Program during the quarter.
13 (2) A manufacturer may review the information provided
14 under paragraph (1) and verify information. Adjustments to
15 rebates shall be made to the extent that information
16 indicates that utilization was greater or less than the
17 amount previously specified.
18 (3) In the event that, in any quarter, a material
19 discrepancy in the department's information is certified by
20 the manufacturer prior to the due date of the rebate, the
21 department and the manufacturer shall, in good faith, attempt
22 to resolve the discrepancy. If resolution is not reached
23 within 30 days of receipt of the manufacturer's certification
24 by the department, the manufacturer may appeal the
25 department's decision under the department's formal fair
26 hearings and appeals process. The manufacturer shall pay the
27 department that portion of the rebate amount which is not
28 disputed within the required time frame under this chapter.
29 Any balance due, plus statutory interest, shall be paid or
30 credited by the manufacturer or the department by the due
19910H1470B2445 - 28 -
1 date of the next quarterly payment after resolution of the
2 dispute.
3 (c) Manufacturer provisions PROVISION of price <--
4 information.--
5 (1) Each manufacturer with an agreement in effect under <--
6 this chapter shall report to the department, not later than
7 30 days after the last day of each quarter, all of the
8 following:
9 (i) The average manufacturer price.
10 (ii) For single-source drugs and innovator multiple-
11 source drugs:
12 (A) the manufacturer's best price for covered
13 prescription drugs for the quarter; and
14 (B) the best price in effect on July 1, 1990.
15 (iii) For new drugs, the best price in effect during
16 the first month of marketing of the new drug.
17 (1) EACH MANUFACTURER WITH AN AGREEMENT IN EFFECT UNDER <--
18 THIS CHAPTER SHALL REPORT THE AVERAGE MANUFACTURER PRICE FOR
19 ALL COVERED PRESCRIPTION DRUGS PRODUCED BY THAT MANUFACTURER
20 TO THE DEPARTMENT NOT LATER THAN 30 DAYS AFTER THE LAST DAY
21 OF EACH QUARTER.
22 (2) The department shall retain the services of an
23 independent contractor to survey wholesalers, direct sellers
24 and manufacturers that directly distribute their covered
25 prescription drugs, when necessary, to verify manufacturer
26 prices reported under paragraph (1). Any survey conducted
27 shall not reveal to the department nor to any other person or
28 entity other than the independent contractor the name,
29 identity, location, actual acquisition invoice, other
30 proprietary information or any information from which the
19910H1470B2445 - 29 -
1 department might be enabled to ascertain the name, identity
2 or location of any wholesaler, direct seller or provider so
3 surveyed unless the contractor shall have gathered sufficient
4 evidence to enable the department to bring charges against
5 any wholesaler, direct seller or provider in violation of
6 subsection (d)(3).
7 (d) Penalties.--The department shall administer penalties as
8 follows:
9 (1) A manufacturer who fails to supply information
10 required under subsection (c)(1) shall be liable for a civil
11 penalty in the amount of 2% of the rebate next required to be
12 paid, plus $1,000 for each day that the information is late.
13 If the information is not reported within 30 days of the due
14 date, the agreement shall be suspended for services furnished
15 after the end of the 30-day period until the date the
16 information is reported or the expiration of 45 days,
17 whichever is later.
18 (2) A manufacturer who knowingly supplies false
19 information that is required under subsection (c)(1) shall be
20 liable for a civil penalty in the amount of $50,000 for each
21 item of false information.
22 (3) A direct seller, manufacturer or wholesaler who
23 refuses a request for information, or knowingly provides
24 false information, that is required under subsection (c)(2)
25 shall be liable for a civil penalty in the amount of $50,000.
26 (4) Penalties collected under this subsection shall be
27 deposited into the fund.
28 (5) All civil monetary penalties imposed under this
29 chapter are in addition to other civil or criminal penalties.
30 (e) Confidentiality of information.--Information disclosed
19910H1470B2445 - 30 -
1 by manufacturers, wholesalers or direct sellers under this
2 chapter is confidential and shall not be disclosed by the
3 department in a form which discloses the identity of a specific
4 manufacturer, wholesaler or direct seller or the prices charged
5 for drugs by the manufacturer or wholesaler, except as the
6 department determines to be necessary to carry out this chapter
7 and to permit the Department of the Auditor General and the
8 Office of State Inspector General to review the information
9 provided.
