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S.178

Introduced by Senator Rivers of Windsor County

Referred to Committee on

Date:

Subject: Human services; VScript; federally-qualified health centers; cost-effective prescription drug prescribing practices; cigarette taxes

Statement of purpose: This bill proposes to establish a universally-accessible prescription drug insurance program within the VScript pharmaceutical assistance program, to support the establishment of new federally-qualified health centers, to create incentives and provide financial support for cost-effective prescription drug prescribing practices, and to increase the cigarette tax.

AN ACT RELATING TO A UNIVERSALLY-ACCESSIBLE PRESCRIPTION DRUG INSURANCE PROGRAM

It is hereby enacted by the General Assembly of the State of Vermont:

Part A. VScript; VScript Prescription Drug Insurance Program

Sec. 1. 33 V.S.A. § 2000 is added to read:

§ 2000. VSCRIPT PRESCRIPTION DRUG INSURANCE PROGRAM

(a) The commissioner of prevention, assistance, transition, and health access shall establish a VScript prescription drug insurance program: a universally-accessible, comprehensive insurance program offering coverage of medically-necessary prescription drugs to all Vermonters.

(b) Any Vermont resident, and any insured or self-insured group on behalf of Vermont resident beneficiaries, may enroll in the VScript prescription drug insurance program subject to the payment of such copayment, coinsurance, premium, deductible or other cost-sharing amounts as are established by the commissioner. The premiums, deductibles, copayments and other cost-sharing amounts may be calculated from a sliding scale formula based on the beneficiary’s household income, in an amount and for such periods as the commissioner shall establish.

(c) The commissioner may require any health insurance plan offered by an agency or instrumentality of the state, and any health insurance plan offered by a health insurer, as defined in subdivision 9402(7) of Title 8, to permit plan beneficiaries to enroll in the VScript prescription drug insurance program, unless the plan’s alternative purchasing program for prescription drugs will provide greater economic or other benefits to plan beneficiaries.

(d) Premium, deductible, copayment and other cost-sharing amounts shall be established so that total revenue, in addition to such amounts as are annually appropriated by the general assembly to provide subsidized financial support for eligible beneficiaries, is sufficient to pay for the cost of benefits and claims for beneficiaries of the insurance program, including such reserves as the commissioner determines are needed to account for adverse selection, administrative costs and other unanticipated costs. The program may adjust premium, deductible, coinsurance, copayment and other cost-sharing amounts annually to account for any change in the cost of benefits. The commissioner shall establish an enrollment period for applications for coverage under this subsection.

(e) The department shall monitor enrollment on a monthly basis in the VScript prescription drug insurance program. In the event that appropriations and beneficiary revenue in any fiscal year are not sufficient to support the payment of benefits and claims for all otherwise eligible individuals under this section, the department shall limit enrollments for subsidized coverage, amend cost-sharing amounts, or take any other administrative actions necessary to ensure that expenditures do not exceed the costs of the program in any fiscal year.

Sec. 2. 33 V.S.A. § 2001 is added to read:

§ 2001. VERMONT PRESCRIPTION DRUG COST CONTROLS

The commissioner may establish, by rule, one or more of the following prescription drug cost control, utilization and price reduction mechanisms for the purpose of increasing the affordability of medically-necessary prescription drugs for Vermonters:

(1) The commissioner may negotiate discounts and receive manufacturer rebates on behalf of the beneficiaries of Medicaid, the VHAP pharmacy program, the pharmacy discount plan, the VScript pharmaceutical assistance programs administered under this chapter and any other pharmacy assistance program administered by or on behalf of the state of Vermont.

(2) The commissioner may negotiate and contract with prescription drug manufacturers, wholesale suppliers or any other entity, separately or in concert with any public or private health benefit plan or prescription drug purchasing entity within or outside this state, for the establishment of prescription drug price schedules, discounts, rebates and any other cost-control mechanism, for the benefit of the beneficiaries of Medicaid, the VHAP pharmacy program, the pharmacy discount plan, the VScript pharmaceutical assistance programs administered under this chapter and any other pharmacy assistance program administered by or on behalf of the state of Vermont.

