SENATE, No. 2914

STATE OF NEW JERSEY

212th LEGISLATURE

 

INTRODUCED NOVEMBER 29, 2007

 


 

Sponsored by:

Senator LORETTA WEINBERG

District 37 (Bergen)

 

 

 

 

SYNOPSIS

     Establishes New Jersey Rx Program to reduce prescription drug prices.

 

CURRENT VERSION OF TEXT

     As introduced.

  


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 dependence on public assistance programs.

 

     2.    As used in this act:

     “Advisory council” means the “Rx Program Advisory Council” established pursuant to section 10 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 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.2005, c.156 (C.30:4J-8 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, which 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 who: has an annual income that does not exceed 350% of the federal poverty level; is not eligible for a State or federally 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 the program; and 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 may 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, 2010 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.     (1) 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.

     (2)   In the case of a combination of drugs that are prescribed in conjunction with each other to treat a specific disease, illness or other medical condition in accordance with a treatment regimen that the commissioner determines to be in the best interest of providing appropriate medical care for that disease, illness or medical condition, but which combination includes one or more drugs that are not covered by a rebate agreement, the commissioner shall establish discounted prices for those drugs that are not covered by a rebate agreement when prescribed in that combination for that disease, illness or medical condition.

     (3)   In the case of a drug that is prescribed for a specific disease, illness or other medical condition, with respect to which the commissioner determines that there is no therapeutic equivalent for that disease, illness or medical condition, but which drug is not covered by a rebate agreement, the commissioner shall establish a discounted price for that drug when prescribed for that disease, illness or medical condition.

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

     (1)   beginning January 1, 2010 an initial discounted price; and

     (2)   no later than October 1, 2010 a secondary discounted price.

     c.     In determining the amount of discounted prices, the commissioner shall consider, as applicable, 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 section 4 of this act shall be considered public information, and the department shall release this information to health care providers and the public.  In addition, the dispensing of prescription drugs provided by those manufacturers and labelers shall be subject to the provisions of section 11 of this act.

 

     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.  There is established the “Rx 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 15 public members as follows:

     (1)   five physicians who represent a cross-section of professional specialties and four pharmacists, who shall be appointed by the Governor with the advice and consent of the Senate; and

     (2)   six members of the public who are health care consumers, of whom two shall be appointed by the Governor with the advice and consent of the Senate, two shall be appointed by the President of the Senate, and two shall be appointed by the Speaker of the General Assembly.

     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, six shall serve for a term of three years, five for a term of two years, and four 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.

 

     11.  a.  (1) The commissioner, in consultation with the advisory council, shall establish an approved drug group for PAAD and Senior Gold.  The commissioner shall exclude from the approved drug group those prescription drugs that are not covered by a rebate agreement pursuant to section 4 of this act, and shall impose requirements under those programs for obtaining verification of approval for the dispensing of those prescription drugs, except as provided in paragraph (2) of this subsection.

     (2)   The commissioner, in consultation with the advisory council, shall exempt from the verification of approval requirement imposed pursuant to paragraph (1) of this subsection such prescription drugs, or prescription drugs for persons with such diagnoses, as the commissioner determines to be in the best interest of providing appropriate medical care to PAAD and Senior Gold recipients.

     b.    (1) The Commissioner of Human Services, in consultation with the advisory council, shall establish an approved drug group for the Medicaid program and NJ FamilyCare.  The Commissioner of Human Services shall exclude from the approved drug group those prescription drugs that are not covered by a rebate agreement pursuant to section 4 of this act, and shall impose requirements under those programs, as permitted by law, for obtaining verification of approval for the dispensing of those prescription drugs, except as provided in paragraph (2) of this subsection.