10 (f) Length of agreement.--A rebate agreement shall remain in
11 effect for an initial period of not less than one year and shall
12 be automatically renewed for a period of not less than one year
13 unless terminated under subsection (g).
14 (g) Termination.--
15 (1) The department may provide for termination of a
16 rebate agreement for any reason. Termination shall not be
17 effective earlier than 60 days after the date of receipt of
18 notice of termination by the manufacturers.
19 (2) A manufacturer may terminate a rebate agreement for
20 any reason. Termination shall not be effective earlier than
21 60 days after the date of receipt of notice of termination by
22 the department.
23 (3) Termination of the rebate agreement shall not affect
24 rebates due under the agreement before the effective date of
25 termination.
26 (4) Commonwealth Court shall have original jurisdiction
27 over cases of termination of agreements under this
28 subsection. Commencement of an action under this paragraph
29 shall not delay the effective date of termination.
30 (5) If a rebate agreement is terminated for cause,
19910H1470B2445 - 31 -
1 another agreement with the same manufacturer or a successor
2 manufacturer may not be entered into until a period of one
3 year has elapsed from the date of the termination unless the
4 department finds good cause for an earlier agreement.
5 Section 505. Amount of rebate.
6 (a) Single-source drugs and innovator multiple-source <--
7 drugs.--
8 (1) With respect to single-source drugs and innovator
9 multiple-source drugs, each manufacturer shall remit a rebate
10 to the Commonwealth. Except as otherwise provided in this
11 section, the amount of the rebate to the Commonwealth per
12 calendar quarter with respect to each dosage form and
13 strength of single-source drugs and innovator multiple-source
14 drugs shall be equal to the product of the total number of
15 units of each dosage form and strength reimbursed by the PACE
16 Program and the General Assistance Program in the quarter and
17 one of the following:
18 (i) For quarters beginning after April 1, 1991, and
19 before January 1, 1993, the greater of the following:
20 (A) The difference between the average
21 manufacturer price and 87.5% of that price, after
22 deducting customary prompt payment discounts, for the
23 quarter.
24 (B) The difference between the average
25 manufacturer price for a drug and the best price.
26 Under this subparagraph, in no case shall the rebate
27 exceed 35% of the average wholesale price as published in
28 the Medical Economics Drug Topics Redbook as of July 1,
29 1990, increased by the percentage increase in the
30 Consumer Price Index-Urban from July 1, 1990, to the
19910H1470B2445 - 32 -
1 month before the beginning of the calendar quarter
2 involved.
3 (ii) For quarters beginning after December 31, 1992,
4 the greater of the following:
5 (A) The difference between the average
6 manufacturer price for a drug and 85% of that price.
7 (B) The difference between the average
8 manufacturer price for a drug and the best price for
9 the quarter for that drug.
10 (2) Rebates for a covered prescription drug based on
11 paragraph (1)(i)(B) may not exceed the rebate amount for a
12 covered prescription drug under the provisions of Title IV,
13 Subtitle B, of the Omnibus Budget Reconciliation Act of 1990
14 (Public Law 101-508, 104 Stat. 1388), relating to
15 pharmaceutical access and prudent purchasing of
16 pharmaceutical materials until the earlier of the following:
17 (i) The date state pharmaceutical programs are
18 exempted from such legislation.
19 (ii) October 1, 1991.
