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H.31

AN ACT RELATING TO PRESCRIPTION DRUG COST CONTAINMENT AND AFFORDABLE ACCESS

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

Sec. 1.  33 V.S.A. chapter 19, subchapter 5 is added to read:

Subchapter 5.  Prescription Drug Cost Containment

§ 1997.  DEFINITIONS

As used in this subchapter:

(1)  “Board” or “drug utilization review board” means the drug utilization review board established by the commissioner in connection with the Medicaid program.

(2)  “Commissioner” means the commissioner of prevention, assistance, transition, and health access.

(3)  “Department” means the department of prevention, assistance, transition, and health access.

(4)  “Health benefit plan” means a health benefit plan with prescription drug coverage offered or administered by a health insurer, as defined by subdivision 9402(7) of Title 18, and the out-of-state counterparts to such plans.  The term includes, but is not limited to:

(A)  any state public assistance program with a health benefit plan that provides coverage of prescription drugs;

(B)  any health benefit plan offered by or on behalf of the state of Vermont or any instrumentality of the state providing coverage for government employees and their dependents that agrees to participate in the program; and

(C)  any insured or self-insured health benefit plan that agrees to participate in the program. 

(5)  “Participating health benefit plan” means a health benefit plan that has agreed to participate in one or more components of the pharmacy best practices and cost control program.

(6)  “Program” or “the pharmacy best practices and cost control program” means the pharmacy best practices and cost control program established by this subchapter.

(7)  “State public assistance program”, includes, but is not limited to, the Medicaid program, the Vermont health access plan, the Vermont health access plan-pharmacy, VScript and VScript-Expanded, the state children’s health insurance program, the state of Vermont AIDS medication assistance program, the General Assistance program, the pharmacy discount plan program, and the out-of-state counterparts to such programs.

§ 1998.  PHARMACY BEST PRACTICES AND COST CONTROL

              PROGRAM ESTABLISHED

(a)  The commissioner of prevention, assistance, transition, and health access shall establish a pharmacy best practices and cost control program designed to reduce the cost of providing prescription drugs, while maintaining high quality in prescription drug therapies.  The program shall include:

(1)  A preferred list of covered prescription drugs that identifies preferred choices within therapeutic classes for particular diseases and conditions, including generic alternatives.

(A)  The commissioner, and the commissioner of banking, insurance, securities, and health care administration shall implement the preferred drug list as a uniform, statewide preferred drug list by encouraging all health benefit plans in this state to participate in the program.

(B)  The commissioner of personnel shall use the preferred drug list in the state employees health benefit plan only if participation in the program will provide economic and health benefits to the state employees health benefit plan and to beneficiaries of the plan, and only if agreed to through the bargaining process between the state of Vermont and the authorized representatives of the employees of the state of Vermont.  The provisions of this subdivision do not authorize the actuarial pooling of the state employees health benefit plan with any other health benefit plan, unless otherwise agreed to through the bargaining process between the state of Vermont and the authorized representatives of the employees of the state of Vermont.

(C)  The commissioner shall encourage all health benefit plans to implement the preferred drug list as a uniform, statewide preferred drug list by inviting the representatives of each health benefit plan providing prescription drug coverage to residents of this state to participate as observers or nonvoting members in the commissioner’s drug utilization review board, and by inviting such plans to use the preferred drug list in connection with the plans’ prescription drug coverage;

(2)  Utilization review procedures, including a prior authorization review process;

(3)  Any strategy designed to negotiate with pharmaceutical manufacturers to lower the cost of prescription drugs for program participants, including a supplemental rebate program;

(4)  Education programs, including a counterdetailing program, designed to provide information and education on the therapeutic and cost‑effective utilization of prescription drugs to physicians, pharmacists and other health care professionals authorized to prescribe and dispense prescription drugs;

(5)  Alternative pricing mechanisms, including consideration of using maximum allowable cost pricing for generic and other prescription drugs;

(6)  Alternative coverage terms, including consideration of providing coverage of over-the-counter drugs where cost-effective in comparison to prescription drugs, and authorizing coverage of dosages capable of permitting the consumer to split each pill if cost-effective and medically appropriate for the consumer;

(7)  A simple, uniform prescription form, designed to implement the preferred drug list, and to enable prescribers and consumers to request an exception to the preferred drug list choice with a minimum of cost and time to prescribers, pharmacists and consumers; and

(8)  Any other cost containment activity adopted, by rule, by the commissioner that is designed to reduce the cost of providing prescription drugs while maintaining high quality in prescription drug therapies.

