BILL NUMBER: SB 1278 CHAPTERED
BILL TEXT
CHAPTER 542
FILED WITH SECRETARY OF STATE SEPTEMBER 15, 2002
APPROVED BY GOVERNOR SEPTEMBER 13, 2002
PASSED THE SENATE AUGUST 31, 2002
PASSED THE ASSEMBLY AUGUST 30, 2002
AMENDED IN ASSEMBLY AUGUST 28, 2002
AMENDED IN ASSEMBLY AUGUST 20, 2002
AMENDED IN ASSEMBLY AUGUST 13, 2002
AMENDED IN ASSEMBLY JUNE 10, 2002
AMENDED IN SENATE MARCH 7, 2002
INTRODUCED BY Senator Speier
(Principal coauthor: Assembly Member Vargas)
(Coauthors: Senators Chesbro, Escutia, Kuehl, Ortiz, Romero, and
Vincent)
(Coauthors: Assembly Members Alquist, Aroner, Cohn, Correa, Diaz,
Jackson, and Simitian)
JANUARY 16, 2002
An act to amend Section 4425 of, and to repeal Section 4427 of,
the Business and Professions Code, and to amend Sections 130400,
130401, 130403, 130404, 130406, 130407, 130408, and 130409 of, and to
add Sections 130401.1, 130406.5, 130407.5, and 130410 to, the Health
and Safety Code, relating to pharmacies, and making an appropriation
therefor.
LEGISLATIVE COUNSEL'S DIGEST
SB 1278, Speier. Pharmacies: prescription benefits: Medicare
beneficiaries.
(1) 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 the
Medi-Cal drug formulary. Existing law, the Pharmacy Law, separately
regulates the operation of pharmacies and makes the violation of its
provisions a crime.
The Pharmacy Law requires until January 1, 2003, as a condition of
Medi-Cal eligibility, that pharmacies charge Medicare beneficiaries
a price not to exceed the Medi-Cal reimbursement rate for
prescription medicines, and an amount to cover electronic
transmission charges by Medicare beneficiaries, upon showing their
Medicare card and prescription.
This bill would indefinitely extend these provisions and would
specify that they do not apply to a prescription covered by
insurance. The bill would require the department to conduct an
outreach program to inform Medicare beneficiaries of this program and
require participating pharmacists to prominently display a sign
pertaining to its provisions. By imposing this requirement on a
pharmacist and by extending the provisions of this program, the
violation of which is punishable as a criminal offense, the bill
would impose a state-mandated local program.
(2) Existing law, the Golden Bear State Pharmacy Assistance
Program (the program), provides that in addition to receiving a
discounted rate for prescription medicines under the Pharmacy Law, a
Medicare beneficiary may participate in the program as well. Under
the program, the State Department of Health Services is required to
negotiate rebate amounts with drug manufacturers for prescription
drugs purchased by Medicare beneficiaries. Under the program, a drug
manufacturer is required to pay the department the negotiated rebate
amount for a prescription drug provided to a Medicare beneficiary
participating in the program. Existing law requires the department
to deposit the rebates into the Golden Bear State Pharmacy Assistance
Program Rebate Fund (the fund), which is continuously appropriated.
This bill would authorize the department to establish a system
that allows a Medicare beneficiary access to programs operated by
drug manufacturers providing a larger discount amount on prescription
drugs. The bill would also authorize the department to collect
prospective rebates from drug manufacturers, which would be deposited
into the fund. Because the bill would increase the amount of
revenue in a continuously appropriated fund, it would make an
appropriation. The bill would require the department to negotiate a
separate fee in an amount required to administer each pharmacy claim
reimbursement submitted to the department under the program.
(3) The California Constitution requires the state to reimburse
local agencies and school districts for certain costs mandated by the
state. Statutory provisions establish procedures for making that
reimbursement.
This bill would provide that no reimbursement is required by this
act for a specified reason.
Appropriation: yes.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 4425 of the Business and Professions Code is
amended to read:
4425. (a) As a condition for the participation of a pharmacy in
the Medi-Cal program pursuant to Chapter 7 (commencing with Section
14000) of Division 9 of the Welfare and Institutions Code, the
pharmacy, upon presentation of a valid prescription for the patient
and the patient's Medicare card, shall charge Medicare beneficiaries
a price that does not exceed the Medi-Cal reimbursement rate for
prescription medicines, and an amount, as set by the State Department
of Health Services to cover electronic transmission charges.
However, Medicare beneficiaries shall not be allowed to use the
Medi-Cal reimbursement rate for over-the-counter medications or
compounded prescriptions.
(b) The State Department of Health Services shall provide a
mechanism to calculate and transmit the price to the pharmacy, but
shall not apply the Medi-Cal drug utilization review process for
purposes of this section.
(c) The State Department of Health Services shall monitor pharmacy
participation with the requirements of subdivision (a).
(d) The State Department of Health Services shall conduct an
outreach program to inform Medicare beneficiaries of their right to
participate in the program described in subdivision (a), including,
but not limited to, the following:
(1) Including on its Internet Web site the Medi-Cal reimbursement
rate for, at minimum, 200 of the most commonly prescribed medicines
and updating this information monthly.
(2) Providing a sign to participating pharmacies that the
pharmacies shall prominently display at the point of service and at
the point of sale, reminding the Medicare beneficiaries to ask that
the charge for their prescription be the same amount as the Medi-Cal
reimbursement rate and providing the department's telephone number,
e-mail address, and Internet Web site address to access information
about the program.
(e) If prescription drugs are added to the scope of benefits
available under the federal Medicare program, the Senate Office of
Research shall report that fact to the appropriate committees of the
Legislature. It is the intent of the Legislature to evaluate the
need to continue the implementation of this article under those
circumstances.
