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S.131

Introduced by Senator Bloomer of Rutland County

Referred to Committee on

Date:

Subject: Health; prescription drugs

Statement of purpose: This bill proposes to:

(1) organize and fund public prescription drug education, countermarketing and substitution strategies to balance the effect of pharmaceutical company marketing behavior;

(2) establish consumer protection procedures in connection with the use of prescription drug formularies;

(3) assist in the creation of new federally-qualified health centers that can dispense low cost prescription drugs;

(4) authorize a VScript catastrophic drug expense program;

(5) authorize the expansion of the Vermont Health Access Plan – Pharmacy program and the VScript program to permit all Vermonters to enroll and gain access to reduced-cost prescription drugs;

(6) create a statewide, coordinated system of access to pharmaceutical manufacturer patient assistance programs; and

(7) create a joint legislative commission on regional cooperation on prescription drugs.

AN ACT RELATING TO PRESCRIPTION DRUG COST CONTAINMENT AND AFFORDABLE ACCESS

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

Part A. Therapeutic and Cost-Effective Utilization of Prescription Drugs

Sec. 1. 33 V.S.A. § 1998 is added to read:

§ 1998. THERAPEUTIC AND COST-EFFECTIVE UTILIZATION OF

PRESCRIPTION DRUGS

The commissioner of prevention, assistance, transition, and health access shall develop a therapeutic and cost-effective prescription drug education and utilization system designed to promote therapeutic and cost-effective utilization of prescription drugs by patients. In developing the system the commissioner may request the participation of the commissioner of banking, insurance, securities, and health care administration, the commissioner of health, Vermont physicians, hospitals used by Vermont patients, Vermont pharmacists, public and private health benefit plans, consumer representatives, the board of medical practice, the board of osteopathic physicians and surgeons, the board of nursing, the board of pharmacy, any other appropriate licensing boards, and any other interested party. The commissioner is authorized to solicit, accept and spend public and private grants, contributions and other funds to match public funds appropriated to carry out the purposes of this section. The system may include:

(1) the establishment of an electronic database or other information resources containing information indicating which equally effective prescription drug or drugs within the same therapeutic class are the least costly for the consumer and the consumer’s health plan. The electronic database may also include the capability of creating, for the purpose of promoting

medically-appropriate and cost-effective prescription drug utilization, a confidential, individual prescription drug record for participating patients, including the identity of prescribing health care professionals and dispensing pharmacies, within a secure communications network connecting physicians, pharmacists and patients. The database shall be designed for use by physicians, hospitals, pharmacists, consumers, private health insurance plans and public health benefit plans;

(2) the development of a uniform formulary of prescription drugs for use by physicians, hospitals, pharmacists, consumers, private health insurance plans and government health insurance plans. Any formulary developed by the commissioner pursuant to this subdivision shall incorporate the following elements:

(A) The formulary shall incorporate the database developed under subdivision (1) of this section and shall contain standards and procedures for patient access to medically-necessary alternatives to the formulary and for patient choice of higher cost alternatives to the formulary.

(B) The standards and procedures regulating prescription drug formularies establish by 8 V.S.A. § 4089i shall apply to the use of any formulary developed pursuant to this subdivision by any health insurance plan, except that the commissioner may establish separate standards and procedures as necessary to comply with federal Medicaid laws and regulations.

(C) The formulary developed pursuant to this subdivision shall not be required of any health insurance plan, or any beneficiary of a health insurance plan, without the approval of the general assembly, except that the commissioner of prevention, assistance, transition and health access may implement the formulary developed pursuant to this subdivision by rule for programs administered by or through agencies or instrumentalities of the state in accordance with section 1999 of this title, after presenting an implementation plan to a joint hearing of the house and senate committees on health and welfare.

(D) As used in this subdivision, "health insurance plan" means a health benefit plan offered or administered by a health insurer, as defined by subdivision 9402(7) of Title 18. "Health insurance plan" includes any health benefit plan offered or administered by the state, or any agency or instrumentality of the state;

(3) a program to identify the computer and software needs of professionals involved in the process of prescribing and dispensing drugs, if necessary to ensure access to the database;

(4) a program of academic detailing and consumer counter-detailing that educates physicians and consumers 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; and

(5) recommendations for continuing medical education opportunities and requirements for Vermont physicians and other health care professionals who prescribe, dispense or administer prescription drugs.