(3)(A) The commissioner may contract with a third party, separately or in concert with any public or private health benefit plan or prescription drug purchasing entity within or outside this state, to administer a pharmacy benefit management program for purposes including the following:

(i) education for health care providers, pharmacists and patients designed to improve the quality and cost-effectiveness of prescription drug therapies;

(ii) the establishment of a formulary to purchase

medically-necessary prescription drugs at the lowest possible cost; and

(iii) utilization review of prescription drug purchases.

(B) The pharmacy benefit management program may be established for the benefit of the beneficiaries of Medicaid, the VHAP pharmacy program, the pharmacy discount plan, the VScript pharmaceutical assistance programs administered under this chapter, any other pharmacy assistance program administered by or on behalf of the state of Vermont and any other public or private health benefit plan within or outside this state.

Sec. 3. 33 V.S.A. § 1991(3) is amended to read:

(3) "Drug" means a drug that may not be dispensed unless prescribed by a health care provider as defined by section 9402(6) of this title acting within the scope of the provider’s license. A drug shall always be the lowest cost brand available to the pharmacist unless the health care provider writing the prescription specifies otherwise. The term includes insulin, an insulin syringe and an insulin needle. The term excludes:

(A) a drug determined less than effective under the federal Food, Drug and Cosmetics Act;

(B) except for purposes of the prescription drug insurance program, a drug within therapeutic classifications primarily associated with the treatment of acute medical conditions; and

(C) a central nervous system agent other than:

(i) agents used for treatment of convulsive disorders;

(ii) nonsteroidal anti-inflammatory agents for arthritis; and

(iii) agents used primarily for control of psychotic conditions diagnosed under current classifications of the Diagnostic Statistical Manual.

Sec. 4. 33 V.S.A. § 1993 is amended to read:

§ 1993. ELIGIBILITY

(a)*[(1)]* A person shall be eligible for assistance under this chapter if*[:

(A)]* he or she is a resident of Vermont at the time of application for benefits *[and has been such, continuously, for the 12 months immediately preceding application;]*, as defined by the commissioner by rule; and if

*[

(B) he]* (1) VScript: Medicaid-funded and state-funded eligibility. He or she is at least 65 years of age, or disabled and receives Social Security disability benefits (SSDI)*[,]* or is a Medicare beneficiary*[;]* , and

*[

(C)]* the person’s household income, when calculated in accordance with the rules adopted for the Vermont health access plan under Act No. 14 of the Acts and Resolves of the 1995 Session of the general assembly, as amended, is no greater than 225 percent of the federal poverty level; or

(2) The VScript prescription drug insurance program. The person is enrolled in the VScript prescription drug insurance program, a universally-accessible, comprehensive insurance program offering coverage of medically-necessary prescription drugs to all Vermonters, and is subject to a schedule of monthly premiums, annual deductible amounts, coinsurance, copayment and other cost-sharing payments established by the commissioner, based on a sliding scale of annual household income as determined by the commissioner.

*[

(2)]*(b) A person shall be eligible for assistance with prescription drug expenses covered under this chapter upon payment of the cost sharing amount required by section *[254]* 1994 of this title.

*[

(b)]*(c) A person whose prescription drug expenses are paid or reimbursable, either in whole or in part, by any plan of assistance or insurance, other than Title XVIII of the Social Security Act (Medicare), shall not be eligible for pharmaceutical assistance under *[this chapter]* subdivision (a)(1) of this section. No assistance shall be provided under this chapter with respect to an individual drug purchase that may be covered in whole or in part by Title XVIII of the Social Security Act (Medicare).