(f) This section shall not apply to a prescription that is covered
by insurance.
SEC. 2. Section 4427 of the Business and Professions Code is
repealed.
SEC. 3. Section 130400 of the Health and Safety Code is amended to
read:
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.
(3) "Medicare beneficiary" means a Medicare beneficiary who is a
California resident.
SEC. 4. Section 130401 of the Health and Safety Code is amended to
read:
130401. (a) In addition to participating in the program provided
for under Article 24 (commencing with Section 4425) of Chapter 9 of
Division 2 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 of the method by which the
prescription drug discount is determined and that the discount shall
periodically fluctuate. No outreach material shall contain a
likeness of an elected state official.
(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.
SEC. 5. Section 130401.1 is added to the Health and Safety Code,
to read:
130401.1. (a) The department may accept on behalf of the state
any gift, bequest, or donation of outreach services or materials to
inform eligible Medicare beneficiaries of their right to participate
in this program. Neither Section 11005 of the Government Code nor
any other law requiring approval by a state officer of a gift,
bequest, or donation shall apply to these gifts, bequests, or
donations. For purposes of this section, outreach services may
include, but not be limited to, coordinating and implementing
outreach efforts and plans, and outreach materials may include, but
not be limited to, brochures, pamphlets, fliers, posters,
advertisements, and other promotional items.
(b) An advertisement provided as a gift, bequest, or donation
pursuant to this section shall be exempt from the provisions of
Article 5 (commencing with Section 11080) of Chapter 1 of Part 1 of
Division 3 of Title 2 of the Government Code.
SEC. 6. Section 130403 of the Health and Safety Code is amended to
read:
130403. (a) The department shall attempt to negotiate rebate
amounts with drug manufacturers for all prescription drugs purchased
by Medicare beneficiaries. As part of these agreements, the
department shall negotiate a separate fee in an amount required to
administer each pharmacy claim reimbursement submitted to the
department pursuant to Section 130405.
(b) If the department determines that it is unable to negotiate
rebates with a sufficient number of drug manufacturers, it may cease
to continue the implementation or operation of this division.
SEC. 7. Section 130404 of the Health and Safety Code is amended to
read:
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 the rebate amount negotiated by the department pursuant to
Section 130403.
(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.
SEC. 8. Section 130406 of the Health and Safety Code is amended to
read:
130406. (a) The department may collect prospective rebates from
drug manufacturers for payment to pharmacies pursuant to Section
130405.
(b) 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.
(c) A drug manufacturer shall pay the department the amount of any
rebate of which the drug manufacturer is notified pursuant to
subdivision (b) that exceeds the amount collected by the department
pursuant to subdivision (a).
SEC. 9. Section 130406.5 is added to the Health and Safety Code,
to read:
130406.5. (a) As part of the program provided in this division,
the department may establish a system to provide a Medicare
beneficiary access to a drug discount program operated by a drug
manufacturer that would provide greater prescription drug discounts
than are otherwise available through the program provided in this
division. The program registration card issued pursuant to Section
130401 shall serve as the single point of entry to the private drug
discount programs of participating manufacturers.
(b) To establish the system described in subdivision (a), the
department may negotiate a contract with a drug manufacturer that
operates a prescription drug discount program. To assist in these
negotiations, the department may contract with a public or private
entity.
(c) (1) A Medicare beneficiary shall not in any circumstance be
required to participate in, or to disclose information that would
determine his or her eligibility to participate in, these private
drug discount programs in order to participate in the program
provided in this division.
(2) Notwithstanding paragraph (1), a Medicare beneficiary may
voluntarily disclose or provide information that may be necessary to
determine eligibility for participation in a private drug discount
program.
SEC. 10. Section 130407 of the Health and Safety Code is amended
to read:
130407. (a) The department shall deposit all payments received
pursuant to Sections 130406 and 130410 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. Notwithstanding any other law, no money in the fund is
available for expenditure for any other purpose or for loaning or
transferring to any other fund, including the General Fund.
SEC. 11. Section 130407.5 is added to the Health and Safety Code,
to read:
130407.5. The department shall repay the General Fund the loan in
the amount of one million dollars ($1,000,000), which was
appropriated to the department for startup costs associated with the
program provided in this division.
SEC. 12. Section 130408 of the Health and Safety Code is amended
to read:
130408. The department shall develop a program to prevent the
occurrence of fraud under this division. An individual or entity
that violates any provision of the fraud prevention program may be
precluded from participating in the Golden Bear State Pharmacy
Assistance Program. The department shall adopt regulations setting
forth a procedure for precluding participation in the program on this
basis.
SEC. 13. Section 130409 of the Health and Safety Code is amended
to read:
130409. The department may hire any staff needed for the
implementation of this division. The department may also use the
contract with the Medi-Cal fiscal intermediary or contract with
another public or private entity to implement or administer the
program and to enroll Medicare beneficiaries who are eligible to
participate in the program, to collect rebates, and to 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 2 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. 14. Section 130410 is added to the Health and Safety Code, to
read:
130410. A contract executed for the purposes of this division is
exempt from Part 2 (commencing with Section 10100) of Division 2 of
the Public Contract Code.
SEC. 15. No reimbursement is required by this act pursuant to
Section 6 of Article XIII B of the California Constitution because
the only costs that may be incurred by a local agency or school
district will be incurred because this act creates a new crime or
infraction, eliminates a crime or infraction, or changes the penalty
for a crime or infraction, within the meaning of Section 17556 of the
Government Code, or changes the definition of a crime within the
meaning of Section 6 of Article XIII B of the California
Constitution.