20 (A) SINGLE-SOURCE DRUGS AND INNOVATOR MULTIPLE-SOURCE <--
21 DRUGS.--WITH RESPECT TO SINGLE-SOURCE DRUGS AND INNOVATOR
22 MULTIPLE-SOURCE DRUGS, EACH MANUFACTURER SHALL REMIT A REBATE TO
23 THE COMMONWEALTH. EXCEPT AS OTHERWISE PROVIDED IN THIS SECTION,
24 THE AMOUNT OF THE REBATE TO THE COMMONWEALTH PER CALENDAR
25 QUARTER WITH RESPECT TO EACH DOSAGE FORM AND STRENGTH OF SINGLE-
26 SOURCE DRUGS AND INNOVATOR MULTIPLE-SOURCE DRUGS SHALL BE EQUAL
27 TO THE PRODUCT OF THE TOTAL NUMBER OF UNITS OF EACH DOSAGE FORM
28 AND STRENGTH REIMBURSED BY THE PACE PROGRAM AND THE GENERAL
29 ASSISTANCE PROGRAM IN THE QUARTER AND THE DIFFERENCE BETWEEN THE
30 AVERAGE MANUFACTURER PRICE AND 87.5% OF THAT PRICE, AFTER
19910H1470B2445 - 33 -
1 DEDUCTING CUSTOMARY PROMPT PAYMENT DISCOUNTS, FOR THE QUARTER,
2 WHICH REBATE SHALL BE APPLICABLE FOR QUARTERS BEGINNING ON AND
3 AFTER JANUARY 1, 1991.
4 (b) Rebate for other drugs.--
5 (1) The amount of the rebate to the Commonwealth for a
6 calendar quarter with respect to covered prescription drugs
7 which are noninnovator multiple-source drugs shall be equal
8 to the product of:
9 (i) the applicable percentage of the average
10 manufacturer price, after deducting customary prompt
11 payment discounts, for each dosage form and strength of
12 such drugs for the quarter; and
13 (ii) the number of units of such form and dosage
14 reimbursed by the PACE Program and the General Assistance
15 Program in the quarter.
16 (2) For the purposes of paragraph (1), the applicable <--
17 percentage is:
18 (i) with respect to calendar quarters beginning
19 after April 1, 1991, and ending before January 1, 1994,
20 10%; and
21 (ii) with respect to calendar quarters beginning on
22 or after December 31, 1993, 11%.
23 (2) FOR THE PURPOSES OF PARAGRAPH (1), THE APPLICABLE <--
24 PERCENTAGE FOR CALENDAR QUARTERS BEGINNING AFTER JANUARY 1,
25 1991, IS 10%.
26 (C) DRUGS APPROVED AFTER ACT TAKES EFFECT.--IN THE CASE OF A
27 COVERED OUTPATIENT DRUG APPROVED FOR MARKETING AFTER THE
28 EFFECTIVE DATE OF THIS ACT, ANY REFERENCE TO JANUARY 1, 1991,
29 SHALL BE A REFERENCE TO THE FIRST DAY OF THE FIRST MONTH DURING
30 WHICH THE DRUG WAS MARKETED.
19910H1470B2445 - 34 -
1 Section 506. Exemption.
2 Section 306(a) shall not apply to rebates under this chapter.
3 Section 507. Disposition of funds.
4 (a) PACE Program.--Money received under this chapter in
5 connection with the PACE Program shall be deposited in the
6 Pharmaceutical Assistance Contract for the Elderly Fund.
7 (b) General Assistance Program.--Money received under this
8 chapter in connection with the General Assistance Program shall
9 augment the medical assistance outpatient appropriation to the
10 Department of Public Welfare.
11 Section 508. Existing agreements.
12 Any rebate agreement between the department and a
13 manufacturer entered into prior to the effective date of this
14 chapter shall remain in effect and be considered a rebate
15 agreement in compliance with this chapter until the agreement
16 expires or until either party terminates the agreement.
17 SECTION 509. EXPIRATION OF CHAPTER. <--
18 THIS CHAPTER SHALL EXPIRE JULY 1, 1992, UNLESS REENACTED BY
19 THE GENERAL ASSEMBLY.
20 CHAPTER 7
21 TRANSPORTATION SERVICES
22 Section 701. Definitions.
23 The following words and phrases when used in this chapter
24 shall have the meanings given to them in this section unless the
25 context clearly indicates otherwise:
26 "Shared ride public transportation services." Demand
27 responsive transportation that is available to the general
28 public, operates on a nonfixed route basis and charges a fare to
29 all riders. For transportation to be included in this
30 definition, the first fare paying passengers to enter the public
19910H1470B2445 - 35 -
1 transportation vehicle must not refuse to share the vehicle with
2 other passengers during a given trip. The term excludes
3 exclusive ride taxi service, charter and sightseeing services,
4 nonpublic transportation, transportation to and from airports <--
5 and school bus and limousine services.
6 Section 702. Department of Transportation.
7 The Department of Transportation has the power and duty to
8 make grants from the fund to transportation companies, county
9 transportation systems and local transportation organizations to
10 pay estimated transit losses resulting from providing free
11 service or local common carrier mass transportation systems to
12 persons 65 years of age or older when passage is on fixed route
13 public transportation services during nonpeak riding hours and
14 on holidays and weekends. Reimbursement shall be as follows:
15 (1) The losses resulting from granting service on mass
16 transportation systems shall be reimbursable at 100% of the
17 system's average or base fare, whichever is less, multiplied
18 by the number of trips made by senior citizens participating
19 in the free transit program.