Sec. 2. 26 V.S.A. § 2032(a) is amended to read:

(a) The board shall adopt rules necessary for the performance of its duties, including:

(1) scope of the practice of pharmacy;

(2) qualifications for obtaining licensure;

(3) explanations of appeal and other rights given to licensees, applicants and the public;

(4) standards and procedures permitting the dispensing of drugs prescribed by authorized practitioners by facsimile machine, or by e-mail communications, with suitable safeguards relating to verification and other health and safety issues; and

(5) standards and procedures to monitor and require the maximum practicable use of medically-appropriate generic substitution of prescription drugs authorized under section 4605 of Title 18.

Sec. 3. 26 V.S.A. § 1353(a)(13) is added to read:

(a) The board shall have the following powers and duties:

* * *

(13) To adopt standards and procedures requiring a licensee, when relevant to the individual’s scope of practice in Vermont as determined by the board, to complete an appropriate program of continuing medical education relating to therapeutic and cost-effective prescribing, dispensing or administering prescription drugs, consistent with the recommendations of the commissioner of prevention, assistance, transition, and health access under subdivision 1998(4) of Title 33.

Sec. 4. 26 V.S.A. § 1792(a)(4) is added to read:

(a) In addition to its other powers and duties, the board shall:

* * *

(4) adopt standards and procedures requiring a licensee, when relevant to the individual’s scope of practice in Vermont as determined by the board, to complete an appropriate program of continuing education relating to therapeutic and cost-effective prescribing, dispensing or administering prescription drugs, consistent with the recommendations of the commissioner of prevention, assistance, transition and health access under subdivision 1998(4) of Title 33.

Sec. 5. 8 V.S.A. § 4089i is added to read:

§ 4089i. PRESCRIPTION DRUG FORMULARIES

(a) A health insurance plan shall permit a beneficiary’s health care provider to prescribe a prescription drug not on the plan’s formulary if:

(1) the formulary choice has not been effective in treating the patient’s condition; or

(2) the formulary choice causes or is reasonably expected to cause adverse or harmful reactions in the enrollee.

(b) As used in this section, "health insurance plan" means a health benefit plan offered or administered by a health insurer, as defined by section 9402(7) of Title 18.

(c) This section shall apply to any health insurance policy, subscriber contract and other health benefit plan offered, issued or renewed after October 1, 2001.

Sec. 6. REPORT ON THERAPEUTIC AND COST-EFFECTIVE

UTILIZATION OF PRESCRIPTION DRUGS;

APPROPRIATIONS; RECODIFICATION

(a) The commissioner of prevention, assistance, transition, and health access shall report to the governor and the general assembly on or before January 1, 2002 and on January 1 of each successive three years with an assessment of the success of the separate programs of the commissioner’s therapeutic and cost-effective utilization of prescription drugs system under Sec. 1 of this act, together with an estimate of the costs and benefits of funding such programs on a statewide basis.

(b) The board of pharmacy shall report to the general assembly on or before January 1, 2002 and in each of the succeeding three years with an evaluation of its success in implementing the provisions of section 2032(a) of Title 26.

(c) The sum of $150,000.00 is appropriated from the insurance regulatory and supervision fund to the commissioner of prevention, assistance, transition, and health access in fiscal year 2002 to carry out the purposes of Sec. 1 of this act. Funds allocated for academic detailing and consumer counter-detailing may be matched with federal Medicaid funds to be spent for these purposes.

(d) The statutory revision commission is directed to recodify 8 V.S.A. § 4089i and 4089j as 8 V.S.A. § 4089v and 4089w, respectively.

