READ FIRST TIME 01/31/03.   

     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 74.09 RCW; adding a new section to chapter 69.41 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:
     (a) 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; and
     (b) Develop a program to promote access to affordable prescription drug coverage to low-income aged or disabled persons who do not otherwise have adequate coverage to purchase necessary and appropriate 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 for whom the authority is providing the school districts' health insurance programs as provided in RCW 28A.400.350.
     (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 thirteen members selected as provided in this subsection.
     (a) The governor shall select one member of the prescription drug board from lists 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) The governor shall select one member who is versed in biologic medicine through research or academia from the University of Washington or Washington State University;
     (e) One member shall be the secretary of the department of social and health services or his or her designee;
     (f) One member shall be the director of the department of labor and industries or his or her designee; and
     (g) One member shall be the administrator.
     (3) The members who represent the organizations appointed pursuant to subsection (2)(a)(v) 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 each of 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 administrator, on behalf of 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.
     (5) Members of the prescription drug board are immune from civil liability for any official acts performed in good faith as members of the board.

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) Adopt a preferred drug list for use as provided in this act through the establishment of a pharmacy and therapeutics committee.
     (i) The pharmacy and therapeutics committee shall be comprised of practicing licensed physicians, other practicing licensed health professionals with prescriptive authority, practicing licensed pharmacists, and pharmacoeconomists. At least one licensed health professional with prescriptive authority and one pharmacist must have demonstrated experience in serving women, children, and people of color. The membership composition must be consistent with applicable federal requirements under Title XIX of the federal social security act to allow full participation by the department of social and health services or other state agencies in activities under this act.
     (ii) The pharmacy and therapeutics committee shall review nationally recognized therapeutic drug classes. The committee must use an evidence-based process that evaluates the efficacy of prescription drugs, considering safety, efficacy, likelihood of compliance, outcomes, and any unique impacts on specific populations based upon factors such as sex, age, ethnicity, race, or disability. For each therapeutic class reviewed, the committee must identify the prescription drugs determined to be most clinically effective, and if applicable, equally effective. Decisions of the pharmacy and therapeutics committee regarding the clinical effectiveness of drugs within a therapeutic class are binding on the prescription drug board.
     If a substantial number of prescribers in a peer group are frequently prescribing nonpreferred drugs in one or more therapeutic classes, the administrator must provide the pharmacy and therapeutics committee with information on these prescribing patterns to enable the committee to review their decisions related to the affected therapeutic classes.
     (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 consistent with the scope of benefits offered through those programs. In administering prescription drug benefits under state purchased health care programs, agencies shall honor an endorsing prescriber's direction to dispense a prescription drug as written on the prescription order or to continue therapy with the drug classes included in section 12 of this act.
     (iv) Within one hundred twenty days following establishment of the pharmacy and therapeutics committee, the drug utilization and education council within the department of social and health services shall be disbanded and its functions transferred to the pharmacy and therapeutics committee.
     (v) If a particular class of drugs is being used in a disease management program sponsored by a state purchased health care program, efforts shall be made to ensure that the preferred drugs in that class are consistent with protocols or algorithms used in the disease management program.
     (vi) Members of the pharmacy and therapeutics committee are immune from civil liability for any official acts performed in good faith as members of the committee;
     (b) Establish drug utilization management policies. State purchased health care programs shall adopt these drug utilization management policies consistent with the scope of benefits offered and populations served through programs administered by that program and may implement the policies directly or by contract or interagency agreement. To ensure full participation by the department of social and health services in drug utilization management activities under this act, the policies must be consistent with drug utilization review requirements of Title XIX of the federal social security act. The pharmacy and therapeutics committee shall conduct drug utilization management activities for state purchased health care programs and the consortium as directed by the prescription drug board;
     (c) Develop prescriber and consumer education policies. State purchased health care programs shall adopt these prescriber and consumer policies and implement them directly or by contract or interagency agreement. Effective prescriber education policies are intended to result in better compliance of prescribers with the preferred drug list and increased cost savings. Prescriber education policies should be adequately funded and designed to educate prescribers to prevent use of more expensive prescription drugs of no greater clinical benefit, to increase prescribers' awareness of the preferred drug list and the credible evidence-based process used to develop it, and the ability to direct that prescriptions be dispensed as written;
     (d) Adopt policies necessary for establishment of a prescription drug purchasing consortium. The administrator shall implement the prescription drug purchasing consortium policies adopted by the board, and shall coordinate state purchased health care programs' participation in the 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 13 of this act. The administrator shall not require that any supplemental rebate offered by a pharmaceutical manufacturer for prescription drugs purchased for medical assistance program clients under chapter 74.09 RCW be extended to state purchased health care programs other than medical assistance, or to private individuals or entities participating in the consortium. The prescription drug board and the administrator shall explore joint purchasing opportunities with other states to achieve quality cost-effective prescription drug coverage for those participating in the consortium.
     (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 or are underinsured for prescription drug coverage. Unaffiliated individuals who participate in the consortium shall receive reduced costs comparable to those negotiated by the consortium for its preferred prescription drugs. 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. A private entity may limit its participation to one or more of the prescription drug board's program components.