20 (2) Notwithstanding paragraph (1), the department shall,
21 with the approval of the Governor's Office of the Budget,
22 reimburse transportation companies or local transportation
23 organizations for 100% of the losses resulting from senior
24 citizen transfer trips incurred under the conditions of this
25 subsection.
26 (3) Money appropriated from the General Fund to the
27 Department of Transportation to augment fixed route public
28 transportation services under this section shall be granted
29 to transportation providers at the discretion of the
30 Department of Transportation.
19910H1470B2445 - 36 -
1 SECTION 703. COMMUTER RAIL FARE. <--
2 WITH REGARD TO PASSAGE ON FIXED ROUTE COMMUTER RAIL LINES,
3 THE FARE FOR ADULTS 65 YEARS OF AGE OR OLDER WHO DO NOT QUALIFY
4 AS ELIGIBLE CLAIMANTS UNDER THE PHARMACEUTICAL ASSISTANCE
5 CONTRACT FOR THE ELDERLY PROGRAM SHALL BE LIMITED TO $1 PER TRIP
6 BUT ONLY WHEN UTILIZING SUCH TRANSPORTATION SERVICES DURING
7 NONPEAK RIDING HOURS AND ON HOLIDAYS AND WEEKENDS.
8 Section 703 704. Human service shared ride transportation <--
9 services for older adults.
10 (a) Program grants.--The Department of Transportation has
11 the power and duty to administer, utilizing a fixed amount of
12 money from the fund as appropriated by the General Assembly, a
13 program providing shared ride public transportation services for
14 adults 65 years of age or older. Individuals utilizing shared
15 ride public transportation services for older adults shall
16 contribute 15% of the individual fare and 85% of the individual
17 fare shall be reimbursed by the fund.
18 (b) Future options.--
19 (1) The department, in cooperation with the Department
20 of Transportation, shall conduct a study addressing options
21 for future administration of the shared ride program. The
22 department shall report its findings to the Aging and Youth
23 Committee of the Senate and the Aging and Youth Committee of
24 the House of Representatives by March 1, 1992.
25 (2) The department and the Department of Transportation
26 shall conduct a study of the existing shared ride programs
27 for cities of the first class. The study shall include
28 information on ridership levels, complaints per 1,000 rides,
29 telephone service, public information efforts, no-show
30 analysis, contract enforcement and other concerns identified
19910H1470B2445 - 37 -
1 by the departments. The completed study, with appropriate
2 recommendations for the operation of the shared ride programs
3 in cities of the first class, shall be submitted to the Aging
4 and Youth Committee, the Appropriations Committee and the
5 Transportation Committee of the Senate and to the Aging and
6 Youth Committee, the Appropriations Committee and the
7 Transportation Committee of the House of Representatives by
8 February 7, 1992. After review of the study, the General
9 Assembly may, by resolution, direct the Department of
10 Transportation to consider, by May 1, 1992, alternate
11 approaches to the provision of shared ride services in cities
12 of the first class. After submission of the study under this
13 paragraph and before June 30, 1992, the Department of
14 Transportation and contracted providers of shared ride
15 services in cities of the first class may incorporate
16 recommendations from the study into existing contracts.
17 (3) BY NOVEMBER 15, 1991, THE DEPARTMENT OF <--
18 TRANSPORTATION SHALL COMPARE THE AVERAGE SHARED RIDE PUBLIC
19 TRANSPORTATION RIDERSHIP LEVELS IN CITIES OF THE FIRST CLASS
20 FOR THE MONTHS OF AUGUST, SEPTEMBER AND OCTOBER IN 1990 AND
21 1991. IF THE AVERAGE RIDERSHIP IN AUGUST, SEPTEMBER AND
22 OCTOBER 1991 IS NOT AT LEAST 85% OF THE RIDERSHIP IN THE SAME
23 MONTHS OF 1990, THE DEPARTMENT OF TRANSPORTATION SHALL DEEM
24 ALL CONTRACTS RELATING TO SHARED RIDE PUBLIC TRANSPORTATION
25 IN CITIES OF THE FIRST CLASS IN DEFAULT AND SHALL CANCEL ALL
26 SUCH CONTRACTS CONSISTENT WITH THE TERMS OF THE CONTRACT.
27 (c) Regulations.--The Department of Transportation shall
28 promulgate regulations necessary to carry out the purposes of
29 this section, INCLUDING REGULATIONS THAT PERMIT LIMITED <--
30 REIMBURSEMENT FOR SHARED RIDE PUBLIC TRANSPORTATION SERVICES
19910H1470B2445 - 38 -
1 PROVIDING ACCESS TO AND FROM PUBLIC AIRPORTS. The Department of
2 Transportation, in consultation with the Pennsylvania Public
3 Utility Commission and the department, shall establish
4 reasonable per mile or trip fare limits for purposes of
5 subsection (a). In accordance with section 2203-A(27) of the act
6 of April 9, 1929 (P.L.177, No.175), known as The Administrative
7 Code of 1929, no regulation shall take effect until submitted to
8 the department for comment.
