1.1                          A bill for an act 
  1.2             relating to human services; establishing a 
  1.3             prescription drug discount program; appropriating 
  1.4             money; proposing coding for new law in Minnesota 
  1.5             Statutes, chapter 256. 
  1.6   BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.7      Section 1.  [256.954] [PRESCRIPTION DRUG DISCOUNT PROGRAM.] 
  1.8      Subdivision 1.  [ESTABLISHMENT; ADMINISTRATION.] The 
  1.9   commissioner of human services shall establish and administer 
  1.10  the prescription drug discount program, effective January 1, 
  1.11  2004.  
  1.12     Subd. 2.  [COMMISSIONER'S AUTHORITY.] The commissioner 
  1.13  shall administer a drug rebate program for drugs purchased 
  1.14  according to the prescription drug discount program.  The 
  1.15  commissioner shall require a rebate agreement from all 
  1.16  manufacturers of covered drugs as defined in section 256B.0625, 
  1.17  subdivision 13.  For each drug, the amount of the rebate shall 
  1.18  be equal to the rebate as defined for purposes of the federal 
  1.19  rebate program in United States Code, title 42, section 
  1.20  1396r-8.  The rebate program shall utilize the terms and 
  1.21  conditions used for the federal rebate program established 
  1.22  according to section 1927 of title XIX of the federal Social 
  1.23  Security Act. 
  1.24     Subd. 3.  [DEFINITIONS.] For the purpose of this section, 
  1.25  the following terms have the meanings given them: 
  2.1      (a) "Commissioner" means the commissioner of human services.
  2.2      (b) "Manufacturer" means a manufacturer as defined in 
  2.3   section 151.44, paragraph (c). 
  2.4      (c) "Covered prescription drug" means a prescription drug 
  2.5   as defined in section 151.44, paragraph (d), that is covered 
  2.6   under medical assistance as described in section 256B.0625, 
  2.7   subdivision 13, and that is provided by a manufacturer that has 
  2.8   a fully executed rebate agreement with the commissioner under 
  2.9   this section and complies with that agreement.  Multi-source 
  2.10  drugs for which there are three or more drug products are not 
  2.11  subject to the requirements of this section.  This exemption 
  2.12  does not apply to innovator multi-source drugs.  
  2.13     (d) "Health carrier" means an insurance company licensed 
  2.14  under chapter 60A to offer, sell, or issue an individual or 
  2.15  group policy of accident and sickness insurance as defined in 
  2.16  section 62A.01; a nonprofit health service plan corporation 
  2.17  operating under chapter 62C; a health maintenance organization 
  2.18  operating under chapter 62D; a joint self-insurance employee 
  2.19  health plan operating under chapter 62H; a community integrated 
  2.20  systems network licensed under chapter 62N; a fraternal benefit 
  2.21  society operating under chapter 64B; a city, county, school 
  2.22  district, or other political subdivision providing self-insured 
  2.23  health coverage under section 461.617 or sections 471.98 to 
  2.24  471.982; and a self-funded health plan under the Employee 
  2.25  Retirement Income Security Act of 1974, as amended. 
  2.26     (e) "Participating pharmacy" means a pharmacy as defined in 
  2.27  section 151.01, subdivision 2, that agrees to participate in the 
  2.28  prescription drug discount program. 
  2.29     (f) "Enrolled individual" means a person who is eligible 
  2.30  for the program under subdivision 4 and has enrolled in the 
  2.31  program according to subdivision 5. 
  2.32     Subd. 4.  [ELIGIBLE PERSONS.] To be eligible for the 
  2.33  program, an applicant must: 
  2.34     (1) be a permanent resident of Minnesota as defined in 
  2.35  section 256L.09, subdivision 4; 
  2.36     (2) not be enrolled in medical assistance, general 
  3.1   assistance medical care, MinnesotaCare, or the prescription drug 
  3.2   program under section 256.955; 
  3.3      (3) not be enrolled in and have currently available 
  3.4   prescription drug coverage under a health plan offered by a 
  3.5   health carrier; 
  3.6      (4) not be enrolled in and have currently available 
  3.7   prescription drug coverage under a Medicare supplement plan, as 
  3.8   defined in sections 62A.31 to 62A.44, or policies, contracts, or 
  3.9   certificates that supplement Medicare issued by health 
  3.10  maintenance organizations or those policies, contracts, or 
  3.11  certificates governed by section 1833 or 1876 of the federal 
  3.12  Social Security Act, United States Code, title 42, section 1395, 
  3.13  et. seq., as amended; and 
  3.14     (5) have a gross household income that does not exceed 250 
  3.15  percent of the federal poverty guidelines. 
  3.16     Subd. 5.  [APPLICATION PROCEDURE.] (a) Applications and 
  3.17  information on the program must be made available at county 
  3.18  social services agencies, health care provider offices, and 
  3.19  agencies and organizations serving senior citizens.  Individuals 
  3.20  shall submit applications and any information specified by the 
  3.21  commissioner as being necessary to verify eligibility directly 
  3.22  to the commissioner.  The commissioner shall determine an 
  3.23  applicant's eligibility for the program within 30 days from the 
  3.24  date the application is received.  Eligibility begins the month 
  3.25  after approval. 