NEW SECTION.  Sec. 5   A new section is added to chapter 41.05 RCW to read as follows:
     Members of the prescription drug board, the pharmacy and therapeutics committee, or any committee that may be established to carry out activities under this act are prohibited from being employed by a pharmaceutical manufacturer, a pharmacy benefits management company, or be employed by any agency administering state purchased health care programs, except as specified in section 3(2) (e), (f), and (g) of this act. 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 or pharmaceutical benefits management company.

NEW SECTION.  Sec. 6   A new section is added to chapter 41.05 RCW to read as follows:
     The administrator shall:
     (1) Directly or by interagency agreement or contract, distribute the initial preferred drug list and any subsequent revisions to every provider with prescriptive authority, including with it a description of how the list was developed, how it will be used, and requesting his or her endorsement;
     (2) Obtain in writing from all prescribers either: (a) An affirmative statement endorsing the preferred drug list and acknowledging the therapeutic substitution authority granted to pharmacists when there is no direction to dispense the prescription as written, or (b) a statement declining to endorse the preferred drug list; and
     (3) Provide each pharmacy with a listing of the prescribers who have not endorsed the preferred drug list.

NEW SECTION.  Sec. 7   A new section is added to chapter 74.09 RCW to read as follows:
     (1) To the extent funds are appropriated specifically for this purpose, and subject to any conditions placed on appropriations made for this purpose, the department shall design the medicaid prescription drug assistance program. Neither the benefits of, nor eligibility for, the program is considered to be an entitlement.
     (2) The department is directed to obtain necessary federal waivers to implement this program. Consistent with federal waiver conditions, the department is authorized to charge enrollment fees, premiums, or point-of-service cost-sharing to enrollees of the program.
     (3) Eligibility for this program is limited to persons: (a) Who are eligible for medicare or age sixty-five and older; (b) whose family income does not exceed two hundred percent of the federal poverty level as adjusted for family size and determined annually by the federal department of health and human services; (c) who do not otherwise have insurance that provides prescription drug coverage; and (d) who are not otherwise eligible under Title XIX of the federal social security act.
     (4) The department is authorized to use a cost-effective prescription drug benefit design. Consistent with federal waiver conditions, this benefit design can be different than the benefit design offered under the medical assistance program. The benefit design may include a deductible benefit that provides coverage when enrollees incur higher prescription drug costs as defined by the department. The department also may offer more than one benefit design.
     (5) The department is authorized to limit enrollment of persons who qualify for the program so as to prevent an overexpenditure of appropriations for this program or to assure necessary compliance with federal waiver budget neutrality requirements. The department shall not reduce existing medical assistance program eligibility or benefits to assure compliance with federal waiver budget neutrality requirements.
     (6) No funds from an approved federal waiver that allows for the collection of premiums from medicaid clients will be used to finance the medicaid prescription drug assistance program.
     (7) This program will be terminated within twelve months after implementation of a prescription drug benefit under Title XVIII of the social security act.
     (8) The department shall provide recommendations to the appropriate committees of the senate and house of representatives by November 15, 2003, on financing options available to support the medicaid prescription drug assistance program. In recommending financing options, the department shall explore every opportunity to maximize federal funding to support the program.

