ASSEMBLY, No. 3289

 

STATE OF NEW JERSEY

 

210th LEGISLATURE

 

INTRODUCED FEBRUARY 4, 2003

 

 

Sponsored by:

Assemblyman JOHN J. BURZICHELLI

District 3 (Salem, Cumberland and Gloucester)

Assemblyman DOUGLAS H. FISHER

District 3 (Salem, Cumberland and Gloucester)

Assemblyman GORDON M. JOHNSON

District 37 (Bergen)

 

Co-Sponsored by:

Assemblymen Guear, Diegnan and Hackett

 

 

 

 

SYNOPSIS

    Establishes New Jersey Rx Program to reduce prescription drug prices.

 

CURRENT VERSION OF TEXT

    As introduced.

 

(Sponsorship Updated As Of: 6/24/2003)


An Act establishing the New Jersey Rx Program and supplementing Title 26 of the Revised Statutes.

 

    Be It Enacted by the Senate and General Assembly of the State of New Jersey:

 

    1. The Legislature finds and declares that affordability is critical in providing access to prescription drugs for New Jersey residents, and that the provisions of this act will enable the State to act as a pharmacy benefit manager in order to make prescription drugs more affordable for qualified State residents, and thereby increase the overall health and welfare of the citizens of this State; however, it is not the intent of the State to discourage employers from offering or paying for prescription drug benefits for their employees or to replace employer-sponsored prescription drug benefit plans that provide benefits comparable to those that are made available to qualified New Jersey residents pursuant to this act.

    The Legislature further finds and declares that the New Jersey Rx Program established pursuant to this act will ultimately benefit the State Medicaid program by providing State residents with the means for obtaining preventive drug therapies, thereby staving off serious and costly ailments and health conditions that can lead residents into poverty and dependance on public assistance programs.

 

    2. As used in this act:

    "Commissioner" means the Commissioner of Health and Senior Services.

    "Department" means the Department of Health and Senior Services.

    "Labeler" means an entity or person that receives prescription drugs from a manufacturer or wholesaler and repackages those drugs for later retail sale, and that has a labeler code from the federal Food and Drug Administration under 21 C.F.R. s.207.20.

    "Manufacturer" means a manufacturer of prescription drugs and includes a subsidiary or affiliate thereof.

    "Medicaid program" means the program established pursuant to P.L.1968, c.413 (C.30:4D-1 et seq.).

    "NJ FamilyCare" means the FamilyCare Health Coverage Program established pursuant to P.L.2000, c.71 (C.30:4J-1 et seq.) and the Children's Health Care Coverage Program established pursuant to P.L.1997, c.272 (C.30:4I-1 et seq.).

    "PAAD" means the pharmaceutical assistance to the aged and disabled program established pursuant to P.L.1975, c.194 (C.30:4D-20 et seq.).

    "Participant" means a person who has qualified for and received a New Jersey RX Program enrollment card from the department.

    "Participating pharmacy" means a retail pharmacy located in this State, or another business licensed to dispense prescription drugs in this State, that participates in the New Jersey Rx Program and provides discounted prescription drug prices to qualified residents pursuant to this act.

    "Program" means the New Jersey Rx Program established pursuant to this act.

    "Qualified resident" means a resident of New Jersey whose annual income does not exceed 300% of the federal poverty level, and who has qualified for and received a program enrollment card from the department.

    "Secondary discounted price" means a price that is equal to or less than the initial discounted price minus the amount of any rebate paid by the State to the participating pharmacy.

    "Senior Gold" means the "Senior Gold Prescription Discount Program" established pursuant to P.L.2001, c.96 (C.30:4D-43 et seq.).

 

    3. There is established the New Jersey Rx Program in the Department of Health and Senior Services in order to reduce prescription drug prices for qualified residents of this State in accordance with the provisions of this act.

 

    4. a. A manufacturer or labeler that sells prescription drugs in this State through any State-funded program that provides prescription drug benefits shall enter into a rebate agreement with the department for this program. The rebate agreement shall require the manufacturer or labeler to make rebate payments to the State in each calendar quarter or according to a schedule established by the commissioner.

    b. In negotiating the amount of the rebate required pursuant to subsection a. of this section, the commissioner shall:

    (1) take into consideration the rebate calculated under the Medicaid program pursuant to 42 U.S.C. s.1396r-8, the average wholesale price of prescription drugs, and any other information on prescription drug prices and price discounts that the commissioner deems appropriate;

    (2) use the commissioner's best efforts to obtain an initial rebate amount equal to or greater than the rebate calculated under the Medicaid program; and

    (3) with respect to the rebate that shall take effect no later than October 1, 2004 under this act, use the commissioner's best efforts to obtain an amount equal to or greater than the amount of any discount, rebate or price reduction for prescription drugs provided to the federal government.