Sec. 5. 33 V.S.A. § 1994(a) is amended to read:

(a) Benefits under this chapter shall be subject to payment of *[a co-payment]* *[or]* copayment, coinsurance *[amount]*, premium, deductible or other cost-sharing amounts by the recipient in accordance with the provisions of this section:

(1) Medicaid-funded VScript. In the case of recipients eligible for assistance under subdivision 1993(a)(1) of this title with income of less than *[176]* or equal to 175 percent of the federal poverty level, *[such co-payment]* the copayment shall be the same *[co-payment]* copayment requirements that exist under the pharmaceutical benefits component of the Vermont health access plan under Act No. 14, Sec. 14(a)(6) of the Acts and Resolves of the 1995 Session of the general assembly, as amended.

(2) State-funded VScript. In the case of recipients eligible for assistance under subdivision 1993(a)(1) of this title whose household income is *[176]* greater then 175 percent of the federal poverty level *[or more and no greater than]* and less than or equal to 225 percent of the federal poverty level the coinsurance payment shall be 50 percent of the cost of the drug.

(3) The VScript prescription drug insurance program. For recipients enrolled in the VScript prescription drug insurance program under section 2000 of this title, benefits shall be subject to the payment of such copayment, coinsurance, premium, deductible or other cost-sharing amounts as are established by the commissioner.

Sec. 6. PROGRAM IMPLEMENTATION; APPROPRIATIONS

(a) The commissioner of prevention, assistance, transition, and health access shall implement the provisions of Secs. 1 through 4 of this act (VScript prescription drug insurance program) on or before September 1, 2001.

(b) The amount of $25,000,000.00 is appropriated from the Vermont health access trust fund to the department of prevention, assistance, transition, and health access in fiscal year 2002 to support the VScript prescription drug insurance program.

Part B. Federally-Qualified Health Centers

Sec. 7. FEDERALLY-QUALIFIED HEALTH CENTERS

(a) It is the purpose of this section to assist Vermonters to purchase prescription drugs at the lowest possible cost, and to advance Vermont’s goal of affordable access to quality health care for all Vermonters through the expansion and development of federally-qualified health centers throughout this state. The general assembly finds that an appropriate expansion of federally-qualified health centers can:

(1) empower communities to create a system of universal access to primary health care that people need;

(2) create a partnership between Vermonters who use health care services and Vermonters who provide those services;

(3) reduce health care costs for patients through administration of an income-based sliding scale fee schedule for primary health care services;

(4) expand access to health care in medically-underserved areas, and reduce cost shifting to private health insurance plans through a service-based reimbursement schedule for primary health care providers that is determined by the reasonable cost of the services provided; and

(5) reduce health care costs for individuals, businesses and government through access to the Federal Supply Schedule’s substantially discounted prescription drug prices.

(b) Within 45 days of passage of this act, the governor is directed to request from the federal government medically-underserved area designations, and any other designation or approval needed to establish federally-qualified health centers or other entities permitted to access the Federal Supply Schedule for prescription drugs in all appropriate regions of the state of Vermont not so designated on the effective date of this act, and to take all steps necessary to secure such designations and approvals.

(c) Within 30 days of passage of this act, the department of health shall award a contract to implement the provisions of this section, and shall award to the contractor such funds as are appropriated by the general assembly to carry out the purpose of this section.

(d) The contract awarded by the department of health to carry out the purposes of this section shall provide for the following:

(1) the development and implementation of a plan to create an appropriate number of federally-qualified health center administrative entities statewide, with such satellite facilities as the federally-qualified health center administrative entities may determine are necessary to meet the health care needs of the community;

(2) technical assistance, by contract or other means, to rural health centers and health care providers seeking federal approval as a federally-qualified health center;

(3) grants not to exceed $10,000.00 to rural health centers and health care providers, matched by the grant recipient at 50 percent of the grant amount, to support all or a portion of the expenses associated with conversion to a federally-qualified health center;

(4) grants not to exceed $10,000.00 to nonprofit community organizations, matched by the grant recipient at 50 percent of the grant amount, to support all or a portion of the expenses associated with the establishment of federally-qualified health center administrative entities; and

(5) the development and implementation of plans to ensure that each federally-qualified health center operating in this state provides access to prescription drugs to patients of the center at Federal Supply Schedule prices, through contracts with existing pharmacies in the community, or through a health center dispensary if a contract with a community pharmacy is not feasible.