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 its contractor shall report to the general assembly on January 1 of each year with its 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 general 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. V-Script Coverage of Catastrophic Expenses; VHAP Pharmacy

Expansion; V-Script Buy-In for Medicare Beneficiaries

Sec. 9. 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 accruing of prescription drug expenses for recipients eligible under subdivision 1993(a)(2) of this title, 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. 10. 33 V.S.A. § 1992(e) is amended to read:

(e) Any manufacturer of prescription drugs purchased by persons receiving assistance under this chapter, or any other publicly-supported pharmaceutical assistance program including Medicaid and the VHAP Pharmacy Program as determined by the commissioner, shall pay to the commissioner, as a condition of participation in the program, and as a condition of participating in such other publicly-supported pharmaceutical assistance program including Medicaid and the VHAP pharmacy program as determined by the commissioner, a rebate in an amount at least as favorable as the rebate paid to the commissioner in connection with the Medicaid program. Agreements with participating manufacturers may also include provisions for the coordination of benefits between pharmaceutical manufacturer patient assistance programs and the prescription drug benefits provided through programs administered by the department, financial support from pharmaceutical manufacturers for the catastrophic prescription drug expense program authorized by subsection 1994(e) of this title, and any other provisions determined by the commissioner to be necessary or desirable for the cost-effective operation of the prescription drug benefit programs administered by the department. The provisions of this subsection shall not apply if, and only to the extent, necessary to ensure the availability of a drug essential to the health of program beneficiaries as determined by the commissioner in his or her sole discretion.

Sec. 11. 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

*[

(B)]*(1) (VScript 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) Catastrophic prescription drug expense program. 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 less than or equal to 300 percent of the federal poverty level.

*[

(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).

(d)(1) Notwithstanding any other provision of law, no general fund amounts appropriated for Vermont’s pharmaceutical assistance programs under this chapter, as amended, and the pharmaceutical benefits program 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, may be spent if federal funds in such amounts are made available and are spent on benefits for the beneficiaries of such programs.

(2) To the greatest extent feasible, in the event of the enactment after the effective date of this section of any federal program, or expansion of an existing federal program which is designed to provide pharmaceutical assistance to individuals receiving assistance under this chapter, or under the pharmaceutical benefits program 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, general funds which would otherwise be spent for such state programs shall be used to supplement general funds appropriated for such state programs.

(3) The commissioner shall work with Vermont’s congressional delegation to help ensure that Vermont’s share of any new federal monies appropriated for beneficiaries of state pharmaceutical assistance programs can be used to address the unmet pharmaceutical needs of such beneficiaries, and will not replace existing funding for such programs.

Sec. 12. 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 coinsurance amount 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]* the co-payment shall be the same co-payment 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) Catastrophic prescription drug expense program. In the case of recipients eligible for assistance under subdivision 1993(a)(2) of this title:

(A) VScript-eligible recipients. For recipients subject to the provisions of subdivision (2) of this subsection, the coinsurance payment shall be 50 percent of the cost of the drug until such time during each coverage period as the recipient’s unreimbursed household expenditures for drugs covered under this chapter exceed the amount provided for in subsection (e) of this section, after which time any such coinsurance shall be the same coinsurance 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; and

(B) Recipients ineligible for VScript. For recipients not subject to the provisions of subdivision (2) of this section, the coinsurance payment shall be 100 percent of the cost of the drug, or the coinsurance payment required by the recipient’s private or public prescription drug benefit plan until such time during each coverage period as the recipient’s unreimbursed household expenditures for drugs covered under this chapter exceed the amount provided for in subsection (e) of this section, after which time any such coinsurance shall be 50 percent of the cost of the drug, or 50 percent of any applicable coinsurance payment required by the recipient’s private or public prescription drug benefit plan.

Sec. 13. 33 V.S.A. § 1994(e) is added to read:

(e)(1) For individuals eligible for assistance under subdivision 1993(a)(2) of this title, the initial period for accruing expenditures for covered drugs shall begin on January 1, 2001 and end on December 31, 2001, provided that only expenditures for covered drugs incurred after July 1, 2001 shall be eligible for assistance under this subsection, and provided further that only expenditures incurred in any coverage period after the date of the individual’s application and enrollment shall be eligible for assistance under this subsection. During such six-month period and during each subsequent coverage period beginning on January 1 and ending on December 31 of each year, no co-payment shall be required for the remainder of such period in excess of the co-payment requirements provided for in subdivision 1994(a)(3) of this title by any eligible recipient whose unreimbursed household expenditures for drugs covered under this chapter, when aggregated with the unreimbursed household expenditures for covered drugs of the other members of the household, exceed ten percent of the individual’s household income.