(b)  The commissioner shall implement the pharmacy best practices and cost control program for Medicaid and all other state public assistance program health benefit plans to the extent permitted by federal law.

(c)(1)  The commissioner may implement the pharmacy best practices and cost control program for any other health benefit plan within or outside this state that agrees to participate in the program.

(2)  The commissioner of prevention, assistance, transition, and health access, and the secretary of administration shall take all steps necessary to enable Vermont’s participation in joint prescription drug purchasing agreements with any other health benefit plan or organization within or outside this state that agrees to participate with Vermont in such joint purchasing agreements.

(3)  The commissioner of personnel shall take all steps necessary to enable the state of Vermont to participate in joint prescription drug purchasing agreements with any other health benefit plan or organization within or outside this state that agrees to participate in such joint purchasing agreements, as may be agreed to through the bargaining process between the state of Vermont and the authorized representatives of the employees of the state of Vermont.

(4)  The actions of the commissioners and the secretary shall include:

(A)  active collaboration with the Northeast Legislative Association on Prescription Drugs in the Association’s efforts to establish a Prescription Drug Fair Price Coalition;

(B)  active collaboration with the Pharmacy RFP Issuing States initiative organized by the West Virginia Public Employees Insurance Agency;

(C)  the execution of any joint purchasing agreements or other contracts with any participating health benefit plan or organization within or outside the state which the commissioner determines will lower the cost of prescription drugs for Vermonters while maintaining high quality in prescription drug therapies; and

(D)  with regard to participation by the state employees health benefit plan, the execution of any joint purchasing agreements or other contracts with any health benefit plan or organization within or outside the state which the commissioner determines will lower the cost of prescription drugs and provide overall quality of integrated health care services to the state employees health benefit plan and the beneficiaries of the plan, and which is negotiated through the bargaining process between the state of Vermont and the authorized representatives of the employees of the state of Vermont.

(5)  The commissioner and the commissioner of personnel may renegotiate and amend existing contracts to which their departments are parties if such renegotiation and amendment will be of economic benefit to the health benefit plans subject to such contracts, and to the beneficiaries of such plans.  Any renegotiated or substituted contract shall be designed to improve the overall quality of integrated health care services provided to beneficiaries of such plans.

(6)  The commissioners and the secretary shall report quarterly to the health access oversight committee and the joint fiscal committee on their progress in securing Vermont’s participation in such joint purchasing agreements.

(7)  The commissioner, the commissioner of personnel, the commissioner of banking, insurance, securities and health care administration, and the secretary of human services shall establish a collaborative process with the Vermont Medical Society, pharmacists, health insurers, consumers, employer organizations and other health benefit plan sponsors, the Northeast Legislative Association on Prescription Drug Pricing, pharmaceutical manufacturer organizations, and other interested parties designed to consider and make recommendations to reduce the cost of prescription drugs for all Vermonters.

(d)  A participating health benefit plan other than a state public assistance program may agree with the commissioner to limit the plan’s participation to one or more program components.  The commissioner shall supervise the implementation and operation of the pharmacy best practices and cost control program, including developing and maintaining the preferred drug list, to carry out the provisions of the subchapter.  The commissioner may include such insured or self-insured health benefit plans as agree to use the preferred drug list or otherwise participate in the provisions of this subchapter.  The purpose of this subchapter is to reduce the cost of providing prescription drugs while maintaining high quality in prescription drug therapies.

