H-4107.1  _______________________________________________

                    SUBSTITUTE HOUSE BILL 2431

          _______________________________________________

State of Washington      57th Legislature     2002 Regular Session

By House Committee on Health Care (originally sponsored by Representatives Cody, Campbell, Sommers, Schual‑Berke, Fromhold, Hunt, Doumit, McIntire, Lysen, Hatfield, Conway, Veloria, Chase, Ogden, Upthegrove, Romero, Santos, Kagi, Haigh, Wood, Kenney and Simpson)

Read first time 02/05/2002.  Referred to Committee on .

Developing a comprehensive prescription drug education and utilization system.

    AN ACT Relating to development of a prescription drug education and utilization system; amending RCW 74.09.010, 41.05.011, 42.30.110, and 41.05.026; reenacting and amending RCW 42.17.310; adding new sections to chapter 41.05 RCW; adding a new section to chapter 74.09 RCW; adding a new section to chapter 43.70 RCW; adding a new section to chapter 72.09 RCW; adding new sections to chapter 43.60A RCW; adding a new section to chapter 51.36 RCW; adding a new section to chapter 69.41 RCW; creating new sections; prescribing penalties; and declaring an emergency.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

NEW SECTION. Sec. 1.  (1) The legislature finds that prescription drugs are an effective and important part of efforts to maintain and improve the health of Washington state residents.  Yet prescription drug expenditures in both the public and private sectors are growing at rates far in excess of consumer or medical inflation, placing a strain on the ability of public and private health care purchasers to continue to offer comprehensive health benefits coverage.  In addition, inappropriate use of prescription drugs can have serious health consequences for Washington state residents.

    (2) It is the intent of the legislature to develop a comprehensive prescription drug education and utilization system in Washington state that will ensure best prescribing practices and pharmaceutical use, reduce administrative burdens on providers, increase consumer understanding of and compliance with appropriate use of prescription drugs, help to control increases in consumer and state health care spending, and improve prescription drug purchasing through a sound evidence-based process that evaluates the therapeutic value and cost-effectiveness of prescription drugs.

    Sec. 2.  RCW 74.09.010 and 1990 c 296 s 6 are each amended to read as follows:

    ((As used in this chapter:)) The definitions in this section apply throughout this chapter unless the context clearly requires otherwise.

    (1) "Children's health program" means the health care services program provided to children under eighteen years of age and in households with incomes at or below the federal poverty level as annually defined by the federal department of health and human services as adjusted for family size, and who are not otherwise eligible for medical assistance or the limited casualty program for the medically needy.

    (2) "Committee" means the ((children's health services)) pharmacy and therapeutics committee ((created in section 3 of this act)).

    (3) "County" means the board of county commissioners, county council, county executive, or tribal jurisdiction, or its designee.  A combination of two or more county authorities or tribal jurisdictions may enter into joint agreements to fulfill the requirements of RCW 74.09.415 through 74.09.435.

    (4) "Department" means the department of social and health services.

    (5) "Department of health" means the Washington state department of health created pursuant to RCW 43.70.020.

    (6) "Internal management" means the administration of medical assistance, medical care services, the children's health program, and the limited casualty program.

    (7) "Limited casualty program" means the medical care program provided to medically needy persons as defined under Title XIX of the federal social security act, and to medically indigent persons who are without income or resources sufficient to secure necessary medical services.

    (8) "Medical assistance" means the federal aid medical care program provided to categorically needy persons as defined under Title XIX of the federal social security act.

    (9) "Medical care services" means the limited scope of care financed by state funds and provided to general assistance recipients, and recipients of alcohol and drug addiction services provided under chapter 74.50 RCW.

    (10) "Nursing home" means nursing home as defined in RCW 18.51.010.

    (11) "Poverty" means the federal poverty level determined annually by the United States department of health and human services, or successor agency.

    (12) "Preferred drug" means the department's drug of choice within a selected therapeutic class, as determined by the process established in section 4 of this act.

(13) "Prior authorization" means a process requiring the prescriber or the dispenser to verify with the state medicaid agency or its contractor that the proposed medical use of a particular medicine for a patient meets predetermined criteria for payment by the program.

(14) "Secretary" means the secretary of social and health services.

(15) "Therapeutic class" means a group of drugs used for the diagnosis, treatment, remediation, or cure of a specific disorder or disease.

    Sec. 3.  RCW 41.05.011 and 2001 c 165 s 2 are each amended to read as follows:

    ((Unless the context clearly requires otherwise,)) The definitions in this section ((shall)) apply throughout this chapter unless the context clearly requires otherwise.

    (1) "Administrator" means the administrator of the authority.

    (2) "State purchased health care" or "health care" means medical and health care, pharmaceuticals, and medical equipment purchased with state and federal funds by the department of social and health services, the department of health, the basic health plan, the state health care authority, the department of labor and industries, the department of corrections, the department of veterans affairs, and local school districts.

    (3) "Authority" means the Washington state health care authority.

    (4) "Insuring entity" means an insurer as defined in chapter 48.01 RCW, a health care service contractor as defined in chapter 48.44 RCW, or a health maintenance organization as defined in chapter 48.46 RCW.

    (5) "Flexible benefit plan" means a benefit plan that allows employees to choose the level of health care coverage provided and the amount of employee contributions from among a range of choices offered by the authority.

    (6) "Employee" includes all full-time and career seasonal employees of the state, whether or not covered by civil service; elected and appointed officials of the executive branch of government, including full-time members of boards, commissions, or committees; and includes any or all part-time and temporary employees under the terms and conditions established under this chapter by the authority; justices of the supreme court and judges of the court of appeals and the superior courts; and members of the state legislature or of the legislative authority of any county, city, or town who are elected to office after February 20, 1970.  "Employee" also includes:  (a) Employees of a county, municipality, or other political subdivision of the state if the legislative authority of the county, municipality, or other political subdivision of the state seeks and receives the approval of the authority to provide any of its insurance programs by contract with the authority, as provided in RCW 41.04.205; (b) employees of employee organizations representing state civil service employees, at the option of each such employee organization, and, effective October 1, 1995, employees of employee organizations currently pooled with employees of school districts for the purpose of purchasing insurance benefits, at the option of each such employee organization; and (c) employees of a school district if the authority agrees to provide any of the school districts' insurance programs by contract with the authority as provided in RCW 28A.400.350.

    (7) "Board" means the public employees' benefits board established under RCW 41.05.055.