     (2)   The Commissioner of Human Services shall, in consultation with the advisory council, exempt from the verification of approval requirement imposed pursuant to paragraph (1) of this subsection such prescription drugs, or prescription drugs for persons with such diagnoses, as the Commissioner of Human Services determines to be in the best interest of providing appropriate medical care to Medicaid and NJ FamilyCare recipients.

     c.     Any requirement for verification of approval imposed pursuant to subsection a. or b. of this section shall meet any applicable requirements set forth in federal law governing prior authorization for the dispensing of prescription drugs in the Medicaid program, and shall ensure that, with respect to a recipient of benefits under PAAD, Senior Gold, the Medicaid program or NJ FamilyCare:

     (1)   the provisions of subsections a. and b. of this section shall not be construed to deny the recipient any prescription drug under the applicable program that the recipient’s physician determines to be medically necessary to treat the recipient’s diagnosis and that is covered by the applicable program, regardless of whether or not the drug is included in an approved drug group established pursuant to subsection a. or b. of this section;

     (2)   the person who requests verification of approval by telephone or on-line for the dispensing of a prescription drug to the recipient shall receive a response to that request from a pharmacist on the staff of the department or the Department of Human Services, as applicable, within 24 hours of making the request; and

     (3)   notwithstanding the verification of approval requirement to the contrary, the recipient shall be entitled to receive a 72-hour supply of the prescribed drug, without obtaining the required prior authorization, in an emergency as determined by the prescriber.

 

     12.  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.

 

     13.  A third party administrator with whom the commissioner contracts to administer any or all components of the program pursuant to subsection d. of section 12 of this act shall be required to adhere to the same ethical standards as those required for public employees under Executive Order No. 10 (2002).

 

     14.  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 and the advisory council, 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 verification of approval 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, and whose prescription drugs are not included in the approved drug group for these programs established pursuant to section 11 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 and the advisory council, shall adopt rules and regulations with respect to the Medicaid program and NJ FamilyCare concerning requirements for verification of approval 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, and whose prescription drugs are not included in the approved drug group for these programs established pursuant to section 11 of this act.

 

     15.  This act shall take effect on July 1, 2009; 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 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 350% of the federal poverty level, and who are not eligible for a State or federally 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 the New Jersey Rx Program.

     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 may 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 the 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 the 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 the bill will be considered public information, and DHSS is to release this information to health care providers and the public.

     --  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 the 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 the 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.

     --  The Rx 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 of Health and Senior Services and the Commissioner of Human Services, or their designees, as ex officio members, and 15 public members as follows:

     -  five physicians who represent a cross-section of professional specialties and four pharmacists, to be appointed by the Governor; and

     -  six members of the public who are health care consumers, of whom two are appointed by the Governor, two by the President of the Senate, and two by the Speaker of the General Assembly.

     --  The Commissioner of Health and Senior Services, in consultation with the advisory council, is to establish an approved drug group, which is to exclude those prescription drugs that are not covered by a rebate agreement pursuant to the bill, and impose prior verification of approval requirements for PAAD and Senior Gold for drugs that are not in the approved drug group; and the Commissioner of Human Services is to do the same for Medicaid and NJ FamilyCare, as permitted by law.

     --  Each commissioner, in consultation with the advisory council, may, however, exempt from verification of approval requirements such prescription drugs, or prescription drugs for persons with such diagnoses, as the commissioner determines to be in the best interest of providing appropriate medical care to recipients of the applicable program.

     --  Any verification of approval requirement imposed pursuant to the bill must meet any applicable requirements set forth in federal law governing prior authorization for the dispensing of prescription drugs in the Medicaid program, and must ensure that, with respect to a recipient of benefits under PAAD, Senior Gold, the Medicaid program or NJ FamilyCare:

     -  the provisions of the bill are not to be construed to deny the recipient any prescription drug under the applicable program that the recipient’s physician determines to be medically necessary to treat the recipient’s diagnosis and that is covered by the applicable program, regardless of whether or not the drug is included in an approved drug group established pursuant to the bill;

     -  the person who requests verification of approval by telephone or on-line for the dispensing of a prescription drug to the recipient will receive a response to that request from a pharmacist on the staff of DHSS or the Department of Human Services, as applicable, within 24 hours of making the request; and

     -  notwithstanding the verification of approval requirement to the contrary, the recipient is entitled to receive a 72-hour supply of the prescribed drug, without obtaining the required verification of approval, in an emergency as determined by the prescriber.

     --  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 the bill; and

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

     --  A third party administrator with whom the commissioner contracts to administer any or all components of the New Jersey Rx Program will be required to adhere to the same ethical standards as those required for public employees under Executive Order No. 10 (2002).