(e)  The commissioner of prevention, assistance, transition, and health access shall develop procedures for the coordination of state public assistance program health benefit plan benefits with pharmaceutical manufacturer patient assistance programs offering free or low cost prescription drugs, including the development of a proposed single application form for such programs.  The commissioner may contract with a nongovernmental organization to develop the single application form.

(f)(1)  The drug utilization review board shall make recommendations to the commissioner for the adoption of the preferred drug list.  The board’s recommendations shall be based upon considerations of clinical efficacy, safety, and cost-effectiveness.

(2)  The board shall meet at least quarterly.  The board shall comply with the requirements of subchapter 2 of chapter 5 of Title 1 (open meetings) and subchapter 3 of chapter 5 of Title 1 (open records).

(3)  To the extent feasible, the board shall review all drug classes included in the preferred drug list at least every 12 months, and may recommend that the commissioner make additions to or deletions from the preferred drug list.

(4)  The program shall establish board procedures for the timely review of prescription drugs newly approved by the federal Food and Drug Administration, including procedures for the review of newly‑approved prescription drugs in emergency circumstances.

(5)  Members of the board shall receive per diem compensation and reimbursement of expenses in accordance with section 1010 of Title 32.

§ 1999.  CONSUMER PROTECTION RULES; PRIOR AUTHORIZATION

(a)(1)  The pharmacy best practices and cost control program shall authorize pharmacy benefit coverage when a patient’s health care provider prescribes a prescription drug not on the preferred drug list, or a prescription drug which is not the list’s preferred choice, if either of the circumstances set forth in subdivision (2) or (3) of this subsection applies.

(2)(A)  The program shall authorize coverage under the same terms as coverage for preferred choice drugs if the prescriber determines, after consultation with the pharmacist, or with the participating health benefit plan if required by the terms of the plan, that:

(i)  the preferred choice has not been effective, or with reasonable certainty is not expected to be effective, in treating the patient’s condition; or

(ii)  the preferred choice causes or is reasonably expected to cause adverse or harmful reactions in the patient.

(B)  The prescriber’s determination concerning whether the standards established in this subdivision (2) have been demonstrated shall be final.

(3)  The program shall authorize coverage if the patient agrees to pay any additional cost in excess of the benefits provided by the patient’s health benefit plan which is participating in the program.  The provisions of this subdivision (3) shall not apply to the extent that they may be inconsistent with any federal Medicaid laws and regulations.  The provisions of this subdivision (3) shall not affect implementation by a participating health benefit plan of tiered copayments or other similar cost sharing systems.

(b)  The program or any participating health benefit plan shall provide information on how prescribers, pharmacists, beneficiaries, and other interested parties can obtain a copy of the preferred drug list, whether any change has been made to the preferred drug list since it was last issued, and the process by which exceptions to the preferred list may be made.

(c)  For HIV and AIDS-related medications used by individuals with HIV or AIDS, the preferred drug list and any utilization review procedures shall not be more restrictive than the drug list and the application of the list used for the state of Vermont AIDS medication assistance program.

(d)  The program’s prior authorization process shall not apply to prescription drugs prescribed for the treatment of severe and persistent mental illness including schizophrenia, severe depression, or bipolar disorder.

(e)(1)  The prior authorization process shall be designed to minimize administrative burdens on prescribers, pharmacists, and consumers.  The provisions of this section shall apply to the program’s prior authorization process, except to the extent that different prior authorization rules are established in section 2004 of this title.

(2)  The prior authorization process shall ensure real-time receipt of requests, by telephone, voice mail, facsimile, electronic transmission, or mail on a 24-hour basis, seven days a week.

(3)  The prior authorization process shall provide an in-person response to emergency requests by a prescriber with telephone answering queues that do not exceed 10 minutes.

(4)  Any request for authorization or approval of a drug that the prescriber indicates, including the clinical reasons for the request, is for an emergency or urgent condition shall be responded to in no more than four hours from the time the program or participating health benefit plan receives the request.