(e) The commissioner of health and the commissioner’s contractor shall report to the general assembly on January 1 of each year with an assessment of the progress in implementing the provisions of this section, and with an accounting of its use of grant funds.

(f) Vermont’s Congressional Delegation is urged to take all actions necessary and desirable in securing designations, approvals and other actions by the federal government required to carry out the purposes of this section.

(g) The commissioner of health may exercise sole source contracting authority to carry out the provisions of this section.

Sec. 8. APPROPRIATIONS; FEDERALLY-QUALIFIED HEALTH

CENTERS

The sum of $277,000.00 is appropriated to the department of health from the Vermont health access trust fund in fiscal year 2002 to support a contract to carry out the purposes of Sec. 7 of this act. The department of health shall report to the general assembly on or before January 1, 2002, identifying the funds necessary to carry out the purposes of Sec. 7 of this act in fiscal year 2003.

Part C. Cost-Effective Prescribing Practices

Sec. 9. COST-EFFECTIVE PRESCRIPTION DRUG PRESCRIBING

PRACTICES; COUNTER-MARKETING

(a) The commissioner of prevention, assistance, transition, and health access shall establish a supplemental Medicaid reimbursement rate for health care providers who engage in cost-effective prescription drug prescribing practices approved by the commissioner. Such practices shall include participation in the "Canada Rx" program administered by United Health Alliance of Bennington, Vermont, and may include such other cost-effective prescribing practices identified by the commissioner.

(b) The commissioner shall establish a program of consumer counterdetailing and academic detailing that educates consumers and physicians on the therapeutic and cost-effective utilization of prescription drugs, developed in a manner designed to counteract the marketing efforts of pharmaceutical companies directed at physicians, and to counteract direct-to-consumer advertising, and developed in coordination with similar programs administered throughout the state.

(c) The amount of $223,000.00 is appropriated to the commissioner from the Vermont health access trust fund in fiscal year 2002 to support the program of consumer counterdetailing and academic detailing established under subsection (b) of this section.

Part C. Cigarette Taxes

Sec. 10. 32 V.S.A. § 7771 is amended to read:

§ 7771. RATE OF TAX

A tax is imposed on all cigarettes held in this state by any person for sale or by any person in possession of more than 10,000 cigarettes, unless such cigarettes shall be:

(1) in the possession of a licensed wholesale dealer;

(2) in the course of transit and consigned to a licensed wholesale dealer or retail dealer; or

(3) in the possession of a retail dealer who has held the cigarettes for 24 hours or less. Such tax shall be at the rate of *[22]* 55.5 mills for each cigarette and the payment thereof to be evidenced by the affixing of stamps to the packages containing the cigarettes, as hereinafter provided. Any cigarette on which the tax imposed by this chapter has been paid, such payment being evidenced by the affixing of such stamp, shall not be subject to a further tax under this chapter. Nothing contained in this chapter shall be construed to impose a tax on any transaction the taxation of which by this state is prohibited by the constitution of the United States. The amount of taxes advanced and paid by a licensed wholesale dealer or a retail dealer as herein provided shall be added to and collected as part of the retail sale price on the cigarettes. All taxes upon cigarettes under this chapter are declared to be a direct tax upon the consumer at retail and shall conclusively be presumed to be precollected for the purpose of convenience and facility only.