9 (D) COORDINATED TRANSPORTATION PLANS.--THE DEPARTMENT OF <--
10 TRANSPORTATION SHALL REQUIRE THAT EACH TRANSPORTATION PROVIDER
11 OR DESIGNATED COORDINATOR, WHICHEVER IS APPROPRIATE, ANNUALLY
12 DEVELOP A COORDINATED TRANSPORTATION PLAN WHICH SHALL INCLUDE,
13 BUT NOT BE LIMITED TO, ANY CURRENT FIXED ROUTE SYSTEM AND SHARED
14 RIDE PROGRAMS. ALL PLANS MUST BE SUBMITTED TO AND APPROVED BY
15 THE DEPARTMENT NO LATER THAN JUNE 1 OF EACH FISCAL YEAR.
16 (E) OTHER FORMS OF ASSISTANCE.--ANY ELIGIBLE CLAIMANT WHOSE
17 TRANSPORTATION SERVICES ARE COVERED IN PART BY ANY OTHER PLAN OF
18 ASSISTANCE MAY BE REQUIRED TO RECEIVE REDUCED TRANSPORTATION
19 ASSISTANCE UNDER THE PROVISIONS OF THIS CHAPTER.
20 (d) (F) Entitlement not created.--Nothing in this chapter <--
21 creates or provides any individual with an entitlement to
22 services. It is the intent of the General Assembly that services
23 under this chapter shall be made available only to the extent of
24 the availability and level of appropriations made by the General
25 Assembly.
26 CHAPTER 9
27 MISCELLANEOUS PROVISIONS
28 Section 901. Savings.
29 (a) General rule.--This act does not affect any act done,
30 regulation promulgated, liability incurred or right accrued or
19910H1470B2445 - 39 -
1 vested or affect any civil or criminal proceeding pending or to
2 be commenced to enforce any right or penalty or punish any
3 offense under any statute or part of a statute repealed by this
4 act.
5 (b) References.--The reference to the act of January 22,
6 1968 (P.L.42, No.8), known as the Pennsylvania Urban Mass
7 Transportation Assistance Law of 1967, in section 12 of the act
8 of August 26, 1971 (P.L.351, No.91), known as the State Lottery
9 Law, shall be deemed a reference to Chapter 7.
10 Section 902. Severability.
11 The provisions of this act are severable. If any provision of
12 this act or its application to any person or circumstance is
13 held invalid, the invalidity shall not affect other provisions
14 or applications of this act which can be given effect without
15 the invalid provision or application.
16 Section 903. Repeals.
17 (a) Inflation dividends.--The act of March 11, 1971
18 (P.L.104, No.3), known as the Senior Citizens Rebate and
19 Assistance Act, reenacted and amended December 21, 1979
20 (P.L.570, No.131), is repealed insofar as it relates to
21 inflation dividends.
22 (b) Specific repeals.--The following acts and parts of acts
23 are repealed:
24 (1) The following provisions of the act of January 22,
25 1968 (P.L.42, No.8), known as the Pennsylvania Urban Mass
26 Transportation Law:
27 (i) The definition of "shared ride public
28 transportation services" in section 202.
29 (ii) Section 203(5).
30 (2) The act of November 4, 1983 (P.L.217, No.63), known
19910H1470B2445 - 40 -
1 as the Pharmaceutical Assistance Contract for the Elderly
2 Act.
3 (3) The last three sentences of section 1901(c)(16) of
4 Title 75 of the Pennsylvania Consolidated Statutes.
5 (c) Inconsistent repeals.--All acts and parts of acts are
6 repealed insofar as they are inconsistent with this act.
7 Section 904. Applicability.
8 The rebate provisions of Chapter 5 shall apply retroactively <--
9 to April AND SECTION 903(A) SHALL BE RETROACTIVE TO JANUARY 1, <--
10 1991.
11 Section 905. Effective date.
12 This act shall take effect immediately.
E13L72VDL/19910H1470B2445 - 41 -