(5)  In emergency circumstances, or if the response to a request for prior authorization is not provided within the time period established in subdivision (4) of this subsection, a 72-hour supply of the drug prescribed shall be deemed to be authorized by the program or the participating health benefit plan, provided it is a prescription drug approved by the Food and Drug Administration, and provided, for drugs dispensed to a Medicaid beneficiary, it is subject to a rebate agreement with the Centers for Medicare and Medicaid Services.

(6)  The program or participating plan shall provide to participating providers a prior authorization request form for each enrolled beneficiary, known to be a patient of the provider, designed to permit the prescriber to make prior authorization requests in advance of the need to fill the prescription, and designed to be completed without unnecessary delay.  The form shall be capable of being stamped with information relating to the participating provider, and if feasible at least one form capable of being copied shall contain known patient information.

(f)  The program’s prior authorization process shall require that the prescriber, not the pharmacy, request a prior authorization exception to the requirements of this section.  The program may exempt a prescriber from the need to secure prior authorization for a specific drug category if the program determines that the prescriber has written a minimum number of scripts in that category, and the prescriber prescribes prescription drugs on the preferred drug list at or above the minimum threshold for that category.

§ 2000.  PHARMACY BENEFIT MANAGEMENT

The commissioner may implement all or a portion of the pharmacy best practices and cost control program through a contract with a third party with expertise in the management of pharmacy benefits.

§ 2001.  LEGISLATIVE OVERSIGHT

(a)  In connection with the pharmacy best practices and cost control program, the commissioner of prevention, assistance, transition, and health access shall report for review by the health access oversight committee, prior to initial implementation, and prior to any subsequent modifications:

(1)  the compilation that constitutes the preferred drug list or list of drugs subject to prior authorization or any other utilization review procedures;

(2)  any utilization review procedures, including any prior authorization procedures; and

(3)  the procedures by which drugs will be identified as preferred on the preferred drug list, and the procedures by which drugs will be selected for prior authorization or any other utilization review procedure.

(b)  The health access oversight committee shall closely monitor implementation of the preferred drug list and utilization review procedures to ensure that the consumer protection standards enacted pursuant to section 1999 of this title are not diminished as a result of implementing the preferred drug list and the utilization review procedures, including any unnecessary delay in access to appropriate medications.  The committee shall ensure that all affected interests, including consumers, health care providers, pharmacists and others with pharmaceutical expertise have an opportunity to comment on the preferred drug list and procedures reviewed under this subsection.

(c)  The commissioner of prevention, assistance, transition, and health access shall report quarterly to the health access oversight committee concerning the following aspects of the pharmacy best practices and cost control program:

(1)  the efforts undertaken to educate health care providers about the preferred drug list and the program’s utilization review procedures;

(2)  the number of prior authorization requests made; and

(3)  the number of utilization review events (other than prior authorization requests).

(d)  On or before January 1, 2003, and on or before January 1 of each year for the duration of the pharmacy benefit manager contract, the commissioner of prevention, assistance, transition, and health access shall report to the house and senate committees on health and welfare, and to the health access oversight committee, concerning implementation of any pharmacy benefit manager contract entered into by the pharmacy best practices and cost control program.  The report shall include:

(1)  a description of the activities of the pharmacy benefit manager;

(2)  an analysis of the success of the pharmacy benefit manager in achieving each of the department’s public policy goals, together with the pharmacy benefit manager’s report of its activities and achievements;

(3)  an assessment of Medicaid and VScript program administrative costs relating to prescription drug benefits, including any recommendations for increasing the administrative efficiency of such programs;

(4)  a fiscal report on the state fiscal costs and savings to Vermont of the pharmacy benefit manager contract, including an accounting of any payments, fees, offsets, savings and other financial transactions or accountings;

(5)  any recommendations for enhancing the benefits of the pharmacy benefit manager contract, and an identification of, and any recommendations for minimizing any problems with the contract; and

(6)  if the department has not entered into a contract with a pharmacy benefit manager, or if any such contract has been rescinded, any recommendations for pursuing Vermont’s public policy goals relating to pharmaceutical costs, quality and access through other means.