 

    5. A participating pharmacy that sells prescription drugs covered by a rebate agreement pursuant to section 4 of this act shall discount the retail price of those drugs sold to qualified residents.

    a. The commissioner shall establish discounted prices for drugs covered by a rebate agreement and shall promote the use of efficacious and reduced-cost drugs, taking into consideration reduced prices for State and federally-funded programs that provide prescription drug benefits, differential dispensing fees, administrative overhead and incentive payments.

    b. Pursuant to subsection a. of this section, a participating pharmacy shall offer:

    (1) beginning January 1, 2004 an initial discounted price; and

    (2) no later than October 1, 2004 a secondary discounted price.

    c. In determining the amount of discounted prices, the commissioner shall consider an average of all rebates provided pursuant to section 4 of this act, weighted by sales of drugs subject to these rebates over the most recent 12-month period for which information is available.

 

    6. a. The Board of Pharmacy in the Division of Consumer Affairs in the Department of Law and Public Safety, in consultation with the commissioner, shall adopt rules requiring disclosure by participating pharmacies to qualified residents of the amount of savings provided as a result of the program. The rules shall consider and protect information that is proprietary in nature.

    b. The department shall not impose transaction charges under this program on retail pharmacies that submit claims or receive payments under the program.

    c. A participating pharmacy shall submit claims to the department to verify the amount charged to qualified residents pursuant to section 5 of this act.

    d. On a weekly or biweekly basis, the department shall reimburse a participating pharmacy for discounted prices provided to qualified residents pursuant to section 5 of this act and dispensing fees that shall be set by the commissioner.

    e. The department shall collect such utilization data from the participating pharmacies submitting claims as are necessary to calculate the amount of the rebate from the manufacturer or labeler. The department shall protect the confidentiality of all information subject to the provisions of State and federal law, rule or regulation.

 

    7. The names of manufacturers and labelers who do not enter into rebate agreements pursuant to this act shall be considered public information, and the department shall release this information to health care providers and the public.

    a. The commissioner shall impose prior authorization requirements for PAAD and Senior Gold for the dispensing of prescription drugs provided by those manufacturers and labelers.

    b. The Commissioner of Human Services shall impose prior authorization requirements for the Medicaid program and NJ FamilyCare, as permitted by law, for the dispensing of prescription drugs provided by those manufacturers and labelers.

 

    8. a. If there is a discrepancy in the manufacturer's or labeler's favor between the amount claimed by the pharmacy and the amount rebated by the manufacturer or labeler, the department, at the department's expense, may hire a mutually agreed-upon independent auditor to verify the accuracy of the data supplied by the manufacturer or labeler. If a discrepancy still exists following the audit by the independent auditor, the manufacturer or labeler shall justify the reason for the discrepancy or make payment to the department for any additional amount due.

    b. If there is a discrepancy against the interest of the manufacturer or labeler in the information provided by the department to the manufacturer or labeler regarding the manufacturer's or labeler's rebate, the manufacturer or labeler, at the manufacturer's or labeler's expense, may hire a mutually agreed-upon independent auditor to verify the accuracy of the data supplied to the department. If a discrepancy still exists following the audit, the department shall justify the reason for the discrepancy or refund to the manufacturer any excess payment made by the manufacturer or labeler.

    c. Following the procedures established under subsections a. or b. of this section, either the department or the manufacturer or labeler, as applicable, may request a hearing before an administrative law judge, and shall accompany the request with supporting documentation for the hearing.

 

    9. a. There is created in the Department of the Treasury a special nonlapsing fund, to be known as the New Jersey Rx Dedicated Fund, which shall be a dedicated fund to serve as a depository for monies received from manufacturers and labelers who pay rebates pursuant to section 4 of this act and any appropriations or allocations designated for the fund. The monies in the fund shall be administered by the State Treasurer, and all interest on monies in the fund shall be credited to the fund.

    b. The monies in the fund shall be used exclusively to:

    (1) reimburse retail pharmacies for discounted prices provided to qualified residents pursuant to section 5 of this act;

    (2) reimburse the department for contracted services, administrative and associated computer costs, dispensing fees paid to participating retail pharmacies and other reasonable program costs; and

    (3) ensure that benefits and eligibility under other State-funded programs that provide prescription drug benefits are not reduced.