    (8) "Retired or disabled school employee" means:

    (a) Persons who separated from employment with a school district or educational service district and are receiving a retirement allowance under chapter 41.32 or 41.40 RCW as of September 30, 1993;

    (b) Persons who separate from employment with a school district or educational service district on or after October 1, 1993, and immediately upon separation receive a retirement allowance under chapter 41.32, 41.35, or 41.40 RCW;

    (c) Persons who separate from employment with a school district or educational service district due to a total and permanent disability, and are eligible to receive a deferred retirement allowance under chapter 41.32, 41.35, or 41.40 RCW.

    (9) "Benefits contribution plan" means a premium only contribution plan, a medical flexible spending arrangement, or a cafeteria plan whereby state and public employees may agree to a contribution to benefit costs which will allow the employee to participate in benefits offered pursuant to 26 U.S.C. Sec. 125 or other sections of the internal revenue code.

    (10) "Salary" means a state employee's monthly salary or wages.

    (11) "Participant" means an individual who fulfills the eligibility and enrollment requirements under the benefits contribution plan.

    (12) "Plan year" means the time period established by the authority.

    (13) "Separated employees" means persons who separate from employment with an employer as defined in:

    (a) RCW 41.32.010(11) on or after July 1, 1996; or

    (b) RCW 41.35.010 on or after September 1, 2000; or

    (c) RCW 41.40.010 on or after March 1, 2002;

and who are at least age fifty-five and have at least ten years of service under the teachers' retirement system plan 3 as defined in RCW 41.32.010(40), the Washington school employees' retirement system plan 3 as defined in RCW 41.35.010, or the public employees' retirement system plan 3 as defined in RCW 41.40.010.

    (14) "Emergency service personnel killed in the line of duty" means law enforcement officers and fire fighters as defined in RCW 41.26.030, and reserve officers and fire fighters as defined in RCW 41.24.010 who die as a result of injuries sustained in the course of employment as determined consistent with Title 51 RCW by the department of labor and industries.

(15) "Preferred drug" means the authority's drug of choice within a selected therapeutic class, as determined by the process established in section 4 of this act.

(16) "Prior authorization" means a process requiring the prescriber or the dispenser to verify with the authority or its contractor that the proposed medical use of a particular medicine for a patient meets predetermined criteria for payment by the program.

(17) "Therapeutic class" means a group of drugs used for the diagnosis, treatment, remediation, or cure of a specific disorder or disease.

NEW SECTION. Sec. 4.  A new section is added to chapter 41.05 RCW to read as follows:

    The administrator, in concert with other state agencies involved in state purchased health care, must begin implementation of a preferred drug program by January 1, 2003.  The preferred drug program is initially limited to fee-for-service prescription drug purchasing through medical assistance programs under chapter 74.09 RCW, the uniform medical plan under this chapter, and other state purchased health care programs.  The administrator must include bulk purchased prescription drugs in the preferred drug program according to a timetable of the administrator's choosing.  The preferred drug program shall not be applied to health care purchased through managed care contracts with carriers.  To expedite development of the preferred drug list, the administrator, the independent entity, and the pharmacy and therapeutics committee must make maximum use of sound evidence-based prescription drug reviews that have been completed, giving consideration to the needs and characteristics of populations served by state purchased health care programs.  In implementing the preferred drug program, the administrator may adopt rules, and must:

    (1) Identify for initial consideration those classes of drugs for which agencies have substantial annual aggregate fee-for-service expenditures;

    (2) Exempt the following drug classes from inclusion on any preferred drug list:

    (a) Antipsychotics;

    (b) Chemotherapy;

    (c) Antiretroviral drugs;

    (d) Immunosuppressants; and

    (e) Hypoglycemia rescue agents;

    (3) Contract with one or more qualified, independent entities to determine which drugs within each of the identified therapeutic classes are essentially equal in terms of safety, efficacy, and outcomes.  Upon request of the pharmacy and therapeutics committee or the authority, manufacturers must submit dossiers containing clinical and economic data utilizing the academy of managed care pharmacy format for preferred drug list submissions.  The pharmacy and therapeutics committee or the administrator shall request the dossier from a manufacturer within thirty days of food and drug administration approval of any new drug.  The pharmacy and therapeutics committee or the authority must provide the dossier to the contracted entity, who will base its determinations on the strength of scientific evidence and standards of practice that include, but are not limited to:

    (a) Assessing peer-reviewed medical literature, including randomized clinical trials (especially drug comparison studies), pharmacoeconomic studies, and outcomes research data;

    (b) Employing published practice guidelines developed by an acceptable evidence-based process;

    (c) Comparing the efficacy as well as the type and frequency of side effects and potential drug interactions among alternative drug products in the class under review;

    (d) Assessing the likely impact of a drug product on patient compliance when compared to alternative drug products in the class under review; and

    (e) Thoroughly evaluating the benefits, risks, and potential outcomes for patients, including adverse drug events;

    (4) Submit the determinations made under subsection (3) of this section to the pharmacy and therapeutics committee established in section 13 of this act, which must incorporate them into recommendations to the administrator as provided in section 13 of this act;

    (5) Develop a preferred drug list based on the recommendations of the pharmacy and therapeutics committee.  For each therapeutic class considered, the list must identify the drugs determined to be essentially equal and, from among those, which ones are the preferred drugs.  The pharmacy and therapeutics committee or the administrator will revise the preferred drug list annually or as needed, to be determined by new drug approvals, recalls, or new scientific evidence that may change a given drug's status or use, or as necessary to meet the objectives of this act.  Each state agency that purchases or provides health care services must adopt the preferred drug list consistent with the scope of benefits offered through programs administered by that agency;

    (6) Directly or through interagency agreement, distribute the initial preferred drug list, and any subsequent revisions, to every provider with prescriptive authority with whom an agency has core provider agreement, including with it a description of how the list was developed, how it will be used, and requesting his or her endorsement;

    (7) Ensure that a prescriber who does not endorse the list must do so in writing to the administrator and is subject to prior authorization as provided in sections 5 through 10 of this act;

    (8) Require any pharmacist filling a prescription for a client of state purchased health care or entities and individuals voluntarily participating under section 18 of this act from a prescriber who has endorsed the preferred drug list to substitute the preferred drug for any nonpreferred drug in a given therapeutic category, unless the prescriber has indicated on the prescription that the nonpreferred drug must be dispensed as written, in which case the pharmacist must dispense the nonpreferred drug as written.  When a substitution is made, or the preferred drug within a therapeutic class changes, the prescriber will be notified in writing by the dispensing pharmacist of the specific drug and dose dispensed;

    (9) The administrator must either provide each pharmacy with a listing of the prescribers who have endorsed the preferred drug list or include that information in the electronic claim adjudication system of each state drug purchasing program so that the pharmacist may easily determine when substitution of a preferred drug has been authorized.