(e)(1)  The fiscal report required by subdivision (d)(4) of this section shall include the disclosure, in a manner that preserves the confidentiality of any proprietary information as determined by the commissioner, of:

(A)  any agreements entered into by the pharmacy benefit manager identified in subdivision (2) of this subsection; and

(B)  the financial impact of such agreements on Vermont, and on Vermont beneficiaries.

(2)  The commissioner shall not enter into a contract with a pharmacy benefit manager unless the pharmacy benefit manager has agreed to disclose to the commissioner the terms and the financial impact on Vermont and on Vermont beneficiaries of:

(A)  any agreement with a pharmaceutical manufacturer to favor the manufacturer’s products over a competitor’s products, or to place the manufacturer’s drug on the pharmacy benefit manager’s preferred list or formulary, or to switch the drug prescribed by the patient’s health care provider with a drug agreed to by the pharmacy benefit manager and the manufacturer;

(B)  any agreement with a pharmaceutical manufacturer to share manufacturer rebates and discounts with the pharmacy benefit manager, or to pay “soft money” or other economic benefits to the pharmacy benefit manager;

(C)  any agreement or practice to bill Vermont health benefit plans for prescription drugs at a cost higher than the pharmacy benefit manager pays the pharmacy;

(D)  any agreement to share revenue with a mail order or internet pharmacy company;

(E)  any agreement to sell prescription drug data concerning Vermont beneficiaries, or data concerning the prescribing practices of the health care providers of Vermont beneficiaries; or

(F)  any other agreement of the pharmacy benefit manager with a pharmaceutical manufacturer, or with wholesale and retail pharmacies, affecting the cost of pharmacy benefits provided to Vermont beneficiaries.

(3)  The commissioner shall not enter into a contract with a pharmacy benefit manager who has entered into an agreement or engaged in a practice described in subdivision (2) of this subsection, unless the commissioner determines, and certifies in the fiscal report required by subdivision (d)(4) of this section, that such agreement or practice furthers the financial interests of Vermont, and does not adversely affect the medical interests of Vermont beneficiaries.

§ 2002.  SUPPLEMENTAL REBATES

(a)  The commissioner, separately or in concert with the authorized representatives of any participating health benefit plan, shall use the preferred drug list authorized by the pharmacy best practices and cost control program to negotiate with pharmaceutical companies for the payment to the commissioner of supplemental rebates or price discounts for Medicaid and for any other state public assistance health benefit plans designated by the commissioner, in addition to those required by Title XIX of the Social Security Act.  The commissioner may also use the preferred drug list to negotiate for the payment of rebates or price discounts in connection with drugs covered under any other participating health benefit plan within or outside this state, provided that such negotiations and any subsequent agreement shall comply with the provisions of 42 U.S.C. § 1396r-8.  The program, or such portions of the program as the commissioner shall designate, shall constitute a state pharmaceutical assistance program under 42 U.S.C. § 1396r-8(c)(1)(C).

(b)  The commissioner shall negotiate supplemental rebates, price discounts, and other mechanisms to reduce net prescription drug costs by means of any negotiation strategy which the commissioner determines will result in the maximum economic benefit to the program and to consumers in this state, while maintaining access to high quality prescription drug therapies.  The provisions of this subsection do not authorize agreements with pharmaceutical manufacturers whereby financial support for medical services covered by the Medicaid program is accepted as consideration for placement of one or more prescription drugs on the preferred drug list.  The January 1, 2003 report of the commissioner pursuant to subsection 2001(d) of this title shall include a cost‑benefit analysis of alternative negotiation strategies, including the strategy used by the State of Florida to secure supplemental rebates, the strategy used by the State of Michigan to secure supplemental rebates, and any other alternative negotiation strategy that might secure lower net prescription drug costs.

(c)  The commissioner and the department shall prohibit the public disclosure of information revealing company-identifiable trade secrets (including rebate and supplemental rebate amounts, and manufacturer’s pricing) obtained by the department, and by any officer, employee or contractor of the department in the course of negotiations conducted pursuant to this section.  Such confidential information shall be exempt from public disclosure under subchapter 3 of chapter 5 of Title 1 (open records law).

