BILL NUMBER: SB 696 CHAPTERED
BILL TEXT
CHAPTER 693
FILED WITH SECRETARY OF STATE OCTOBER 10, 2001
APPROVED BY GOVERNOR OCTOBER 10, 2001
PASSED THE SENATE SEPTEMBER 13, 2001
PASSED THE ASSEMBLY SEPTEMBER 10, 2001
AMENDED IN ASSEMBLY SEPTEMBER 6, 2001
AMENDED IN ASSEMBLY JULY 17, 2001
AMENDED IN ASSEMBLY JUNE 27, 2001
AMENDED IN SENATE MAY 8, 2001
AMENDED IN SENATE APRIL 17, 2001
AMENDED IN SENATE MARCH 29, 2001
INTRODUCED BY Senator Speier
(Principal coauthor: Assembly Member Negrete McLeod)
(Coauthors: Senators Figueroa, McPherson, and Scott)
(Coauthors: Assembly Members Alquist, Chan, Koretz, and Richman)
FEBRUARY 23, 2001
An act to amend Section 4426 of the Business and Professions Code,
and to add Division 111 (commencing with Section 130400) to the
Health and Safety Code, relating to health, and making an
appropriation therefor.
LEGISLATIVE COUNSEL'S DIGEST
SB 696, Speier. Pharmacies: prescription benefits: Medicare
beneficiaries.
Existing law requires the State Department of Health Services to
conduct a study of the adequacy of Medi-Cal pharmacy reimbursement
rates.
This bill would require the department to report the results of
the study to the Legislature by July 1, 2002.
Existing law provides for the Medi-Cal program, administered by
the State Department of Health Services, under which qualified
low-income persons are provided with health care services, including
prescription benefits. Under existing law, the department pays
participating pharmacists a discounted price for drugs on a Medi-Cal
list of contract drugs, and obtains best price rebates from drug
manufacturers.
Existing law, operative until January 1, 2003, requires Medicare
beneficiaries, upon showing their Medicare card and prescription, be
charged a price not to exceed the Medi-Cal reimbursement rate for
prescription medicines, and an amount to cover electronic
transmission charges, as a condition of a pharmacy's participation in
the Medi-Cal program.
This bill would enact the Golden Bear State Pharmacy Assistance
Program, participation in which would be voluntary for Medicare
beneficiaries, pharmacies, and drug manufacturers.
The bill would require participating pharmacies to charge prices
based on specified components, including rebates to be negotiated
with drug manufacturers, and would require the department to pay
pharmacies an amount based on these rebates. It would further
require rebate amounts paid by the department with respect to a
manufacturer's drug to also be paid by the manufacturer to the
department.
The bill would require moneys received from drug manufacturers
pursuant to the bill to be deposited into the Golden Bear State
Pharmacy Assistance Program Rebate Fund, which would be created by
the bill. The fund would be continuously appropriated to the
department without regard to fiscal years for implementation of the
bill.
This bill would only be implemented upon the receipt of all
necessary federal approvals and if the department is able to
negotiate a sufficient number of rebate agreements.
The bill would appropriate $1,000,000 from the General Fund to the
department, in the form of a loan, for startup costs for
implementation of the bill.
Appropriation: yes.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 4426 of the Business and Professions Code is
amended to read:
4426. The State Department of Health Services shall conduct a
study of the adequacy of Medi-Cal pharmacy reimbursement rates
including the cost of providing prescription drugs and services. The
department shall report the results of the study to the Legislature
by July 1, 2002.
SEC. 2. Division 111 (commencing with Section 130400) is added to
the Health and Safety Code, to read:
DIVISION 111. GOLDEN BEAR STATE PHARMACY ASSISTANCE PROGRAM
130400. (a) This division shall be known, and may be cited as,
the Golden Bear State Pharmacy Assistance Program.
(b) As used in this division:
(1) "Department" means the State Department of Health Services.
(2) "Fund" means the Golden Bear State Pharmacy Assistance Program
Rebate Fund.
130401. (a) In addition to participating in the program provided
for under Article 24 (commencing with Section 4425) of the Business
and Professions Code, any Medicare beneficiary may participate in the
program provided for under this division.
(b) The department shall conduct an outreach program to inform
Medicare beneficiaries of their right to participate in this program.
Medicare beneficiaries shall be informed that the amount of the
prescription discount shall fluctuate quarterly.