    Upon incorporation of a therapeutic class into the preferred drug list, existing prior authorization procedures applicable to that therapeutic class shall cease, and the prior authorization provisions of sections 5 through 10 of this act shall apply.

NEW SECTION. Sec. 5.  A new section is added to chapter 41.05 RCW to read as follows:

    (1) The administrator may subject any drug in a class included in the preferred drug list established in section 4 of this act to prior authorization in only limited circumstances, such as when the drug is high cost, has a narrow therapeutic indication, presents a risk of inappropriate utilization, or poses safety concerns.  A new drug that has not yet been reviewed under section 4 of this act may be subject to prior authorization.  A prescriber who does not endorse the preferred drug list is subject to a broader scope of prior authorization as determined by the administrator.

    (2) The administrator may subject drugs identified in section 4(2) of this act to prior authorization where clinically indicated.

NEW SECTION. Sec. 6.  A new section is added to chapter 74.09 RCW to read as follows:

    (1) The department may subject any drug in a class included in section 4 of this act to prior authorization in only limited circumstances, such as when the drug is high cost, has a narrow therapeutic indication, presents a risk of inappropriate utilization, or poses safety concerns.  A new drug that has not yet been reviewed under section 4 of this act may be subject to prior authorization.  A prescriber who does not endorse the preferred drug list is subject to a broader scope of prior authorization as determined by the secretary.

    (2) The department may subject drugs identified in section 4(2) of this act to prior authorization where clinically indicated.

NEW SECTION. Sec. 7.  A new section is added to chapter 43.70 RCW to read as follows:

    (1) The department may subject any drug in a class included in section 4 of this act to prior authorization in only limited circumstances, such as when the drug is high cost, has a narrow therapeutic indication, presents a risk of inappropriate utilization, or poses safety concerns.  A new drug that has not yet been reviewed under section 4 of this act may be subject to prior authorization.  A prescriber who does not endorse the preferred drug list is subject to a broader scope of prior authorization as determined by the secretary.

    (2) The department may subject drugs identified in section 4(2) of this act to prior authorization where clinically indicated.

NEW SECTION. Sec. 8.  A new section is added to chapter 72.09 RCW to read as follows:

    (1) The department may subject any drug in a class included in section 4 of this act to prior authorization in only limited circumstances, such as when the drug is high cost, has a narrow therapeutic indication, presents a risk of inappropriate utilization, or poses safety concerns.  A new drug that has not yet been reviewed under section 4 of this act may be subject to prior authorization.  A prescriber who does not endorse the preferred drug list is subject to a broader scope of prior authorization as determined by the secretary.

    (2) The department may subject drugs identified in section 4(2) of this act to prior authorization where clinically indicated.

NEW SECTION. Sec. 9.  A new section is added to chapter 43.60A RCW to read as follows:

    (1) The department may subject any drug in a class included in section 4 of this act to prior authorization in only limited circumstances, such as when the drug is high cost, has a narrow therapeutic indication, presents a risk of inappropriate utilization, or poses safety concerns.  A new drug that has not yet been reviewed under section 4 of this act may be subject to prior authorization.  A prescriber who does not endorse the preferred drug list is subject to a broader scope of prior authorization as determined by the director.

    (2) The department may subject drugs identified in section 4(2) of this act to prior authorization where clinically indicated.

NEW SECTION. Sec. 10.  A new section is added to chapter 51.36 RCW to read as follows:

    (1) The department may subject any drug in a class included in section 4 of this act to prior authorization in only limited circumstances, such as when the drug is high cost, has a narrow therapeutic indication, presents a risk of inappropriate utilization, or poses safety concerns.  A new drug that has not yet been reviewed under section 4 of this act may be subject to prior authorization.  A prescriber who does not endorse the preferred drug list is subject to a broader scope of prior authorization as determined by the director.

    (2) The department may subject drugs identified in section 4(2) of this act to prior authorization where clinically indicated.

NEW SECTION. Sec. 11.  A new section is added to chapter 41.05 RCW to read as follows:

    Any prior approval process adopted pursuant to sections 5 through 10 of this act must include clear standards and procedures for a process to ensure consumer access to medically necessary nonpreferred drugs.  No preferred drug list can account for every therapeutic eventuality or unique patient need.  Prior approval procedures for nonpreferred drugs must neither pose a substantial barrier to the prescribing health care professional nor hinder the consumer's ability to receive necessary medication in a safe and timely manner.  A prior authorization program must provide for:  (1) A response within twenty-four hours after receipt of a request for prior authorization; and (2) the dispensing of at least a seventy-two hour supply of the requested drug in an emergency situation.

NEW SECTION. Sec. 12.  A new section is added to chapter 41.05 RCW to read as follows:

    To complement the preferred drug program established in section 4 of this act, the administrator must, in concert with state agencies involved in state purchased health care:

    (1) Implement a program of academic detailing and client counterdetailing that educates physicians and other prescribers, and clients of state purchased health care, on the cost-effective utilization of prescription drugs on the preferred drug list;

    (2) By July 1, 2004, use electronic drug claims processing and information retrieval systems to analyze pharmacy and medical claims to identify those prescribers who request that prescriptions for nonpreferred drugs be dispensed as written on a more frequent basis than their peers, and provide information and education to those prescribers as needed to improve the system and prescribing practices; and

    (3) Conduct a feasibility study of developing a system to periodically provide a complete drug profile of persons covered through state purchased health care systems to health care providers caring for those persons.

NEW SECTION. Sec. 13.  A new section is added to chapter 41.05 RCW to read as follows:

    (1) A pharmacy and therapeutics committee is established to assist the administrator, and other agencies involved in state purchased health care, in the development and implementation of a preferred drug program.