§ 2003.  PHARMACY DISCOUNT PLAN

(a)  On or before July 1, 2002, the commissioner shall implement a pharmacy discount plan, to be known as the “Healthy Vermonters” program, for Vermonters without adequate coverage for prescription drugs.  The provisions of section 1992 of this title shall apply to the commissioner’s authority to administer the pharmacy discount plan established by this section.  The commissioner may establish an enrollment fee in such amount as is necessary to support the administrative costs of the plan.

(b)  The pharmacy discount plan authorized by this section shall include a program implemented as a Section 1115 Medicaid waiver, wherein the state makes a payment toward the cost of the drugs dispensed to individuals enrolled in this program of at least two percent of the cost of each prescription or refill, consistent with the appropriation for the program established by this section.

(c)  The commissioner shall implement the pharmacy discount program authorized by this section without any financial contribution by the state otherwise required by subsection (b) of this section, and without federal waiver approval during such time as federal waiver approval has not been secured.

(d)  As used in this section:

(1)  “Eligible beneficiary” means any individual Vermont resident who is at least 65 years of age, or is disabled and is eligible for Medicare or Social Security disability benefits, with household income equal to or less than 400 percent of the federal poverty level, as calculated under the rules of the Vermont health access plan, as amended, and any other individual Vermont resident with household income equal to or less than 300 percent of the federal poverty level, as calculated under the rules of the Vermont health access plan, as amended; and

(2)  “Vermonter without adequate coverage” includes eligible beneficiaries with no coverage for prescription drugs, and eligible beneficiaries whose annual maximum coverage limit under their health benefit plan has been reached.

§ 2005.  PHARMACEUTICAL MARKETERS

(a)(1)  Annually on or before January 1 of each year, every pharmaceutical manufacturing company shall disclose to the Vermont board of pharmacy the value, nature and purpose of any gift, fee, payment, subsidy or other economic benefit provided in connection with detailing, promotional or other marketing activities by the company, directly or through its pharmaceutical marketers, to any physician, hospital, nursing home, pharmacist, health benefit plan administrator or any other person in Vermont authorized to prescribe, dispense, or purchase prescription drugs in this state.  Disclosure shall be made on a form and in a manner prescribed by the board.  Initial disclosure shall be made on or before January 1, 2004 for the 12‑month period ending June 30, 2003.  The board shall provide to the office of the attorney general complete access to the information required to be disclosed under this subsection.  The office of the attorney general shall report annually on the disclosures made under this section to the general assembly and the governor on or before March 1.

(2)  Each company subject to the provisions of this section shall also disclose to the board, on or before October 1, 2002 and annually thereafter, the name and address of the individual responsible for the company’s compliance with the provisions of this section. 

(3)  The Vermont board of pharmacy and the office of the attorney general shall keep confidential all trade secret information, as defined by subdivision 317(b)(9) of Title 1.  The disclosure form prescribed by the board shall permit the company to identify any information that is a trade secret.

(4)  The following shall be exempt from disclosure:

(A)  free samples of prescription drugs intended to be distributed to patients;

(B)  the payment of reasonable compensation and reimbursement of expenses in connection with bona fide clinical trials.  As used in this subdivision, “clinical trial” means an approved clinical trial conducted in connection with a research study designed to answer specific questions about vaccines, new therapies or new ways of using known treatments;

(C)  any gift, fee, payment, subsidy or other economic benefit the value of which is less than $25.00; and

(D)  scholarship or other support for medical students, residents and fellows to attend a significant educational, scientific or policy-making conference of a national, regional, or specialty medical or other professional association if the recipient of the scholarship or other support is selected by the association.

(b)  The attorney general may bring an action in Washington superior court for injunctive relief, costs, and attorneys fees, and to impose on a pharmaceutical manufacturing company that fails to disclose as required by subsection (a) of this section a civil penalty of no more than $10,000.00 per violation.  Each unlawful failure to disclose shall constitute a separate violation.