(2) For the purpose of determining the percent limit for unreimbursed household expenditures for drugs, the commissioner may establish, by rule, income groups. The program shall pay the remainder of such recipient’s unreimbursed household expenditures for covered drugs upon application and information provided by the recipient sufficient to satisfy the requirements of this subsection at any time during the coverage period.

(3) The department shall monitor enrollment on a monthly basis in the catastrophic benefits element of the program provided for under this subsection. In the event that appropriations in any fiscal year are not sufficient to support the payment of benefits for all otherwise eligible individuals under this subsection, the department shall limit enrollments, amend the eligibility criteria to increase the applicable percentage of the recipient’s household income that must be spent on prescription drugs before benefits are paid by the program, prorate benefits provided for under this subsection, or take any other administrative actions necessary to ensure that expenditures do not exceed appropriations for such benefits in any fiscal year.

Sec. 14. 33 V.S.A. § 1999 is added to read:

§ 1999. PHARMACY DISCOUNT PLAN

(a) The commissioner of prevention, assistance, transition, and health access is directed to seek from the federal government any Medicaid waiver amendment or additional Medicaid waivers necessary and desirable to establish the pharmacy discount plan within an expanded VHAP pharmacy program of the Vermont health access plan, for the purpose of including all Vermont residents in a program that secures for enrolled beneficiaries the benefits of Medicaid discounts and rebates, or any other discount, rebate, pharmacy benefit management, or utilization strategy. The waiver amendment or additional waiver requested by the commissioner shall include the following groups and programs in the pharmacy discount plan:

(1) The pharmacy discount plan shall permit enrollment of all elderly and Medicare-eligible disabled Vermonters with household income above 175 percent of federal poverty level with no Medicare supplemental insurance policy that covers prescription drugs, and other Vermonters with household incomes up to 300 percent of the federal poverty level who do not have an insurance program that includes a prescription drug benefit. The pharmacy discount plan shall include the beneficiaries of the pharmaceutical assistance program under chapter 19 of this title (VScript) for the purpose of securing a discount proportionate to the beneficiary’s coinsurance payment for maintenance treatment prescription drugs.

(2) Any individual Vermont resident and any Vermont purchaser of group health insurance coverage may choose to participate in the pharmacy discount plan, without regard to the income of the resident or plan beneficiary, including individuals currently receiving coverage for other health care benefits through any other health insurance plan, or through any health insurance plan offered by the state of Vermont or any instrumentality of the state in accordance with rules adopted by the secretary of administration. The commissioner of prevention, assistance, transition, and health access, after notice and an opportunity for hearing, may require a health insurance plan to permit plan beneficiaries to use the pharmacy discount plan authorized by this section for prescription drug purchases, unless the health insurance plan demonstrates to the satisfaction of the commissioner that an alternative purchasing program for prescription drugs will provide greater economic or other benefits to plan beneficiaries.

(3) The pharmacy discount program shall include beneficiaries of the catastrophic prescription drug expense program established in section 1994 of this title.

(4) The pharmacy discount plan shall be designed so as not to affect the budget neutrality provisions of the Vermont health access plan waiver, in order to demonstrate the cost and feasibility of a Medicare pharmacy benefit.

(b) In the event that fewer than all of the elements of the pharmacy discount plan authorized by subsection (a) of this section are approved by the federal government by January 1, 2002, the commissioner of prevention, assistance, transition, and health access shall establish by rule a state-funded and state-administered pharmacy discount plan permitting all Vermont residents to be included as potential beneficiaries in an unsubsidized program that secures for enrolled beneficiaries the benefits of Medicaid and VScript discounts and rebates, or any other discount, rebate, pharmacy benefit management or utilization strategy. Any individual Vermonter or Vermont purchaser of group health insurance coverage may choose to participate in the plan, including individuals currently receiving coverage for other health care benefits through any other health insurance plan, and any health insurance plan offered by the state of Vermont or any instrumentality of the state. The commissioner of prevention, assistance, transition, and health access, after notice and an opportunity for hearing, may require a health insurance plan to permit plan beneficiaries to use the pharmacy discount plan authorized by this section for prescription drug purchases, unless the health insurance plan demonstrates to the satisfaction of the commissioner that an alternative purchasing program for prescription drugs will provide greater economic or other benefits to plan beneficiaries.