Sec. 11. 32 V.S.A. § 7814(b) is amended to read:

(b) Cigarettes. Notwithstanding the prohibition against further tax on stamped cigarettes under section 7771 of this title, a floor stock tax is hereby imposed upon every dealer of cigarettes in this state who is either a wholesaler, or a retailer who at 12:01 a.m. o’clock on July 1, *[1995]* 2001, has more than 10,000 cigarettes for retail sale in his or her possession or control. The rate of tax shall be *[12]* 33.5 mills for each cigarette in the possession or control of the wholesaler or retailer at 12:01 a.m. o’clock on July 1, *[1995]* 2001, and on which cigarette stamps have been affixed before July 1, *[1995]* 2001. A floor stock tax is also imposed on each Vermont cigarette stamp in the possession or control of the wholesaler at 12:01 a.m. o’clock on July 1, *[1995]* 2001, and not yet affixed to a cigarette package, and the tax shall be at the rate of *[24]* 67 cents per stamp. Each wholesaler and retailer subject to the tax shall, on or before July 25, *[1995]* 2001, file a report to the commissioner in such form as the commissioner may prescribe showing the cigarettes and stamps on hand at 12:01 a.m. o’clock on July 1, *[1995]* 2001, and the amount of tax due thereon. The tax imposed by this section shall be due and payable on or before July 25, *[1995]* 2001, and thereafter shall bear interest at the rate established under section 3108 of this title. In case of timely payment of the tax, the wholesaler or retailer may deduct from the tax due two and three-tenths of one percent of the tax. Any cigarettes with respect to which a floor stock tax has been imposed under this section shall not again be subject to tax under section 7771 of this title.

Sec. 12. 32 V.S.A. § 7811 is amended to read:

§ 7811. IMPOSITION OF TOBACCO PRODUCTS TAX

There is hereby imposed and shall be paid a tax on all tobacco products possessed in the state of Vermont by any person for sale on and after July 1, 1959 which were imported into the state or manufactured in the state after said date, except that no tax shall be imposed on tobacco products sold under such circumstances that this state is without power to impose such tax, or sold to the United States, or sold to or by a voluntary unincorporated organization of the armed forces of the United States operating a place for the sale of goods pursuant to regulations promulgated by the appropriate executive agency of the United States. Such tax on tobacco products shall be at the rate of *[41]* 103.4 percent of the wholesale price and is intended to be imposed only once upon any tobacco product. Provided, however, that upon payment of the tax within ten days, the distributor or dealer may deduct from the tax two percent of the tax due. It shall be presumed that all tobacco products within the state are subject to tax until the contrary is established and the burden of proof that any tobacco products are not taxable hereunder shall be upon the person in possession thereof.

Sec. 13. 32 V.S.A. § 7814(a) is amended to read:

§ 7814. FLOOR STOCK TAX

(a) Tobacco products. A floor stock tax is hereby imposed upon every retailer of tobacco products in this state at the rate of *[21]* 62.4 percent of the wholesale price of each tobacco product. The tax shall apply to tobacco products in the possession or control of the retailer at 12:01 a.m. o’clock on July 1, *[1995]* 2001, but shall not apply to retailers who hold less than $500.00 in wholesale value of such tobacco products. Each retailer subject to the tax shall, on or before July 25, *[1995]* 2001, file a report to the commissioner in such form as the commissioner may prescribe showing the tobacco products on hand at 12:01 a.m. o’clock on July 1, *[1995]* 2001, and the amount of tax due thereon. The tax imposed by this section shall be due and payable on or before July 25, *[1995]* 2001, and thereafter shall bear interest at the rate established under section 3108 of this title. In case of timely payment of the tax, the retailer may deduct from the tax due two percent of the tax. Any tobacco product with respect to which a floor stock tax has been imposed and paid under this section shall not again be subject to tax under section 7811 of this title.

Sec. 14. EFFECTIVE DATES

This act shall take effect on passage, except that:

(1) Sec. 10 of this act shall apply to taxable cigarettes on and after July 1, 2001; and

(2) Sec. 12 of this act shall apply to taxable tobacco products on and after July 1, 2001.