ASSEMBLY, No. 3406

 

STATE OF NEW JERSEY

 

210th LEGISLATURE

 

INTRODUCED MARCH 6, 2003

 

 

Sponsored by:

Assemblyman JEFF VAN DREW

District 1 (Cape May, Atlantic and Cumberland)

Assemblyman PETER J. BARNES, JR.

District 18 (Middlesex)

Assemblyman NEIL M. COHEN

District 20 (Union)

 

Co-Sponsored by:

Assemblymen Diegnan, Guear, Steele, Hackett, Ahearn, Connors, Dancer, Egan, Holzapfel, McKeon, Rumpf and Wolfe

 

 

 

 

SYNOPSIS

    "New Jersey Fair Market Drug Pricing Act"; establishes New Jersey Rx Card Program to reduce prescription drug prices.

 

CURRENT VERSION OF TEXT

    As introduced.

 

(Sponsorship Updated As Of: 12/12/2003)


An Act establishing the New Jersey Rx Card 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. This act shall be known and may be cited as the "New Jersey Fair Market Drug Pricing Act."

 

    2. The Legislature finds and declares that:

    a. Considering the large volume of prescription drugs dispensed in the Medicaid, NJ FamilyCare, PAAD and Senior Gold programs, the State would receive better prices for those drugs if it entered into voluntary negotiations with drug companies for supplemental rebates above and beyond those required under federal and State law;

    b. California and Florida are examples of states that currently receive such benefits through their programs which negotiate supplemental rebates with drug companies;

    c. In this time of economic difficulty, New Jersey needs to maximize its financial resources in order to provide as much health care coverage as possible for its low-income residents and so, now more than ever, needs to reduce the prices that it pays for prescription drugs;

    d. Over one million New Jerseyans are without health insurance coverage; and, for those State residents who are uninsured or underinsured with respect to prescription drug coverage and are forced to pay excessive prices for prescription drugs, those prices may have the effect of denying them access to medically necessary care and thereby threaten their health and safety;

    e. Uninsured and underinsured State residents too often become Medicaid recipients because of their inability to afford prescription drugs, such as when they are admitted to an institutional care setting because they cannot afford the drug treatment regimen that would have met their medical needs outside of the institution; and, to that extent, helping to reduce prescription drug prices for the uninsured and underinsured would benefit the State Medicaid program;

    f. State government is the only entity in New Jersey that can, as a practical matter, play an effective role in exerting market leverage on behalf of uninsured and underinsured State residents and those covered by State-funded programs, by expanding its role as a prescription benefits manager for a variety of programs to negotiate voluntary drug rebates and use the resulting savings to maintain and expand State-funded programs and reduce drug prices for the uninsured who do not qualify for any of those programs; and

    g. Recognizing that the State already acts as a prescription benefits manager for a variety of State-funded programs, it is clearly in the public interest for the State to enact legislation to expand its role as hereinabove described; as this effort will improve the public health and welfare, promote economic strength through a more healthy workforce, and directly and indirectly benefit State-funded programs that serve the uninsured.

 

    3. As used in this act:

    "Advisory council" means the "New Jersey Rx Card Program Advisory Council" established pursuant to section 5 of 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" means the Medicaid 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 Card Program and provides discounted prescription drug prices to qualified residents pursuant to this act.

    "Prescription drug" means a prescription drug as defined in R.S. 45:14-14.

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

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

    "Wholesaler" means a business that distributes prescription drugs in this State in accordance with law or regulation.

 

    4. a. There is established the New Jersey Rx Card Program in the Department of Health and Senior Services in order to reduce prices to participants for prescription drugs that are covered by a rebate agreement with manufacturers. The department shall contract with wholesalers or participating pharmacies under the program to deliver discounted prices to participants, using the savings from the negotiated rebates, in accordance with the provisions of this act.

    b. (1) A manufacturer or labeler that sells prescription drugs in this State may enter into a rebate agreement with the department for this program. Any 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.

    (2) In negotiating the terms of the rebate, the commissioner shall take into consideration the rebate calculated under the Medicaid program pursuant to 42 U.S.C.s.1396r-8, the price of a prescription drug provided to eligible entities under 42 U.S.C.s.256b, and any other information on prescription drug prices, discounts and rebates that the commissioner deems appropriate.

    c. The commissioner shall calculate the participant's prescription drug price discounts on a quarterly basis, and those discounts shall be approximately equal to the amount of the negotiated drug rebate minus an amount to cover the reasonable cost of administering the program as determined by the commissioner.