    10. For the purposes of this act, the commissioner:

    a. shall establish simplified procedures for determining eligibility and issuing program enrollment cards to qualified residents;

    b. shall undertake outreach efforts to build public awareness of the program and maximize enrollment of qualified residents;

    c. may adjust the requirements and terms of the program to accommodate any new federally funded prescription drug programs;

    d. may contract with a third party administrator to administer any or all components of the program, including, but not limited to, outreach, eligibility, claims, administration and rebate recovery and redistribution;

    e. shall administer the program in a manner that is advantageous to the program and to its enrollees, and may seek to coordinate the program with other State-funded programs that provide prescription drug benefits;

    f. may seek to negotiate and to enter into a purchasing alliance or a regional strategy with one or more governments of other jurisdictions, and with other public and private entities, for the purpose of reducing prescription drug prices for residents of this State;

    g. may seek any waivers of federal law, rules or regulations necessary to implement the provisions of this act; and

    h. shall annually report the enrollment and financial status of the program to the Governor and the Legislature.

 

    11. a. The commissioner, pursuant to the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.) and in consultation with the Commissioner of Human Services, shall adopt rules and regulations to effectuate the purposes of this act, including rules and regulations with respect to PAAD and the Senior Gold Prescription Discount Program concerning requirements for prior authorization for the dispensing of prescription drugs to persons enrolled in these programs that are provided by manufacturers and labelers who do not enter into agreements with the department pursuant to this act.

    b. The Commissioner of Human Services, pursuant to the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.) and in consultation with the commissioner, shall adopt rules and regulations with respect to the Medicaid program and NJ FamilyCare, concerning requirements for prior authorization for the dispensing of prescription drugs to persons enrolled in those programs that are provided by manufacturers and labelers who do not enter into agreements with the department pursuant to this act.

 

    12. This act shall take effect on July 1, 2003.


STATEMENT

 

    This bill establishes the New Jersey Rx Program to reduce prescription drug prices for residents of this State. This program, modeled after the program established by statute in Maine (P.L.1999, c.786), is to be established in the Department of Health and Senior Services (DHSS), and is designed for the State to utilize manufacturer rebates and pharmacy discounts to reduce prescription drug prices. In implementing the program, the State will act as a pharmacy benefits manager in establishing rebates and discounts on behalf of qualified residents whose income does not exceed 300% of the federal poverty level.

    Specifically, the bill provides as follows:

   A drug manufacturer or labeler that sells prescription drugs in this State through any State-funded program that provides prescription drug benefits is to enter into a rebate agreement with DHSS for the New Jersey RX Program, to be negotiated with the Commissioner of Health and Senior Services.

   A participating pharmacy that sells prescription drugs covered by a rebate agreement pursuant to this bill is required to discount the retail price of those drugs sold to qualified residents in accordance with a process established by the commissioner.

   On a weekly or biweekly basis, DHSS will reimburse a participating pharmacy for discounted prices provided to qualified residents pursuant to this bill and dispensing fees that are to be set by the commissioner.

   The names of manufacturers and labelers who do not enter into rebate agreements pursuant to this bill will be considered public information, and DHSS is to release this information to health care providers and the public. The Commissioner of Health and Senior Services will impose prior authorization requirements for PAAD and Senior Gold, and the Commissioner of Human Services will do so for Medicaid and NJ FamilyCare, as permitted by law, for the dispensing of prescription drugs provided by those manufacturers and labelers.

   A special nonlapsing fund is established in the Department of the Treasury, to be known as the New Jersey Rx Dedicated Fund, which is to serve as a depository for monies received from manufacturers and labelers who pay rebates pursuant to this bill and any appropriations or allocations designated for the fund. The monies in the fund will be used exclusively to:

    -- reimburse retail pharmacies for discounted prices provided to qualified residents pursuant to this bill;

    -- reimburse DHSS for contracted services, administrative and associated computer costs, dispensing fees paid to participating retail pharmacies and other reasonable program costs; and

    -- ensure that benefits and eligibility under other State-funded programs that provide prescription drug benefits are not reduced.

   For the purposes of this bill, the commissioner:

    -- will establish simplified procedures for determining eligibility and issuing New Jersey RX Program enrollment cards to qualified residents;

    -- will undertake outreach efforts to build public awareness of the program and maximize enrollment of qualified residents;

    -- may adjust the requirements and terms of the program to accommodate any new federally funded prescription drug programs;

    -- may contract with a third party administrator to administer any or all components of the program, including, but not limited to, outreach, eligibility, claims, administration and rebate recovery and redistribution;

    -- will administer the program in a manner that is advantageous to the program and to its enrollees, and may seek to coordinate the program with other State-funded programs that provide prescription drug benefits;

    -- may seek to negotiate and to enter into a purchasing alliance or a regional strategy with one or more governments of other jurisdictions, and with other public and private entities, for the purpose of reducing prescription drug prices for residents of this State;

    -- may seek any waivers of federal law, rules or regulations necessary to implement the provisions of this bill; and

    -- will annually report the enrollment and financial status of the program to the Governor and the Legislature.