BILL REQ. #:  H-0417.1 

Read first time 01/15/2003.   Referred to Committee on Health Care.

     AN ACT Relating to prescription drugs; amending RCW 41.05.011; adding new sections to chapter 41.05 RCW; adding a new section to chapter 69.41 RCW; adding a new section to chapter 43.60A RCW; creating new sections; 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 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.
     (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) "Prescription drug board" means the prescription drug quality improvement and purchasing board created in section 3 of this act.

NEW SECTION.  Sec. 3   A new section is added to chapter 41.05 RCW to read as follows:
     (1) The prescription drug quality improvement and purchasing board is created within the authority. The function of the prescription drug board is to design and approve policies and programs related to prescription drugs for public and private participants in the purchasing consortium established under section 4 of this act.
     (2) The prescription drug board shall be composed of eleven members selected as provided in this subsection.
     (a) The governor shall select one member of the prescription drug board from each list of three nominees submitted by statewide organizations representing each of the following:
     (i) One representative of state employees, who represents an employee union certified as exclusive representative of at least one bargaining unit of classified employees;
     (ii) One member who is a licensed physician;
     (iii) One member who is a licensed pharmacist;
     (iv) One member representing a health carrier licensed under Title 48 RCW; and
     (v) One member representing a private union;
     (b) The governor shall select two members of the prescription drug board from a list of nominees submitted by statewide organizations representing consumers, one of whom shall represent individuals under age sixty-five without insurance coverage for prescription drugs and one of whom shall represent individuals over age sixty-five without insurance coverage for prescription drugs;
     (c) The governor shall select two members of the prescription drug board from a list of nominees submitted by statewide organizations representing business, one of whom shall represent small businesses who employ fifty or fewer employees and one of whom shall represent large businesses;
     (d) One member shall be the secretary of the department of social and health services; and
     (e) One member shall be the administrator.
     (3) The members who represent the organizations appointed pursuant to subsection (2) (a)(v), (b), and (c) of this section shall be nonvoting members until such time as there are no less than twelve thousand participants enrolled with the authority for prescription drug purchasing from the organizations they are appointed to represent.
     (4) The governor shall appoint the initial members of the prescription drug board to staggered terms not to exceed four years. Members appointed thereafter shall serve two-year terms. Members of the prescription drug board shall be compensated in accordance with RCW 43.03.250 and shall be reimbursed for their travel expenses while on official business in accordance with RCW 43.03.050 and 43.03.060. The prescription drug board shall prescribe rules for the conduct of its business. The administrator shall serve as chair of the prescription drug board. Meetings of the prescription drug board shall be at the call of the chair.

NEW SECTION.  Sec. 4   A new section is added to chapter 41.05 RCW to read as follows:
     (1) The prescription drug board shall, directly or by contract:
     (a) Establish a new, or contract with an existing, pharmacy and therapeutics committee to develop a preferred drug list for use by participants in the purchasing consortium.
     (i) The pharmacy and therapeutics committee shall be comprised of licensed physicians, licensed pharmacists, and pharmacoeconomists. At least one physician and one pharmacist must have demonstrated experience in serving women and people of color.
     (ii) Decisions of the pharmacy and therapeutics committee must be based on an evidence-based evaluation of the efficacy of prescription drugs, considering safety, efficacy, and outcomes, and any unique circumstances regarding women, people of color, elderly, children, and those with special diseases. Decisions of the pharmacy and therapeutics committee related to the preferred drug list are binding on the prescription drug board.
     (iii) State purchased health care programs shall adopt the preferred drug list established by the prescription drug board for those components of their programs that purchase prescription drugs directly or through reimbursement of retail pharmacies. In administering prescription drug benefits under state purchased health care programs, agencies shall honor a prescriber's direction to dispense a prescription drug as written on the prescription order;
     (b) Establish drug utilization review policies. State purchased health care programs shall adopt these drug utilization review policies consistent with the scope of benefits offered through programs administered by that agency and may implement the policies directly or by contract or interagency agreement;
     (c) Develop and distribute prescriber and consumer education materials and processes. State purchased health care programs shall adopt these prescriber and consumer education materials and processes and may implement the policies directly or by contract or interagency agreement;
     (d) Establish a prescription drug purchasing consortium. State purchased health care programs shall purchase prescription drugs through the consortium for those prescription drugs that are purchased directly by the state and those that are purchased through reimbursement of retail pharmacies, unless exempted under section 10 or 11 of this act.
      (2) Participation in the purchasing consortium and other prescription drug board activities is purely voluntary for units of local government, private entities, and individuals who lack prescription drug coverage. A private entity may limit its participation to one or more of the prescription drug board's program components. The prescription drug board may set reasonable fees, including enrollment fees for participating individuals, to cover administrative costs attributable to participation of private entities in prescription drug board activities.

NEW SECTION.  Sec. 5   A new section is added to chapter 41.05 RCW to read as follows:
     No member of the prescription drug board, the pharmacy and therapeutics committee, or any committee that may be established to develop utilization review or prescriber and consumer education policies may be employed by a pharmaceutical manufacturer, or be employed by any agency administering state purchased health care programs. As a condition of appointment to the prescription drug board or any committee, each member must disclose any potential conflict of interest, including receipt of any remuneration, grants, or other compensation from a pharmaceutical manufacturer.

NEW SECTION.  Sec. 6   A new section is added to chapter 41.05 RCW to read as follows:
     The prescription drug consortium account is created in the custody of the state treasurer. All receipts from the fees from the prescription drug purchasing consortium created in section 4 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. 7   A new section is added to chapter 41.05 RCW to read as follows:
     The prescription drug board and the administrator may solicit and accept grants or other funds from public and private sources to support consumer and provider education and other related activities under this act. Any grants or funds received may be used to enhance these activities as long as program standards established by the prescription drug board and the administrator are maintained.

NEW SECTION.  Sec. 8   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 board's activities under 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; and
     (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 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.
     (3) The results of the evaluation must be submitted to the governor and the legislature by January 1, 2007.

NEW SECTION.  Sec. 9   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 shall 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 shall dispense the nonpreferred drug as written. When a substitution is made, or a preferred drug within a therapeutic class changes, the prescriber must be notified in writing by the dispensing pharmacist of the specific drug and dose dispensed.

NEW SECTION.  Sec. 10   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 list program under section 4 of this act if drugs can be obtained at lower cost.

NEW SECTION.  Sec. 11   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 list program under section 4 of this act if drugs can be obtained at lower cost.

NEW SECTION.  Sec. 12   The therapeutic consultation service operated by the department of social and health services expires on January 1, 2004.

NEW SECTION.  Sec. 13   A new section is added to chapter 41.05 RCW to read as follows:
     The prescription drug board and agencies that administer state purchased health care programs are authorized to adopt rules implementing this act.

NEW SECTION.  Sec. 14   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. 15   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. 16   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.