  3.26     (b) The commissioner shall develop an application form that 
  3.27  does not exceed one page in length and requires information 
  3.28  necessary to determine eligibility for the program. 
  3.29     Subd. 6.  [PARTICIPATING PHARMACY.] According to a valid 
  3.30  prescription, a participating pharmacy must sell a covered 
  3.31  prescription drug to an enrolled individual at the pharmacy's 
  3.32  usual and customary retail price, minus an amount that is equal 
  3.33  to the rebate amount described in subdivision 8, plus the amount 
  3.34  of any administrative fee and switch fee established by the 
  3.35  commissioner under subdivision 10.  Each participating pharmacy 
  3.36  shall provide the commissioner with all information necessary to 
  4.1   administer the program, including, but not limited to, 
  4.2   information on prescription drug sales to enrolled individuals 
  4.3   and usual and customary retail prices. 
  4.4      Subd. 7.  [NOTIFICATION OF REBATE AMOUNT.] The commissioner 
  4.5   shall notify each drug manufacturer, each calendar quarter or 
  4.6   according to a schedule to be established by the commissioner, 
  4.7   of the amount of the rebate owed on the prescription drugs sold 
  4.8   by participating pharmacies to enrolled individuals. 
  4.9      Subd. 8.  [PROVISION OF REBATE.] To the extent that a 
  4.10  manufacturer's prescription drugs are prescribed to a citizen of 
  4.11  this state, the manufacturer must provide a rebate equal to the 
  4.12  rebate provided under the medical assistance program for any 
  4.13  prescription drug distributed by the manufacturer that is 
  4.14  purchased by an enrolled individual at a participating 
  4.15  pharmacy.  The manufacturer must provide full payment within 30 
  4.16  days of receipt of the state invoice for the rebate, or 
  4.17  according to a schedule to be established by the commissioner.  
  4.18  The commissioner shall deposit all rebates received into the 
  4.19  Minnesota prescription drug dedicated fund established under 
  4.20  this section.  The manufacturer must provide the commissioner 
  4.21  with any information necessary to verify the rebate determined 
  4.22  per drug. 
  4.23     Subd. 9.  [PAYMENT TO PHARMACIES.] The commissioner shall 
  4.24  distribute on a biweekly basis an amount that is equal to an 
  4.25  estimate of the rebate amount described in subdivision 8 to each 
  4.26  participating pharmacy based on the prescription drugs sold by 
  4.27  that pharmacy to enrolled individuals, minus the amount of the 
  4.28  administrative fee established by the commissioner under 
  4.29  subdivision 10. 
  4.30     Subd. 10.  [ADMINISTRATIVE FEE; SWITCH FEE.] The 
  4.31  commissioner shall establish a reasonable administrative fee 
  4.32  that covers the commissioner's expenses for enrollment, 
  4.33  processing claims, repaying the appropriation from the cash flow 
  4.34  account over a seven-year period, and distributing rebates under 
  4.35  this program.  The commissioner shall establish a reasonable 
  4.36  switch fee that covers expenses incurred by pharmacies in 
  5.1   formatting for electronic submission claims for prescription 
  5.2   drugs sold to enrolled individuals. 
  5.3      Subd. 11.  [DEDICATED FUND; CREATION; USE OF FUND.] (a) The 
  5.4   Minnesota prescription drug dedicated fund is established as an 
  5.5   account in the state treasury.  The commissioner of finance 
  5.6   shall credit to the dedicated fund all rebates paid under 
  5.7   subdivision 8, any federal funds received for the program, and 
  5.8   any appropriations or allocations designated for the fund.  The 
  5.9   commissioner of finance shall ensure that fund money is invested 
  5.10  under section 11A.25.  All money earned by the fund must be 
  5.11  credited to the fund.  The fund shall earn a proportionate share 
  5.12  of the total state annual investment income. 
  5.13     (b) Money in the fund is appropriated to the commissioner 
  5.14  of human services to reimburse participating pharmacies for 
  5.15  prescription drug discounts provided to enrolled individuals 
  5.16  under this section, to reimburse the commissioner of human 
  5.17  services for costs related to enrollment, processing claims, 
  5.18  distributing rebates, and for other reasonable administrative 
  5.19  costs related to administration of the prescription drug 
  5.20  discount program, and to repay the appropriation from the cash 
  5.21  flow account provided in section 2.  The commissioner must 
  5.22  administer the program so that the costs total no more than 
  5.23  funds appropriated plus the drug rebate proceeds. 
  5.24     Sec. 2.  [APPROPRIATION.] 
  5.25     $....... is appropriated on July 1, 2003, from the cash 
  5.26  flow account to the Minnesota prescription drug dedicated fund 
  5.27  established under the prescription drug discount program.  This 
  5.28  is a onetime appropriation.