    (2) The committee consists of nine members, to be appointed by the governor as follows:

    (a) Four physicians licensed under chapter 18.57 or 18.71 RCW in this state and actively engaged in the practice of medicine, at least one of whom is employed by a carrier as defined in RCW 48.43.005, chosen from a list of nominees provided by the Washington state medical association;

    (b) One advanced registered nurse practitioner licensed in this state and actively engaged in the practice of nursing chosen from a list of nominees provided by the Washington state nurses association;

    (c) Three pharmacists licensed in this state and actively engaged in the practice of pharmacy chosen from a list of nominees provided by the Washington state pharmacists association; and

    (d) One person with background experience, education, or expertise in pharmacoeconomics.

    (3) No member of the committee may be employed by or receive remuneration, grants, or other compensation from a pharmaceutical manufacturer, or be employed by the state of Washington by any agency administering "state purchased health care," as defined in RCW 41.05.011.

    (4) Committee members serve staggered three-year terms.  Of the initial members, one physician, the advanced registered nurse practitioner, and one pharmacist must each be appointed for two-year terms, and one physician and one pharmacist must each be appointed for one-year terms.  The remaining committee members must be appointed for three-year terms.  Members may be reappointed for a period not to exceed three three-year terms.  Vacancies on the committee must be filled for the balance of the unexpired term from nominee lists for the appropriate committee category as provided under subsection (2) of this section.

    (5) Committee members must select a chair and a vice-chair on an annual basis from the committee membership.

    (6) The administrator must enter into a confidentiality agreement with any private contractor or state employee who has access to proprietary or confidential nonpublished data that is in the custody of the pharmacy and therapeutics committee established under this section.  The failure of any contractor to adhere to the terms of the confidentiality agreement is grounds for termination of the contract by the administrator.  Unauthorized disclosure of proprietary or confidential nonpublished data by any contractor or their employee, or by any employee of a state agency, is punishable as a class C felony.

    (7) The authority shall provide staff support to the committee.  Committee members shall be compensated for their service and shall be reimbursed for expenses pursuant to RCW 43.03.050 and 43.03.060.

    (8) The members of the committee are immune from civil liability for any official acts performed in good faith as members of the committee.

    (9) The committee must:

    (a) Recommend to the administrator, and other agencies involved in state purchased health care, which drugs should be identified as preferred drugs from among those determined, pursuant to section 4(3) of this act, to be essentially equal in terms of safety and efficacy.  In updating the preferred drug list, the pharmacy and therapeutics committee shall complete its review and submit recommendations to the administrator within one hundred twenty days from the date of receipt of the dossier under section 4 of this act.  In making these recommendations, the committee must consider, among other factors, the relative cost of the drugs being considered, the impact of each drug on the state's overall health care expenditures, and the efforts of each drug's manufacturer to ensure that all Washington residents have access to medically necessary medicines at an affordable price.

    (b) Make recommendations regarding the rules to be adopted by the administrator and other state agencies involved in state purchased health care to implement the preferred drug program; and

    (c) Make recommendations regarding the preferred drug list development and review process, and program implementation, as necessary to achieve the objectives of this act.

NEW SECTION. Sec. 14.  A new section is added to chapter 41.05 RCW to read as follows:

    The administrator must design, in concert with state agencies involved in state purchased fee-for-service health care, a uniform drug utilization review program for state purchased health care that meets the requirement of Title XIX of the social security act.  Each state agency that purchases or provides health care services must adopt the uniform drug utilization review program for its fee-for-service purchasing and may implement it directly or by contract or interagency agreement.  The program must include but is not limited to prescription drug review, management, and education, including prospective, concurrent, and retrospective review, to improve the quality of pharmaceutical care by ensuring that prescription drugs provided through state purchased fee-for-service health care programs advance quality clinical outcomes and are appropriate, medically necessary, and not likely to produce adverse medical results.  Drugs exempted from the preferred drug list under section 4(2) of this act may be included in the drug utilization review program.  The program also must identify clients utilizing large numbers of prescription drugs, and develop strategies to enhance coordination of care for these individuals.

    (1) The administrator shall establish a drug utilization review committee either directly or through a contract with a private organization to assist in development and implementation of the drug utilization review program.  The committee must be composed primarily of actively practicing health care professionals.  Additional specialty expertise must be obtained as needed.  Employees of agencies that purchase health services cannot be a member of the drug utilization review committee but will provide staff support to the committee.  Upon establishment of the committee, the department of social and health services shall disband the drug utilization review committee under the medical assistance administration.

    (2) Nothing in chapter 42.30 RCW prevents the drug utilization review committee from holding an executive session during a regular or special meeting of the committee to review and discuss proprietary or confidential nonpublished data that relates to development or implementation of the drug utilization review program.

    (3) The administrator must enter into a confidentiality agreement with any private contractor or state employee who has access to proprietary or confidential nonpublished data that is in the custody of any drug utilization review committee established under this section.  The failure of any contractor to adhere to the terms of the confidentiality agreement is grounds for termination of the contract by the administrator.  Unauthorized disclosure of proprietary or confidential nonpublished data by any contractor or their employee, or by any employee of a state agency, is punishable as a class C felony.

    (4) A person who serves on a drug utilization review committee established under this section is immune from civil liability for actions taken in good faith as a member of the committee.

    Sec. 15.  RCW 42.30.110 and 2001 c 216 s 1 are each amended to read as follows:

    (1) Nothing contained in this chapter may be construed to prevent a governing body from holding an executive session during a regular or special meeting:

    (a) To consider matters affecting national security;

    (b) To consider the selection of a site or the acquisition of real estate by lease or purchase when public knowledge regarding such consideration would cause a likelihood of increased price;

    (c) To consider the minimum price at which real estate will be offered for sale or lease when public knowledge regarding such consideration would cause a likelihood of decreased price.  However, final action selling or leasing public property shall be taken in a meeting open to the public;

    (d) To review negotiations on the performance of publicly bid contracts when public knowledge regarding such consideration would cause a likelihood of increased costs;

    (e) To consider, in the case of an export trading company, financial and commercial information supplied by private persons to the export trading company;

    (f) To receive and evaluate complaints or charges brought against a public officer or employee.  However, upon the request of such officer or employee, a public hearing or a meeting open to the public shall be conducted upon such complaint or charge;

    (g) To evaluate the qualifications of an applicant for public employment or to review the performance of a public employee.  However, subject to RCW 42.30.140(4), discussion by a governing body of salaries, wages, and other conditions of employment to be generally applied within the agency shall occur in a meeting open to the public, and when a governing body elects to take final action hiring, setting the salary of an individual employee or class of employees, or discharging or disciplining an employee, that action shall be taken in a meeting open to the public;

    (h) To evaluate the qualifications of a candidate for appointment to elective office.  However, any interview of such candidate and final action appointing a candidate to elective office shall be in a meeting open to the public;

    (i) To discuss with legal counsel representing the agency matters relating to agency enforcement actions, or to discuss with legal counsel representing the agency litigation or potential litigation to which the agency, the governing body, or a member acting in an official capacity is, or is likely to become, a party, when public knowledge regarding the discussion is likely to result in an adverse legal or financial consequence to the agency.