(c) The commissioner may adopt such rules as are necessary to carry out the pharmacy discount plan programs authorized by this section.

Sec. 15. 33 V.S.A. § 2000 is added to read:

§ 2000. VSCRIPT PRESCRIPTION DRUG INSURANCE PROGRAM

(a) In the event that the federal government does not approve a waiver amendment permitting the pharmacy discount plan to operate in the manner contemplated by section 1999 of this title, the commissioner of prevention, assistance, transition, and health access shall establish a VScript prescription drug insurance program for Medicare beneficiaries on July 1, 2002.

(b) Eligible individuals under the VScript prescription drug insurance program shall be Vermont residents who are at least 65 years of age, or who are disabled and eligible to receive Medicare or Social Security disability benefits. Benefits covered by the program shall be defined by subdivision 1991(3) of this title. The program shall require the recipient to pay a premium established by the commissioner, and a 50 percent coinsurance amount. The premium shall be calculated from a sliding scale formula based on the recipient’s income, in an amount and for such periods as the commissioner shall establish. Premium amounts shall be established so that total premium revenue is sufficient to pay for the cost of benefits for such recipients, including such reserves as the commissioner determines are needed to account for adverse selection, administrative costs, and other unanticipated costs. The program may adjust premiums annually to account for any change in the cost of benefits. The commissioner shall establish an enrollment period for applications for coverage under this subdivision.

Sec. 16. 33 V.S.A. § 2001 is added to read:

§ 2001. VERMONT PRESCRIPTION DRUG AND 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 for the benefit of the beneficiaries of the VHAP pharmacy program, 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 the VHAP pharmacy program 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 the VHAP pharmacy program, 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.

(C) The standards and procedures developed for the system of therapeutic and cost-effective utilization of prescription drugs established by the commissioner under section 1998 of this title shall be used to carry out the purposes of this subdivision (3).

(4) The commissioner may establish a mail order or internet purchasing program for use at the voluntary option of beneficiaries of the VHAP pharmacy program and any other pharmacy assistance program administered by or on behalf of the state of Vermont, for the purpose of empowering beneficiaries to lower the cost of their medically-necessary prescription drugs. The commissioner shall establish quality standards for mail order and internet vendors permitted to participate in the program established by this subdivision.

Sec. 17. PROGRAM IMPLEMENTATION; APPROPRIATIONS;

CONTRACTING AUTHORITY; EXPEDITED RULES;

REPORT ON PHARMACEUTICAL MANUFACTURER

CONTRIBUTIONS; PROGRAM ADMINISTRATION REPORT;

CONSUMER GUIDE; POSITIONS AUTHORIZED

(a) The commissioner of prevention, assistance, transition, and health access shall implement the provisions of Secs. 9 through 13 of this act (catastrophic prescription drug expense program) on or before September 1, 2001.

(b)(1) The amount of $45,000.00 is appropriated from the general fund to the commissioner of prevention, assistance, transition, and health access in fiscal year 2002 to support the administrative costs necessary to carry out the purposes of Secs. 9 through 15 of this act. Any unexpended funds from such appropriation may be carried forward and spent by the commissioner for such purposes in fiscal year 2003.

(2) The amount of $5,000,000.00 is appropriated from the general fund to the department of prevention, assistance, transition, and health access in fiscal year 2002 to support catastrophic prescription drug expense assistance to individuals eligible under 33 V.S.A. § 1993(a)(2).

(c) The commissioner may exercise sole source contracting authority in order to implement the catastrophic prescription drug expenses program authorized in Secs. 9 through 13 of this act in a timely manner.

(e) The commissioner of prevention, assistance, transition, and health access shall report to the health access oversight committee each month until January 1, 2002 with the results of the commissioner’s negotiations and agreements with participating manufacturers pursuant to Sec. 10 of this act, including agreements for financial support from pharmaceutical manufacturers for the catastrophic prescription drug expense program authorized by subsection 1994(e) of Title 33. The commissioner also shall report to the health access oversight committee each month for 24 months following the commissioner’s exercise of any of the prescription drug price and cost control powers granted pursuant to section 1999 of Title 33.