(c) In order to participate in the program provided for under this
division, a Medicare beneficiary shall be required to register on a
one-time basis. Registration may be made at any pharmacy
participating in this program. In order to register for the program,
the Medicare beneficiary shall pay to the pharmacy an administrative
fee, which the pharmacy shall retain, in an amount to be established
by the department. Upon payment of this fee, the pharmacy shall
issue a program registration card, which shall be prepared and
provided to the pharmacy by the department, to the Medicare
beneficiary.
130402. (a) Any pharmacy may participate in the program provided
for under this division. However, this division shall apply only to
prescriptions dispensed to noninstitutionalized Medicare
beneficiaries.
(b) Any drug manufacturer may participate in the program provided
for under this division.
130403. (a) The department shall attempt to negotiate rebate
amounts with drug manufacturers for all prescription drugs purchased
by Medicare beneficiaries.
(b) If the department determines that it is unable to negotiate
rebates with a sufficient number of drug manufacturers, it may cease
to continue implementation of this division.
130404. (a) With respect to any prescription drug for which a
rebate amount has been negotiated pursuant to Section 130403, upon
presentation of a program registration card issued pursuant to
Section 130401, a participating pharmacy shall charge Medicare
beneficiaries a price for a prescription drug that does not exceed
the following computed price:
(1) The Medi-Cal reimbursement rate for the prescription drug, and
an amount, as set by the department, to cover electronic
transmission charges.
(2) The amount ascertained pursuant to paragraph (1) shall be
reduced by a percentage to be determined by the department based on
the amount of rebate moneys available in the fund.
(b) The pharmacy shall request, and the department shall provide,
through electronic means, the price to be charged pursuant to this
section.
(c) This division shall not apply to any prescription that is
covered by insurance.
130405. Whenever a pharmacy provides a prescription drug to an
individual pursuant to Section 130404, the pharmacy shall bill the
department for the amount computed pursuant to paragraph (2) of
subdivision (a) of Section 130404 and the department shall pay that
amount.
130406. (a) The department shall notify a drug manufacturer of
all instances in which it has paid a rebate amount pursuant to
Section 130405 with respect to one of the manufacturer's drugs.
(b) A drug manufacturer shall pay the department the amount of any
rebate of which the drug manufacturer is notified pursuant to
subdivision (a).
130407. (a) The department shall deposit all payments received
pursuant to Section 130406 into the Golden Bear State Pharmacy
Assistance Program Rebate Fund, which is hereby created in the State
Treasury.
(b) Notwithstanding Section 13340 of the Government Code, the fund
is hereby continuously appropriated to the department without regard
to fiscal years for the purpose of paying rebates pursuant to
Section 130405 and for defraying the costs of administering this
division.
130408. The department shall develop a program to prevent the
occurrence of fraud under this division.
130409. The department may hire any staff needed for the
implementation of this division. To implement this program, the
department may use the contract with the Medi-Cal fiscal intermediary
to administer the program and enroll Medicare beneficiaries, collect
rebates, and pay claims, only if services provided under this
program are specifically identified and reimbursed in a manner that
does not claim federal financial reimbursement. For purposes of this
division, use of the Medi-Cal program fiscal intermediary shall be
exempt from Part 2 (commencing with Section 10100) of Division 1 of
the Public Contract Code. This division shall not be implemented
unless and until the director executes a declaration, which shall be
retained by the director, stating that all federal approvals
necessary for implementation of this division have been received.
SEC. 3. (a) There is hereby appropriated the sum of one million
dollars ($1,000,000) from the General Fund to the State Department of
Health Services, for deposit in the Golden Bear State Pharmacy
Assistance Program Rebate Fund, in order to provide funds for startup
costs for implementation of Division 111 (commencing with Section
130400) of the Health and Safety Code. These funds may be used for,
among other things, the development of technical systems, and for
negotiating rebates with drug manufacturers.
(b) The money appropriated pursuant to this section shall be in
the form of a loan. The department shall be required to repay this
loan to the General Fund, except to the extent that any moneys have
been expended and the provisions of this act are unable to be
implemented.
(c) It is the intent of the Legislature to enact legislation that
provides for an additional loan of one million dollars ($1,000,000),
to be made after the department determines that it has negotiated
sufficient rebate agreements to implement this act. The moneys from
this second loan would be used for pharmacy rebates until sufficient
moneys are paid into the Golden Bear State Pharmacy Assistance
Program Rebate Fund.