    This subsection (1)(i) does not permit a governing body to hold an executive session solely because an attorney representing the agency is present.  For purposes of this subsection (1)(i), "potential litigation" means matters protected by RPC 1.6 or RCW 5.60.060(2)(a) concerning:

    (A) Litigation that has been specifically threatened to which the agency, the governing body, or a member acting in an official capacity is, or is likely to become, a party;

    (B) Litigation that the agency reasonably believes may be commenced by or against the agency, the governing body, or a member acting in an official capacity; or

    (C) Litigation or legal risks of a proposed action or current practice that the agency has identified when public discussion of the litigation or legal risks is likely to result in an adverse legal or financial consequence to the agency;

    (j) To consider, in the case of the state library commission or its advisory bodies, western library network prices, products, equipment, and services, when such discussion would be likely to adversely affect the network's ability to conduct business in a competitive economic climate.  However, final action on these matters shall be taken in a meeting open to the public;

    (k) To consider, in the case of the state investment board, financial and commercial information when the information relates to the investment of public trust or retirement funds and when public knowledge regarding the discussion would result in loss to such funds or in private loss to the providers of this information;

(l) To consider, in the case of the pharmacy and therapeutics committee established in section 13 of this act or the drug utilization review committee established in section 14 of this act, proprietary or confidential nonpublished information that relates to the development or revision of the preferred drug list, the designation of a drug for prior authorization, or the conduct of the drug utilization review program.

    (2) Before convening in executive session, the presiding officer of a governing body shall publicly announce the purpose for excluding the public from the meeting place, and the time when the executive session will be concluded.  The executive session may be extended to a stated later time by announcement of the presiding officer.

    Sec. 16.  RCW 41.05.026 and 1991 c 79 s 1 are each amended to read as follows:

    (1) When soliciting proposals for the purpose of awarding contracts for goods or services, the administrator shall, upon written request by the bidder, exempt from public inspection and copying such proprietary data, trade secrets, or other information contained in the bidder's proposal that relate to the bidder's unique methods of conducting business or of determining prices or premium rates to be charged for services under terms of the proposal.

    (2) Actuarial formulas, statistics, cost and utilization data, or other proprietary information submitted upon request of the administrator or board by a contracting insurer, health care service contractor, health maintenance organization, or vendor may be withheld at any time from public inspection when necessary to preserve trade secrets or prevent unfair competition.

    (3) Proprietary information submitted upon request of the administrator or the pharmacy and therapeutics committee established under section 13 of this act by any vendor or pharmaceutical manufacturer for the purpose of analyzing and developing prescription drug education and utilization systems, a preferred drug list, a drug utilization review program, and consolidated prescription drug purchasing for state purchased health care programs may be withheld at any time from public inspection when necessary to preserve trade secrets or prevent unfair competition.

(4) The board, the pharmacy and therapeutics committee established in section 13 of this act, or the drug utilization review committee established in section 14 of this act may hold an executive session in accordance with chapter 42.30 RCW during any regular or special meeting to discuss information submitted in accordance with subsection (1) ((or)), (2), or (3) of this section.

(5) A person who challenges a request for or designation of information as exempt under this section is entitled to seek judicial review pursuant to chapter 42.17 RCW.

    Sec. 17.  RCW 42.17.310 and 2001 c 278 s 1, 2001 c 98 s 2, and 2001 c 70 s 1 are each reenacted and amended to read as follows:

    (1) The following are exempt from public inspection and copying:

    (a) Personal information in any files maintained for students in public schools, patients or clients of public institutions or public health agencies, or welfare recipients.

    (b) Personal information in files maintained for employees, appointees, or elected officials of any public agency to the extent that disclosure would violate their right to privacy.

    (c) Information required of any taxpayer in connection with the assessment or collection of any tax if the disclosure of the information to other persons would (i) be prohibited to such persons by RCW 84.08.210, 82.32.330, 84.40.020, or 84.40.340 or (ii) violate the taxpayer's right to privacy or result in unfair competitive disadvantage to the taxpayer.

    (d) Specific intelligence information and specific investigative records compiled by investigative, law enforcement, and penology agencies, and state agencies vested with the responsibility to discipline members of any profession, the nondisclosure of which is essential to effective law enforcement or for the protection of any person's right to privacy.

    (e) Information revealing the identity of persons who are witnesses to or victims of crime or who file complaints with investigative, law enforcement, or penology agencies, other than the public disclosure commission, if disclosure would endanger any person's life, physical safety, or property.  If at the time a complaint is filed the complainant, victim or witness indicates a desire for disclosure or nondisclosure, such desire shall govern.  However, all complaints filed with the public disclosure commission about any elected official or candidate for public office must be made in writing and signed by the complainant under oath.

    (f) Test questions, scoring keys, and other examination data used to administer a license, employment, or academic examination.

    (g) Except as provided by chapter 8.26 RCW, the contents of real estate appraisals, made for or by any agency relative to the acquisition or sale of property, until the project or prospective sale is abandoned or until such time as all of the property has been acquired or the property to which the sale appraisal relates is sold, but in no event shall disclosure be denied for more than three years after the appraisal.

    (h) Valuable formulae, designs, drawings, computer source code or object code, and research data obtained by any agency within five years of the request for disclosure when disclosure would produce private gain and public loss.

    (i) Preliminary drafts, notes, recommendations, and intra-agency memorandums in which opinions are expressed or policies formulated or recommended except that a specific record shall not be exempt when publicly cited by an agency in connection with any agency action.

    (j) Records which are relevant to a controversy to which an agency is a party but which records would not be available to another party under the rules of pretrial discovery for causes pending in the superior courts.

    (k) Records, maps, or other information identifying the location of archaeological sites in order to avoid the looting or depredation of such sites.

    (l) Any library record, the primary purpose of which is to maintain control of library materials, or to gain access to information, which discloses or could be used to disclose the identity of a library user.