 

    5. There is established the "New Jersey Rx Card Program Advisory Council" in the department to advise the commissioner on the implementation and operation of the program.

    a. The advisory council shall include the commissioner and the Commissioner of Human Services, or their designees, as ex officio members, and 11 public members, to be appointed by the Governor as follows: five physicians who represent a cross-section of professional specialties, four pharmacists, and two members of the public who are health care consumers.

    b. The advisory council shall organize as soon as possible after the appointment of its members, and shall annually select from its membership a chairman who shall serve until his successor shall be elected and shall qualify. The members shall also select a secretary who need not be a member of the advisory council.

    c. The public members shall serve for a term of three years; except that, of the public members first appointed by the Governor, five shall serve for a term of three years, four for a term of two years, and two for a term of one year.

    d. A vacancy in the membership of the advisory council other than by the expiration of a term shall be filled in the same manner as the original appointment, but for the unexpired term only.

    e. The members of the advisory council shall serve without compensation, but shall be reimbursed for the reasonable expenses incurred in the performance of their duties.


    f. The department shall provide such staff and administrative support to the advisory council as it requires to carry out its responsibilities

 

    6. a. A person shall be eligible to participate in the program if that person is a resident of New Jersey who is eligible for the federal Medicare program established pursuant to the federal Social Security Act, Pub.L.89-97 (42 U.S.C.s.1395 et seq.), or whose annual income does not exceed 300% of the federal poverty level, and is not eligible for a State-funded program or covered by an insurance policy or contract that provides prescription drug benefits that are equal to or greater than the benefits provided under this program.

    b. The commissioner shall establish a program enrollment procedure for participants that is as administratively simple as practicable, and shall undertake an outreach effort to maximize enrollment among eligible persons.

 

    7. 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 participants of the amount of savings provided as a result of the program. The rules shall protect the confidentiality of information that is proprietary in nature.

    b. The department shall not impose transaction charges under this program on wholesalers or participating 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 participants pursuant to this act.

    d. On a weekly basis, the department shall reimburse a wholesaler or participating pharmacy for discounted prices provided to participants pursuant to this act.

    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.

    f. The department may require a wholesaler or participating pharmacy to segregate prescription drugs sold under the program from its other prescription drug inventory, and to maintain records of acquisition and disposition for those drugs separately from its other records.

 

    8. The provisions of this section shall apply if a manufacturer or labeler that sells prescription drugs in this State fails to conclude a rebate agreement with the department pursuant to this act, and the rebates or discounted drug prices offered by that manufacturer or labeler are less favorable to the State than the prescription drug prices provided to eligible entities under 42 U.S.C.s.256b:

    a. The commissioner may impose prior authorization requirements for PAAD and Senior Gold for the dispensing of prescription drugs provided by the manufacturer or labeler, and the Commissioner of Human Services may impose identical prior authorization requirements for Medicaid and NJ FamilyCare, as permitted by law, for the dispensing of prescription drugs provided by the manufacturer or labeler; however:

    (1) any such prior authorization shall meet the requirements set forth in federal law, except as may otherwise be provided in this act, governing prior authorization for the dispensing of prescription drugs in the Medicaid program, including, but not limited to, a requirement that a participant receive a 72-hour supply of a prescribed drug without a requirement for prior authorization in an emergency, and be done in accordance with applicable State law or regulation;

    (2) the commissioner may, in consultation with the advisory council, exempt from the prior authorization requirement such prescription drugs, or prescription drugs for participants with such diagnoses, as the commissioner determines to be in the best interest of providing appropriate medical care;

    (3) the department and the Department of Human Services shall implement procedures to permit a person to request prior authorization by telephone or on-line, and to ensure that a person who requests prior authorization receives a response to that request from a pharmacist on the staff of the department or the Department of Human Services, as applicable, within 30 minutes of making such a request by telephone or on-line; and

    (4) the commissioner, in consultation with the Board of Pharmacy, shall issue a written advisory to each participating pharmacy concerning information that a pharmacist shall be required to provide, on a form and in a manner required by the commissioner, to each participant with respect to whose prescription prior authorization is required pursuant to this section, in order to ensure that the pharmacist notifies the participant that the requirement for prior authorization will not preclude prescription drug coverage under the program for medication to treat that person's diagnosis.

    b. The name of the manufacturer or labeler shall be considered public information, and the department shall release this information to the general public and distribute it among health care providers.

 

    9. 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.

 

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

    a. shall take such actions as are necessary to publicize the program among the general public and health care providers in accordance with such recommendations as may be made by the advisory council, and ensure that information about the program is made available through printed materials, existing telephone services provided by the department, and on-line;

    b. may seek to coordinate the program with other State-funded programs that provide prescription drug benefits, including drug price negotiations with manufacturers to maximize the amount of rebates sought pursuant to this act;

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

    d. shall annually report to the Governor and the Legislature on the enrollment and financial status of the program, in consultation with the Commissioner of Human Services, and shall include in that report information about savings from rebate agreements negotiated pursuant to this act.

 

    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 Senior Gold 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, including, but not limited to, procedures to ensure a timely response to, and compliance with other requirements concerning, any request for prior authorization to dispense a prescription drug as provided in section 8 of 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 Medicaid 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, including, but not limited to, procedures to ensure a timely response to, and compliance with other requirements concerning, any request for prior authorization to dispense a prescription drug as provided in section 8 of this act.

 

    12. This act shall take effect on July 1, 2004, and prescription drug price discounts to New Jersey RX Card Program participants shall begin no later than January 1, 2005; except that the Commissioners of Health and Senior Services and Human Services may take such anticipatory administrative action in advance as shall be necessary for the implementation of the act.