(c)  As used in this section:

(1)  “Pharmaceutical marketer” means a person who, while employed by or under contract to represent a pharmaceutical manufacturing company, engages in pharmaceutical detailing, promotional activities, or other marketing of prescription drugs in this state to any physician, hospital, nursing home, pharmacist, health benefit plan administrator, or any other person authorized to prescribe, dispense, or purchase prescription drugs.  The term does not include a wholesale drug distributor or the distributor’s representative who promotes or otherwise markets the services of the wholesale drug distributor in connection with a prescription drug.

(2)  “Pharmaceutical manufacturing company” means any entity which is engaged in the production, preparation, propagation, compounding, conversion, or processing of prescription drugs, either directly or indirectly by extraction from substances of natural origin, or independently by means of chemical synthesis, or by a combination of extraction and chemical synthesis, or any entity engaged in the packaging, repackaging, labeling, relabeling, or distribution of prescription drugs.  The term does not include a wholesale drug distributor or pharmacist licensed under chapter 36 of Title 26.

§ 2006.  NORTHEAST LEGISLATIVE ASSOCIATION ON

              PRESCRIPTION DRUGS PRICING

(a)  The general assembly finds that the Northeast Legislative Association on Prescription Drug Pricing is a nonprofit organization of legislators formed for the purpose of making prescription drugs more affordable and accessible to citizens of the member states.  The general assembly further finds that the activities of the Association provide a public benefit to the people of the state of Vermont.

(b)  On or before January 15, upon the convening of each biennial session of the general assembly, three directors shall be appointed by the speaker, which may include the speaker, and three directors shall be appointed by the committee on committees, which may include a member of the committee on committees, to serve as the Vermont directors of the Northeast Legislative Association on Prescription Drug Pricing.  Directors so appointed from each body shall not all be from the same party.  Directors so appointed shall serve until new members are appointed.

(c)  For meetings of the Association, directors who are legislators shall be entitled to per diem compensation and reimbursement of expenses in accordance with section 406 of Title 2.  If the lieutenant governor is appointed as a director pursuant to subsection (b) of this section, his or her compensation and expenses shall be paid from the appropriation made to the office of the lieutenant governor.

(d)  The Vermont directors of the Association shall report to the general assembly on or before January 1 of each year with a summary of the activities of the Association, and any findings and recommendations for making prescription drugs more affordable and accessible to Vermonters.

Sec. 2.  SECTION 1115 WAIVER FOR PHARMACEUTICAL PROGRAMS

(a)  The commissioner shall request a Section 1115 waiver or waiver amendment in order to maximize federal financial participation in Vermont’s state pharmaceutical assistance programs, and in order to preserve Vermonters’ continued access to such programs, unless the commissioner determines that such waiver or waiver amendment will not provide a financial benefit to the state of Vermont over the long term.  The commissioner shall report to the health access oversight committee if she determines not to apply for such a waiver, or if she determines to apply for a waiver that is not consistent with the principles established in subsection (b) of this section in whole or in part.

(b)  The waiver request shall conform to the following principles unless deviation is necessary to conduct successful negotiations with the Centers for Medicare and Medicaid Services:

(1)  The waiver request shall propose a financially sustainable program designed to provide access to medically necessary prescription drugs for low income, elderly and disabled Vermonters.

(2)  The waiver request shall propose to include all beneficiaries enrolled in the VScript-Expanded program (175 to 225 percent of the federal poverty level) in the Medicaid waiver population group.

(3)  The waiver request shall consolidate and streamline program administration of and eligibility for Vermont’s pharmaceutical assistance programs.

(4)  The benefit plan and cost sharing provisions shall be designed to provide financial assistance and benefits based on the beneficiary’s household income.