    (m) Financial information supplied by or on behalf of a person, firm, or corporation for the purpose of qualifying to submit a bid or proposal for (i) a ferry system construction or repair contract as required by RCW 47.60.680 through 47.60.750 or (ii) highway construction or improvement as required by RCW 47.28.070.

    (n) Railroad company contracts filed prior to July 28, 1991, with the utilities and transportation commission under RCW 81.34.070, except that the summaries of the contracts are open to public inspection and copying as otherwise provided by this chapter.

    (o) Financial and commercial information and records supplied by private persons pertaining to export services provided pursuant to chapter 43.163 RCW and chapter 53.31 RCW, and by persons pertaining to export projects pursuant to RCW 43.23.035.

    (p) Financial disclosures filed by private vocational schools under chapters 28B.85 and 28C.10 RCW.

    (q) Records filed with the utilities and transportation commission or attorney general under RCW 80.04.095 that a court has determined are confidential under RCW 80.04.095.

    (r) Financial and commercial information and records supplied by businesses or individuals during application for loans or program services provided by chapters 43.163, 43.160, 43.330, and 43.168 RCW, or during application for economic development loans or program services provided by any local agency.

    (s) Membership lists or lists of members or owners of interests of units in timeshare projects, subdivisions, camping resorts, condominiums, land developments, or common-interest communities affiliated with such projects, regulated by the department of licensing, in the files or possession of the department.

    (t) All applications for public employment, including the names of applicants, resumes, and other related materials submitted with respect to an applicant.

    (u) The residential addresses or residential telephone numbers of employees or volunteers of a public agency which are held by any public agency in personnel records, public employment related records, or volunteer rosters, or are included in any mailing list of employees or volunteers of any public agency.

    (v) The residential addresses and residential telephone numbers of the customers of a public utility contained in the records or lists held by the public utility of which they are customers, except that this information may be released to the division of child support or the agency or firm providing child support enforcement for another state under Title IV-D of the federal social security act, for the establishment, enforcement, or modification of a support order.

    (w)(i) The federal social security number of individuals governed under chapter 18.130 RCW maintained in the files of the department of health, except this exemption does not apply to requests made directly to the department from federal, state, and local agencies of government, and national and state licensing, credentialing, investigatory, disciplinary, and examination organizations; (ii) the current residential address and current residential telephone number of a health care provider governed under chapter 18.130 RCW maintained in the files of the department, if the provider requests that this information be withheld from public inspection and copying, and provides to the department an accurate alternate or business address and business telephone number.  On or after January 1, 1995, the current residential address and residential telephone number of a health care provider governed under RCW 18.130.040 maintained in the files of the department shall automatically be withheld from public inspection and copying unless the provider specifically requests the information be released, and except as provided for under RCW 42.17.260(9).

    (x) Information obtained by the board of pharmacy as provided in RCW 69.45.090.

    (y) Information obtained by the board of pharmacy or the department of health and its representatives as provided in RCW 69.41.044, 69.41.280, and 18.64.420.

    (z) Financial information, business plans, examination reports, and any information produced or obtained in evaluating or examining a business and industrial development corporation organized or seeking certification under chapter 31.24 RCW.

    (aa) Financial and commercial information supplied to the state investment board by any person when the information relates to the investment of public trust or retirement funds and when disclosure would result in loss to such funds or in private loss to the providers of this information.

    (bb) Financial and valuable trade information under RCW 51.36.120.

    (cc) Client records maintained by an agency that is a domestic violence program as defined in RCW 70.123.020 or 70.123.075 or a rape crisis center as defined in RCW 70.125.030.

    (dd) Information that identifies a person who, while an agency employee:  (i) Seeks advice, under an informal process established by the employing agency, in order to ascertain his or her rights in connection with a possible unfair practice under chapter 49.60 RCW against the person; and (ii) requests his or her identity or any identifying information not be disclosed.

    (ee) Investigative records compiled by an employing agency conducting a current investigation of a possible unfair practice under chapter 49.60 RCW or of a possible violation of other federal, state, or local laws prohibiting discrimination in employment.

    (ff) Business related information protected from public inspection and copying under RCW 15.86.110.

    (gg) Financial, commercial, operations, and technical and research information and data submitted to or obtained by the clean Washington center in applications for, or delivery of, program services under chapter 70.95H RCW.

    (hh) Information and documents created specifically for, and collected and maintained by a quality improvement committee pursuant to RCW 43.70.510 or 70.41.200, or by a peer review committee under RCW 4.24.250, regardless of which agency is in possession of the information and documents.

    (ii) Personal information in files maintained in a data base created under RCW 43.07.360.

    (jj) Financial and commercial information requested by the public stadium authority from any person or organization that leases or uses the stadium and exhibition center as defined in RCW 36.102.010.

    (kk) Names of individuals residing in emergency or transitional housing that are furnished to the department of revenue or a county assessor in order to substantiate a claim for property tax exemption under RCW 84.36.043.

    (ll) The names, residential addresses, residential telephone numbers, and other individually identifiable records held by an agency in relation to a vanpool, carpool, or other ride-sharing program or service.  However, these records may be disclosed to other persons who apply for ride-matching services and who need that information in order to identify potential riders or drivers with whom to share rides.

    (mm) The personally identifying information of current or former participants or applicants in a paratransit or other transit service operated for the benefit of persons with disabilities or elderly persons.

    (nn) The personally identifying information of persons who acquire and use transit passes and other fare payment media including, but not limited to, stored value smart cards and magnetic strip cards, except that an agency may disclose this information to a person, employer, educational institution, or other entity that is responsible, in whole or in part, for payment of the cost of acquiring or using a transit pass or other fare payment media, or to the news media when reporting on public transportation or public safety.  This information may also be disclosed at the agency's discretion to governmental agencies or groups concerned with public transportation or public safety.

    (oo) Proprietary financial and commercial information that the submitting entity, with review by the department of health, specifically identifies at the time it is submitted and that is provided to or obtained by the department of health in connection with an application for, or the supervision of, an antitrust exemption sought by the submitting entity under RCW 43.72.310.  If a request for such information is received, the submitting entity must be notified of the request.  Within ten business days of receipt of the notice, the submitting entity shall provide a written statement of the continuing need for confidentiality, which shall be provided to the requester.  Upon receipt of such notice, the department of health shall continue to treat information designated under this section as exempt from disclosure.  If the requester initiates an action to compel disclosure under this chapter, the submitting entity must be joined as a party to demonstrate the continuing need for confidentiality.