(f) On or before January 1, 2002, the commissioner of prevention, assistance, transition, and health access shall review all state and federal programs intended to facilitate access or provide assistance to purchasers of prescription drugs, including all programs created or amended by this act, and report to the general assembly on recommendations to combine, merge or consolidate such programs to improve their administration and their effectiveness in providing benefits to the people of the state.

(g) The commissioner of prevention, assistance, transition, and health access shall prepare by January 1, 2002 and annually thereafter a consumer’s guide to public and private prescription drug assistance programs, and shall solicit funds from pharmaceutical manufacturers to support the preparation and distribution of such guides.

(h) The following position is authorized in the department of prevention, assistance, transition and health access in fiscal year 2002: one eligibility specialist.

Part D. Pharmaceutical Manufacturer Patient Assistance Programs

Sec. 18. PHARMACEUTICAL MANUFACTURER PATIENT

ASSISTANCE PROGRAMS

(a) The general assembly finds that pharmaceutical manufacturer patient assistance programs have the potential to benefit a larger number of low income, uninsured and underinsured Vermonters; however, the current way that such programs are administered has resulted in low participation by health care providers and their patients, and few Vermonters benefit from these programs.

(b) The commissioner of prevention, assistance, transition, and health access shall request proposals from community health centers or other nonprofit organizations to administer a statewide program to improve coordination and implementation of pharmaceutical manufacturer patient assistance programs, provided that the commissioner has successfully secured funds from pharmaceutical companies sufficient to support the costs of the program, including the costs of a staffperson to administer the program, and including a plan to inform the public concerning patient assistance programs.

(c) The goal of proposals authorized by this section shall be to develop systems to facilitate access to pharmaceutical manufacturer patient assistance programs. The grant recipient shall assist the commissioner in negotiating with pharmaceutical companies to develop a simplified system to assist low income Vermonters in accessing such programs. Components of the simplified system may include a simplified, single application process, a voucher system for dispensing drugs through local pharmacies, and coordination with and supplementation of the Vermont health access plan pharmacy assistance program. After a simplified system has been developed, the grant recipient shall administer a statewide program to assist health care providers in establishing a program for their patients, to provide consultation to participating health care providers regarding changes to the program, to provide patients with information regarding their eligibility for pharmaceutical manufacturer patient assistance programs, and to work with representatives of pharmaceutical manufacturers to improve the program.

(d) The grant recipient and the commissioner shall report to the general assembly on the results of the program established by this section on or before January 1, 2002, including information concerning the number of Vermonters benefited by patient assistance programs, the value of benefits provided through such programs, and any other relevant information.

Sec. 19. JOINT LEGISLATIVE COMMITTEE ON REGIONAL

COOPERATION REGARDING PRESCRIPTION DRUGS

(a) The joint legislative committee on regional cooperation regarding prescription drugs is created, consisting of four representatives appointed by the speaker of the house and four senators appointed by the committee on committees. No political party shall constitute a majority of the members from either body.

(b) Committee members may meet no more than six times each year, and for such meetings shall receive per diem compensation and reimbursement of expenses as provided in section 406 of Title 2. Staff of the legislative council and the joint fiscal office, and of any other agency of state government at the request of the committee chair, shall provide clerical and professional assistance to the committee.

(c) The committee may:

(1) explore strategies by which Vermont and other states might work cooperatively to reduce prescription drug costs and prices for their citizens;

(2) develop proposals for uniform legislation, interstate compacts, and any other legislative proposals relating to prescription drugs, for introduction in the legislatures of the several states;

(3) consider the formation of a multistate purchasing consortium to use the full purchasing power of the states who are members of the consortium to obtain lower prices for prescription drugs;

(4) report to the general assembly by December 1 of each year on the committee’s activities, together with any findings and recommendations relating to prescription drugs; and

(5) conduct any other activity necessary or desirable in carrying out the purposes of this section.

(d) The committee shall cease to exist on December 31, 2003.

Part E. Effective Date

Sec. 20. EFFECTIVE DATE

This act shall take effect on passage.