NEW SECTION.  Sec. 8   A new section is added to chapter 41.05 RCW to read as follows:
     The administrator shall, directly or by interagency agreement or contract, establish and operate a statewide senior prescription drug information clearinghouse. The clearinghouse shall:
     (1) Promote access to necessary prescription drugs for persons over age sixty-five who reside in Washington state;
     (2) Make information available on a statewide basis regarding private and public programs that provide financial assistance to seniors for the purchase of prescription drugs;
     (3) Provide educational information about the preferred drug list and methods to purchase prescription drugs most cost-effectively and efficiently, including information about generic drugs and the potential for dangerous drug interactions; and
     (4) Provide individual education and assistance regarding prescription drug financial assistance programs.
     Prior to July 1, 2005, the administrator shall provide for an evaluation of the effectiveness and potential continuation of the clearinghouse.

NEW SECTION.  Sec. 9   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 section 4 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. 10   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 activities under this act, including but not limited to consumer and provider education. 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. Except for supplemental rebates, no money from the pharmaceutical industry shall be used to support the activities under this act. Private foundations shall be prohibited from passing through funding from a pharmaceutical manufacturer when it gives the appearance of a conflict of interest or an attempt to exert undue influence on the implementation of this act. The administrator shall report to the appropriate committees of the senate and house of representatives on any grants or funds received under this section within thirty days of their receipt.

NEW SECTION.  Sec. 11   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. 12   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:
     (1) The endorsing prescriber has indicated on the prescription that the nonpreferred drug must be dispensed as written; or
     (2) The prescription is for a refill of an antipsychotic, antidepressant, chemotherapy, antiretroviral, or immunosuppressive drug, in which case the pharmacist shall dispense the nonpreferred drug as written. When a substitution is made, on a new prescription or as a result of a change in the preferred drug within a therapeutic class, the prescriber must be notified in writing by the dispensing pharmacist of the specific drug and dose dispensed.

NEW SECTION.  Sec. 13   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. 14   A new section is added to chapter 41.05 RCW to read as follows:
     This act does not apply to state purchased health care services that are purchased from or through health carriers as defined in RCW 48.43.005, or group model health maintenance organizations that are accredited by the national committee for quality assurance. The administrator shall exempt those prescribers that practice in a group model health maintenance organization that is accredited by the national committee for quality assurance from the endorsement provisions of section 6 of this act.

NEW SECTION.  Sec. 15   The therapeutic consultation service operated by the department of social and health services, with the exception of the intensive benefits management and academic detailing components of the program, expires on July 1, 2005. However, the department shall terminate the therapeutic consultation service four brand limit program component earlier if, upon monitoring prescriber compliance with the preferred drug list and trends in the therapeutic consultation service four brand limit program component, the department determines the number of pharmacy claims that trigger the four brand edit exception under therapeutic consultation services is below the threshold indicated in the biennial omnibus operating budget bill for three consecutive months. The threshold shall represent the point where the legislature determines that anticipated savings associated with the therapeutic consultation service four brand limit program component no longer justify its operation due to the implementation of this act.

NEW SECTION.  Sec. 16   A new section is added to chapter 41.05 RCW to read as follows:
     The health care authority, on behalf of the prescription drug board, and agencies that administer state purchased health care programs are authorized to adopt rules implementing this act.

NEW SECTION.  Sec. 17   If specific funding for this act referencing this act by bill or chapter number, is not provided by June 30, 2003, in the omnibus appropriations act, this act is null and void.

NEW SECTION.  Sec. 18   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. 19   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. 20   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.