    (pp) Records maintained by the board of industrial insurance appeals that are related to appeals of crime victims' compensation claims filed with the board under RCW 7.68.110.

    (qq) Financial and commercial information supplied by or on behalf of a person, firm, corporation, or entity under chapter 28B.95 RCW relating to the purchase or sale of tuition units and contracts for the purchase of multiple tuition units.

    (rr) Any records of investigative reports prepared by any state, county, municipal, or other law enforcement agency pertaining to sex offenses contained in chapter 9A.44 RCW or sexually violent offenses as defined in RCW 71.09.020, which have been transferred to the Washington association of sheriffs and police chiefs for permanent electronic retention and retrieval pursuant to RCW 40.14.070(2)(b).

    (ss) Credit card numbers, debit card numbers, electronic check numbers, card expiration dates, or bank or other financial account numbers supplied to an agency for the purpose of electronic transfer of funds, except when disclosure is expressly required by law.

    (tt) Financial information, including but not limited to account numbers and values, and other identification numbers supplied by or on behalf of a person, firm, corporation, limited liability company, partnership, or other entity related to an application for a liquor license, gambling license, or lottery retail license.

    (uu) Records maintained by the employment security department and subject to chapter 50.13 RCW if provided to another individual or organization for operational, research, or evaluation purposes.

    (vv) Individually identifiable information received by the work force training and education coordinating board for research or evaluation purposes.

    (ww) Those portions of records containing specific and unique vulnerability assessments or specific and unique response plans, either of which is intended to prevent or mitigate criminal terrorist acts as defined in RCW 70.74.285, the public disclosure of which would have a substantial likelihood of threatening public safety.

    (xx) Commercial fishing catch data from logbooks required to be provided to the department of fish and wildlife under RCW 77.12.047, when the data identifies specific catch location, timing, or methodology and the release of which would result in unfair competitive disadvantage to the commercial fisher providing the catch data.  However, this information may be released to government agencies concerned with the management of fish and wildlife resources.

    (yy) Sensitive wildlife data obtained by the department of fish and wildlife.  However, sensitive wildlife data may be released to government agencies concerned with the management of fish and wildlife resources.  Sensitive wildlife data includes:

    (i) The nesting sites or specific locations of endangered species designated under RCW 77.12.020, or threatened or sensitive species classified by rule of the department of fish and wildlife;

    (ii) Radio frequencies used in, or locational data generated by, telemetry studies; or

    (iii) Other location data that could compromise the viability of a specific fish or wildlife population, and where at least one of the following criteria are met:

    (A) The species has a known commercial or black market value;

    (B) There is a history of malicious take of that species; or

    (C) There is a known demand to visit, take, or disturb, and the species behavior or ecology renders it especially vulnerable or the species has an extremely limited distribution and concentration.

    (zz) The personally identifying information of persons who acquire recreational licenses under RCW 77.32.010 or commercial licenses under chapter 77.65 or 77.70 RCW, except name, address of contact used by the department, and type of license, endorsement, or tag.  However, the department of fish and wildlife may disclose personally identifying information to:

    (i) Government agencies concerned with the management of fish and wildlife resources;

    (ii) The department of social and health services, child support division, and to the department of licensing in order to implement RCW 77.32.014 and 46.20.291; and

    (iii) Law enforcement agencies for the purpose of firearm possession enforcement under RCW 9.41.040.

(aaa) Information obtained by the health care authority or the pharmacy and therapeutics committee under RCW 41.05.026.

    (2) Except for information described in subsection (1)(c)(i) of this section and confidential income data exempted from public inspection pursuant to RCW 84.40.020, the exemptions of this section are inapplicable to the extent that information, the disclosure of which would violate personal privacy or vital governmental interests, can be deleted from the specific records sought.  No exemption may be construed to permit the nondisclosure of statistical information not descriptive of any readily identifiable person or persons.

    (3) Inspection or copying of any specific records exempt under the provisions of this section may be permitted if the superior court in the county in which the record is maintained finds, after a hearing with notice thereof to every person in interest and the agency, that the exemption of such records is clearly unnecessary to protect any individual's right of privacy or any vital governmental function.

    (4) Agency responses refusing, in whole or in part, inspection of any public record shall include a statement of the specific exemption authorizing the withholding of the record (or part) and a brief explanation of how the exemption applies to the record withheld.

NEW SECTION. Sec. 18.  A new section is added to chapter 41.05 RCW to read as follows:

    (1) The administrator is authorized to engage in consolidated prescription drug purchasing.  The authority granted the administrator by this section shall be liberally construed to achieve the purposes of this act.

    (2) Within one year following initial adoption of the preferred drug list for state purchased health care, units of local government, private entities, and individuals who lack prescription drug coverage must be offered an opportunity to participate on a purely voluntary basis in the purchasing cooperative resulting from adoption of the preferred drug list.  The administrator may charge reasonable administrative fees to units of local government and private entities who choose to participate in the purchasing cooperative.

    (3) For purposes of this section, "voluntary participation" for individuals who lack prescription drug coverage means that, following payment of a reasonable annual enrollment fee, these individuals can benefit from any price discounts obtained from prescription drug manufacturers through adoption of the preferred drug list.  The administrator must develop mechanisms to ensure that pharmacies filling prescriptions for individuals participating voluntarily in the purchasing cooperative recover any discounts given to these individuals through their participation in the cooperative.

    (4) The administrator shall establish an advisory committee representing units of local government, organized labor, private entities, and consumers to develop an implementation plan for the opportunity to participate as authorized by this subsection (4).  The advisory committee shall submit an implementation plan to the appropriate committees of the senate and house of representatives by September 15, 2003.

NEW SECTION. Sec. 19.  A new section is added to chapter 41.05 RCW to read as follows:

    The consolidated prescription drug purchasing account is created in the custody of the state treasurer.  All receipts from the fees from the preferred drug purchasing cooperative created in section 18 of this act must be deposited into the account.  Expenditures from the account may be used only for the purposes of this act.  Only the administrator or the administrator's designee may authorize expenditures from the account.  The account is subject to allotment procedures under chapter 43.88 RCW, but an appropriation is not required for expenditures.

NEW SECTION. Sec. 20.  A new section is added to chapter 41.05 RCW to read as follows:

    The administrator, in concert with agencies involved in state  purchased health care, must design and implement at least two, but not more than five, pilot disease management programs for persons covered through state purchased health care programs.  The programs must begin operation by July 1, 2003.