Sec. 2a. APPLICATION OF PREFERRED DRUG LIST TO NURSING

              HOME PATIENTS

During fiscal year 2003, the preferred drug list of the department of prevention, assistance, transition and health access shall not apply to Medicaid coverage of prescriptions for beneficiaries residing in a nursing home, including the Vermont Veterans’ Home until the department proposes and the health access oversight committee approves a plan to notify and educate nursing home patients, their prescribers, and their pharmacy concerning the preferred drug list and the prior authorization process, and to ensure that Medicaid is securing the best price for cover drugs prescribed for nursing home residents.  The department shall propose a plan to the committee by July 1, 2002.

Sec. 2b.  26 V.S.A. § 2032(c)(5) is added to read:

(c)  The board of pharmacy shall also have the following responsibilities in regard to medications, drugs, devices and other materials used in this state in the diagnosis, mitigation and treatment or prevention of injury, illness, and disease:

* * *

(4)  The issuance of certificates of registration and licenses of drug outlets;

(5)  The development of criteria for a standardized tamper-resistant prescription pad that can be used by all health care providers who prescribe drugs.  Such criteria shall be developed in consultation with pharmacists, hospitals, nursing homes, physicians and other prescribers, and other affected parties.

Sec. 3  [DELETED.]

Sec. 4.  REPEAL

Subsections 123(n), (o), (p) and (q) of No. 63 of the Acts of 2001 are repealed.

Sec. 5.  EFFECTIVE DATE

This act shall take effect on passage, except that:

(1)  Sec. 1, 33 V.S.A. § 1999 (consumer protection rules), shall take effect 60 days after passage; and

(2)  Sec. 1, 33 V.S.A. § 1999(d) (prior authorization and drugs used to treat mental illness) shall be repealed on July 1, 2004.

Sec. 6.  OUTCOMES BASED ASSESSMENT AND TREATMENT

(a)  Vermont's health care policies shall promote outcomes based assessment and treatment through the development of a statewide quality assurance system and an effective quality improvement process that integrates best practices research, functional status assessment, patient satisfaction measurements and cost containment goals.  These health care policies are best established and implemented by nongovernmental organizations of health care providers and patients.  The role of government should be to support efforts of nongovernmental organizations to remain collaborative in nature, and to recognize those efforts.

     (b)  Statewide quality assurance inventory.  The commissioner of banking, insurance, securities and health care administration shall contract, subject to the availability of grants from federal government agencies and nongovernmental organizations to support the costs of the contract authorized by this subsection, with a qualified nongovernmental organization to conduct an inventory of existing quality assurance measurements used by public and private health plans in Vermont, by hospitals serving Vermont residents, and by other entities within state government.  The commissioner’s contractor shall report to the commissioner with the results of the inventory, and with an analysis and identification of any other information necessary to establish a statewide quality assurance system.

(c)  Evaluation of inventory.

(1)  The commissioner of banking, insurance, securities and health care administration and the secretary of human services shall convene a work group to evaluate the results of the inventory, identify common areas of measurements to all, areas lacking measurements, and an analysis of likely areas for change in order to develop a statewide application of a quality assurance measurement.  Additionally the work group may make proposals to the General Assembly for continued outcomes based assessments which may identify areas of health care which need improvement, provide for a comparison of the quality of health care provided under public and private health benefit plans, identify ways to focus resources and programs in order to improve the health of beneficiary populations or discrete portions thereof, and develop any other findings and recommendations for expanding access to, improving the quality of, and lowering the cost of Vermont’s health care system.

(2)  The work group shall include representatives from private and public health plans, the Vermont Program for Quality in Health Care, Inc., the Vermont Association of Hospitals and Health Systems, the Dartmouth‑Hitchcock Medical Center, the Vermont Medical Society, the University of Vermont medical school, the Vermont Child Health Improvement Project, the Area Health Educational Centers, and anyone else deemed appropriate by the commissioner and the secretary.

(d)  Report to the General Assembly.  The commissioner and the secretary shall make a joint report to the General Assembly on or before December 15, 2002 with findings and recommendations.  The report shall include a summary of the activities of the commissioner and the secretary, and a description of any proposals to implementing outcomes based assessment projects.