Bill Text: OR SB1577 | 2012 | Regular Session | Engrossed

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Bill Title: Relating to prescription drugs; prescribing an effective date.

Spectrum: Partisan Bill (Democrat 11-0)

Status: (Failed) 2012-03-05 - In committee upon adjournment. [SB1577 Detail]

Download: Oregon-2012-SB1577-Engrossed.html

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     76th OREGON LEGISLATIVE ASSEMBLY--2012 Regular Session

NOTE:  Matter within  { +  braces and plus signs + } in an
amended section is new. Matter within  { -  braces and minus
signs - } is existing law to be omitted. New sections are within
 { +  braces and plus signs + } .

LC 219

                           A-Engrossed

                        Senate Bill 1577
                Ordered by the Senate February 9
          Including Senate Amendments dated February 9

Sponsored by Senators ROSENBAUM, BATES; Senators BEYER, BURDICK,
  COURTNEY, DINGFELDER, EDWARDS, HASS, MONROE, SHIELDS, VERGER
  (Presession filed.)

                             SUMMARY

The following summary is not prepared by the sponsors of the
measure and is not a part of the body thereof subject to
consideration by the Legislative Assembly. It is an editor's
brief statement of the essential features of the measure.

  Requires state agencies to participate in Oregon Prescription
Drug Program subject to exceptions.  { + Specifies that Oregon
Health Authority may not participate in program with respect to
prescription drugs purchased for recipients of medical
assistance. + } Authorizes administrator of Oregon Prescription
Drug Program to contract with pharmacy benefit manager. Requires
administrator to contract with entity to negotiate with drug
manufacturers to extend rebates to participants in program.
Directs Oregon Health Authority to apply for federal approval
necessary to obtain federal financial participation in costs of
drugs purchased through program.
    { - Declares emergency, effective on passage. - }
   { +  Takes effect July 1, 2012. + }

                        A BILL FOR AN ACT
Relating to prescription drugs; creating new provisions; amending
  ORS 414.312; and prescribing an effective date.
Be It Enacted by the People of the State of Oregon:
  SECTION 1. ORS 414.312 is amended to read:
  414.312. (1) As used in ORS 414.312 to 414.318:
  (a) 'Pharmacy benefit manager' means an entity that negotiates
and executes contracts with pharmacies, manages preferred drug
lists, negotiates rebates with prescription drug manufacturers
and serves as an intermediary between the Oregon Prescription
Drug Program, prescription drug manufacturers and pharmacies.
  (b) 'Prescription drug claims processor' means an entity that
processes and pays prescription drug claims, adjudicates pharmacy
claims, transmits prescription drug prices and claims data
between pharmacies and the Oregon Prescription Drug Program and
processes related payments to pharmacies.
  (c) 'Program price' means the reimbursement rates and
prescription drug prices established by the administrator of the
Oregon Prescription Drug Program.
  (2) The Oregon Prescription Drug Program is established in the
Oregon Health Authority. The purpose of the program is to:

  (a) Purchase prescription drugs, replenish prescription drugs
dispensed or reimburse pharmacies for prescription drugs in order
to receive discounted prices and rebates;
  (b) Make prescription drugs available at the lowest possible
cost to participants in the program as a means to promote health;
  (c) Maintain a list of prescription drugs recommended as the
most effective prescription drugs available at the best possible
prices; and
  (d) Promote health through the purchase and provision of
discount prescription drugs and coordination of comprehensive
prescription benefit services for eligible entities and members.
  (3) The Director of the Oregon Health Authority shall appoint
an administrator of the Oregon Prescription Drug Program. The
administrator may:
  (a) Negotiate price discounts and rebates on prescription drugs
with prescription drug manufacturers or group purchasing
organizations;
  (b) Purchase prescription drugs on behalf of individuals and
entities that participate in the program;
  (c) Contract with a prescription drug claims processor to
adjudicate pharmacy claims and transmit program prices to
pharmacies;
  (d) Determine program prices and reimburse or replenish
pharmacies for prescription drugs dispensed or transferred;
  (e) Adopt and implement a preferred drug list for the program;
  (f) Develop a system for allocating and distributing the
operational costs of the program and any rebates obtained to
participants   { - of - }   { + in + } the program; and
  (g) Cooperate with other states or regional consortia in the
bulk purchase of prescription drugs.
  (4) The following individuals or entities may participate in
the program:
  (a)   { - Public Employees' Benefit Board, Oregon Educators
Benefit Board and - }  Public Employees Retirement System;
  (b) Local governments as defined in ORS 174.116 and special
government bodies as defined in ORS 174.117 that directly or
indirectly purchase prescription drugs;
  (c) Oregon Health and Science University established under ORS
353.020;
    { - (d) State agencies that directly or indirectly purchase
prescription drugs, including agencies that dispense prescription
drugs directly to persons in state-operated facilities; - }
    { - (e) - }  { +  (d) + } Residents of this state who lack or
are underinsured for prescription drug coverage;
    { - (f) - }  { +  (e) + } Private entities; and
    { - (g) - }  { +  (f) + } Labor organizations.
    { - (5) The state agency that receives federal Medicaid funds
and is responsible for implementing the state's medical
assistance program may not participate in the program. - }
   { +  (5) The Oregon Health Authority may not participate in
the program to purchase prescription drugs directly or indirectly
for recipients of medical assistance.
  (6)(a) Except as provided in subsection (5) of this section,
state agencies that directly or indirectly purchase prescription
drugs, including agencies that dispense prescription drugs
directly to persons in state-operated facilities, shall
participate in the program.
  (b) A state agency is exempt from the requirements of this
subsection only if the agency can demonstrate to the
administrator that the availability of federal programs or the
agency's other purchasing arrangements will result in greater
discounts and aggregate cost savings than would be realized
through participation in the program.
  (c) A state agency that contracts with a health maintenance
organization, as defined in ORS 750.005, to provide coverage that

includes prescription drugs may not require the organization to
participate in the program. + }
    { - (6) - }   { + (7) + } The administrator may establish
different program prices for pharmacies in rural areas to
maintain statewide access to the program.
    { - (7) - }   { + (8) + } The administrator may establish the
terms and conditions for a pharmacy to enroll in the program. A
licensed pharmacy that is willing to accept the terms and
conditions established by the administrator may apply to enroll
in the program.
    { - (8) - }   { + (9) + }   { - Except as provided in
subsection (9) of this section, - }  The administrator may not:
    { - (a) Contract with a pharmacy benefit manager; - }
    { - (b) - }   { + (a) + } Establish a state-managed wholesale
or retail drug distribution or dispensing system; or
    { - (c) - }   { + (b) + } Require pharmacies to maintain or
allocate separate inventories for prescription drugs dispensed
through the program.
    { - (9) - }   { + (10) + } The administrator shall contract
with one or more entities to perform any of the functions of the
program, including but not limited to:
  (a) Contracting with a pharmacy benefit manager and directly or
indirectly with such pharmacy networks as the administrator
considers necessary to maintain statewide access to the program.
  (b) Negotiating with prescription drug manufacturers on behalf
of the administrator { +  on the extension of drug manufacturer
rebates to all participants in the program that purchase
prescription drugs directly or indirectly for medical assistance
recipients + }.
    { - (10) - }   { + (11) + } Notwithstanding subsection
 { - (4)(e) - }  { +  (4)(d) + } of this section, individuals who
are eligible for Medicare Part D prescription drug coverage may
participate in the program.
    { - (11) - }   { + (12) + } The program may contract with
vendors as necessary to utilize discount purchasing programs,
including but not limited to group purchasing organizations
established to meet the criteria of the Nonprofit Institutions
Act, 15 U.S.C. 13c, or that are exempt under the Robinson-Patman
Act, 15 U.S.C. 13.
  SECTION 2.  { + (1) The Oregon Health Authority shall apply to
the Centers for Medicare and Medicaid Services for any approval
necessary to obtain federal financial participation in the costs
of drugs purchased directly or indirectly through the Oregon
Prescription Drug Program.
  (2) The amendments to ORS 414.312 by section 1 of this 2012 Act
become operative upon receipt by the authority of federal
approval under subsection (1) of this section or, if no federal
approval is required, on January 1, 2013.
  (3) The authority shall notify the Legislative Counsel upon
receipt of federal approval or denial of federal approval under
subsection (1) of this section or, if the authority determines
that no federal approval is required, at the time the authority
makes that determination.
  (4) The administrator of the Oregon Prescription Drug Program
and any state agency that will participate in the program may
take any actions before the operative date specified in
subsection (2) of this section that are necessary to implement
the amendments to ORS 414.312 by section 1 of this 2012 Act on
the operative date specified in subsection (2) of this
section. + }
  SECTION 3.  { + This 2012 Act takes effect on July 1, 2012. + }
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