    (1) The administrator, in concert with agencies involved in state purchased health care, must determine the disease groups most appropriate for disease management and the state purchased health care programs to which the disease management programs will apply, after reviewing claims and cost information and research on the effectiveness of disease management programs.  The following disease groups should first be considered for disease management programs:  Asthma, diabetes, cardiovascular disease, malignancies, mental disorders, obesity, hemophilia, renal disease, transplants, intervertebral disc disorders, and populations at highest risk of improper use of medication.

    (2) Each pilot disease management program must include physicians, pharmacists, and other appropriate health care providers in the design and implementation of the program.  Drug classes exempted under section 4(2) of this act must be integrated into disease management programs as appropriate.  Providers may not be required to participate in a disease management program as a condition of contracting to provide state purchased health care services.

    (3) The programs must incorporate an evaluation component that allows the administrator to identify successful programs that are candidates for statewide expansion.  The evaluation should consider the impact of the disease management program upon the health status of participating enrollees, the use of health services by these enrollees, the coverage of comorbidities associated with the selected disease group, and the overall costs of treating these enrollees.

    (4) In addition to the pilot projects established under this section, the administrator and the secretary of the department of social and health services must give strong consideration to including participation in the alliance working for antibiotic resistance education project as a provision of managed care plan contracts for the public employees' benefits board, basic health plan, medical assistance, or children's health insurance programs for contract years beginning in calendar year 2003.

NEW SECTION. Sec. 21.  A new section is added to chapter 41.05 RCW to read as follows:

    Any savings to health care benefit programs administered by the public employees' benefits board that result from implementation of the prescription drug education and utilization system under this act must be deposited into the public employees' and retirees' insurance account established under RCW 41.05.120.  In developing its annual budget proposal for public employee health benefits, the administrator must consider the extent to which implementation of the preferred drug program has moderated increases in public employee health benefit costs and attempt to reflect that moderation in employee cost-sharing.

NEW SECTION. Sec. 22.  A new section is added to chapter 41.05 RCW to read as follows:

    (1) By January 1, 2003, the administrator must submit to the governor and the health care and fiscal committees of the legislature a progress report regarding the implementation of the prescription drug education and utilization system.  The report must include a description of the extent to which the evidence-based review has been incorporated into the preferred drug list, and any prior authorization policies or procedures that have been developed.

    (2) By January 1, 2004, and January 1, 2005, the administrator must submit to the governor and the health care and fiscal committees of the legislature a report on the impacts of the prescription drug education and utilization system.  The report must address whether the activities under this act have succeeded in promoting improved clinical outcomes and cost-effective drug utilization and report specifically on the status and outcomes associated with the pilot disease management programs established under section 20 of this act.  The report must include a description of the extent to which the evidence-based review has been incorporated into the preferred drug list, and any prior authorization policies or procedures that have been developed.  The report may present recommendations for modifications to the system, or for additional strategies that should be pursued to promote therapeutic and cost-effective utilization of prescription drugs by residents of the state of Washington.

    (3) By January 1, 2003, the secretary of the department of social and health services shall submit to the governor and the health care and fiscal committees of the legislature a report on implementation and operation of the therapeutic consultation program.  The report must include, at a minimum, a description of the impact of the program on medical assistance clients and providers and any cost savings associated with the program, and recommendations as to when the program should be discontinued, in whole or in part.

NEW SECTION. Sec. 23.  A new section is added to chapter 41.05 RCW to read as follows:

    The administrator shall contract with an independent entity to evaluate the implementation and impacts of the prescription drug education and utilization system established in this act.

    (1) The evaluation shall assess:

    (a) The degree to which the program has influenced prescription drug prescribing practices among health care providers in Washington, including a description of how prescribing practices may have changed;

    (b) The impact of the program on quality of care and clinical outcomes for persons enrolled in state purchased health care programs;

    (c) The extent to which the program has lessened administrative burdens on health care providers participating in state purchased health care programs;

    (d) The impact of the program on prescription drug expenditures across state purchased health care programs;

    (e) The impact of the program on the utilization of, and expenditures for, other health care services funded by state purchased health care programs.

    (2) The administrator may include the evaluation of disease management programs required under section 20 of this act in the evaluation under this section.

    (3) The administrator shall make every effort to pursue and obtain federal or private foundation funding for the evaluation from entities such as the federal agency for health care research and quality or the milbank memorial fund.  To ensure that results of the evaluation are objective and unbiased, private foundation funds derived from the pharmaceutical industry may not be used to fund the evaluation.

    (4) The results of the evaluation shall be submitted to the governor and legislature by January 1, 2006.

NEW SECTION. Sec. 24.  A new section is added to chapter 69.41 RCW to read as follows:

    Any pharmacist filling a prescription under the preferred drug list program established under section 4 of this act or under section 18 of this act from a prescriber who has endorsed the preferred drug list must substitute the preferred drug for any nonpreferred drug in a given therapeutic category, unless the prescriber has indicated on the prescription that the nonpreferred drug must be dispensed as written, in which case the pharmacist must dispense the nonpreferred drug as written.

NEW SECTION. Sec. 25.  A new section is added to chapter 41.05 RCW to read as follows:

    Nothing in this act preempts state-owned or managed hospitals licensed under chapter 70.41 RCW from aggregate purchasing through other programs.  These hospitals may choose to participate in the preferred drug purchasing program under this act if drugs can be obtained at lower cost.

NEW SECTION. Sec. 26.  A new section is added to chapter 43.60A RCW to read as follows:

    Nothing in this act preempts state-owned facilities and programs operated by the department of veterans affairs from aggregate purchasing through other programs.  The department may choose to participate in the preferred drug program under section 4 of this act if drugs can be obtained at lower cost.

NEW SECTION. Sec. 27.  If any provision of this act or its application to any person or circumstance is held invalid, the remainder of the act or the application of the provision to other persons or circumstances is not affected.

NEW SECTION. Sec. 28.  If any part of this act is found to be in conflict with federal requirements that are a prescribed condition to the allocation of federal funds to the state, the conflicting part of this act is inoperative solely to the extent of the conflict and with respect to the agencies directly affected, and this finding does not affect the operation of the remainder of this act in its application to the agencies concerned.  Rules adopted under this act must meet federal requirements that are a necessary condition to the receipt of federal funds by the state.

NEW SECTION. Sec. 29.  This act is necessary for the immediate preservation of the public peace, health, or safety, or support of the state government and its existing public institutions, and takes effect immediately.

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