 

 

STATEMENT

 

    This bill establishes the New Jersey Rx Card Program to reduce prescription drug prices for residents of this State. The program is to be established in the Department of Health and Senior Services (DHSS), and is designed to enable the State to utilize manufacturer rebates and pharmacy discounts to reduce prescription drug prices.

    Specifically, the bill provides as follows:

   A prescription drug manufacturer or labeler that sells prescription drugs in this State may enter into a rebate agreement with DHSS for this program, and any 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 of Health and Senior Services.

   In negotiating the terms of the rebate, the commissioner is to take into consideration the rebate calculated under the Medicaid program pursuant to 42 U.S.C.A.s.1396r-8, the price of a prescription drug provided to eligible entities under 42 U.S.C.A.s.256b, and any other information on prescription drug prices, discounts and rebates that the commissioner deems appropriate.

   The commissioner is required to calculate the prescription drug price discounts to be received by participants on a quarterly basis, and those discounts are to be approximately equal to the amount of the negotiated drug rebate minus an amount to cover the reasonable cost of administering the program as determined by the commissioner.

   The "New Jersey Rx Card Program Advisory Council" is established in DHSS to advise the commissioner on the implementation and operation of the program. The advisory council is to include the commissioner and the Commissioner of Human Services, or their designees, as ex officio members, and 11 public members, to be appointed by the Governor as follows: five physicians who represent a cross-section of professional specialties, four pharmacists, and two members of the public who are health care consumers.

   A person is eligible to participate in the New Jersey Rx Card Program if that person is a resident of New Jersey who is eligible for the federal Medicare program, or whose annual income does not exceed 300% of the federal poverty level, and is not eligible for a State-funded program or covered by an insurance policy or contract that provides prescription drug benefits that are equal to or greater than the benefits provided under this program.

   The commissioner is directed to establish a program enrollment procedure for participants that is as administratively simple as practicable, and to undertake an outreach effort to maximize enrollment among eligible persons.

   The State Board of Pharmacy, in consultation with the commissioner, is to require disclosure by participating pharmacies to participants of the amount of savings provided as a result of the program (while protecting the confidentiality of information that is proprietary in nature).

   On a weekly basis, DHSS is required to reimburse a wholesaler or participating pharmacy for discounted prices provided to participants pursuant to this bill.

   DHSS is to 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 (while protecting the confidentiality of all information subject to the provisions of State and federal law, rule or regulation).

   If a manufacturer or labeler that sells prescription drugs in this State fails to conclude a rebate agreement with DHSS, and the rebates or discounted drug prices offered by that manufacturer or labeler are less favorable to the State than the prescription drug prices provided to eligible entities under 42 U.S.C.A.s.256b:

    -- The Commissioner of Health and Senior Services may impose prior authorization requirements for PAAD and the Senior Gold Prescription Discount Program, and the Commissioner of Human Services may impose identical prior authorization requirements for the Medicaid program and NJ FamilyCare, as permitted by law, for the dispensing of prescription drugs provided by the manufacturer or labeler; however:

    - any such prior authorization must meet the requirements set forth in federal law, except as may otherwise be provided in this bill, governing prior authorization for the dispensing of prescription drugs in the Medicaid program, including, but not limited to, a requirement that a participant receive a 72-hour supply of a prescribed drug without a requirement for prior authorization in an emergency, and be done in accordance with applicable State law or regulation;

    - the Commissioner of Health and Senior Services may, in consultation with the advisory council established under the bill, exempt from the prior authorization requirement such prescription drugs, or prescription drugs for participants with such diagnoses, as the commissioner determines to be in the best interest of providing appropriate medical care;

    - DHSS and the Department of Human Services are to implement procedures to permit a person to request prior authorization by telephone or on-line, and to ensure that a person who requests prior authorization receives a response to that request from a pharmacist on the staff of DHS or the Department of Human Services, as applicable, within 30 minutes of making such a request by telephone or on-line; and

    - the Commissioner of Health and Senior Services, in consultation with the Board of Pharmacy, is to issue a written advisory to each participating pharmacy concerning information that a pharmacist will be required to provide, on a form and in a manner required by the commissioner, to each participant with respect to whose prescription prior authorization is required pursuant to the bill, in order to ensure that the pharmacist notifies the participant that the requirement for prior authorization will not preclude prescription drug coverage under the program for medication to treat that person's diagnosis; and

    -- The name of the manufacturer or labeler is to be considered public information, and DHSS is directed to release this information to the general public and distribute it among health care providers.

   The Commissioner of Health and Senior Services is directed to:

    -- publicize the program among the general public and health care providers in accordance with such recommendations as may be made by the advisory council established under the bill, and ensure that information about the program is made available through printed materials, existing telephone services provided by the department, and on-line; and

    -- annually report to the Governor and the Legislature on the enrollment and financial status of the program, in consultation with the Commissioner of Human Services, including in that report information about savings from rebate agreements negotiated pursuant to this bill.

    The bill takes effect on July 1, 2004, and prescription drug price discounts to New Jersey RX Card Program participants are to begin no later than January 1, 2005; however, the bill authorizes the Commissioners of Health and Senior Services and Human Services to take anticipatory administrative action in advance as necessary for its implementation.