BILL REQ. #:  H-1661.1 

Read first time 02/19/2003.   Referred to Committee on Health Care.

     AN ACT Relating to state agency contracts with pharmaceutical benefit management companies; amending RCW 41.05.011; adding a new section to chapter 41.05 RCW; and creating a new section.

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

NEW SECTION.  Sec. 1   The legislature finds that pharmaceutical benefit management companies can provide valuable services to state purchased health care programs that include coverage of prescription drugs. The legislature further finds that it is in the best interests of the state to maximize potential savings associated with these contracts by obtaining full disclosure from pharmacy benefit management companies regarding their business relationships with pharmaceutical manufacturers. It is the intent of the legislature to provide for full disclosure of any remuneration received by pharmacy benefits management companies from pharmaceutical manufacturers related to the administration of state purchased health care programs.

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) "Pharmacy benefit management company" means an entity that administers or manages prescription drug coverage for one or more health services purchasers, such as employers, health carriers, labor organizations, or governmental entities, by providing prescription drug services that may include, but are not limited to, claims processing, development of pharmacy provider networks, negotiation of discounts or rebates from pharmaceutical manufacturers, formulary development, and prescription drug utilization review.
     (16) "Pharmaceutical manufacturer" means any entity that is engaged in the production, preparation, propagation, compounding, conversion, or processing of prescription drugs, either directly or indirectly by extraction from substances of natural origin, or independently by means of chemical synthesis, or by a combination of extraction and chemical synthesis, or any entity engaged in the packaging, repackaging, labeling, relabeling, or distribution of prescription drugs. "Pharmaceutical manufacturer" does not include a wholesale drug distributor, a pharmacist licensed under chapter 18.64 RCW, or pharmacy operations of any group model health maintenance organization undertaken for the benefit of patients obtaining care through that system.

NEW SECTION.  Sec. 3   A new section is added to chapter 41.05 RCW to read as follows:
     Any contract between the administrator or any other agency administering a state purchased health care program and a pharmacy benefit management company must include the following provisions:
     (1) Disclosure of any agreements between the pharmacy benefit management company and a pharmaceutical manufacturer, its contractors, or an affiliate of a pharmaceutical manufacturer related to the use of that pharmaceutical manufacturer's products. Agreements to be disclosed include but are not limited to:
     (a) Agreements for the submission of data to pharmaceutical manufacturers or their contractors and any remuneration received from the manufacturer for supplying the data;
     (b) Rebate agreements or contracts with pharmaceutical manufacturers related to use of that manufacturer's products or the use of another manufacturer's products;
     (c) Payments by a drug manufacturer to the pharmacy benefits management company for switching consumer purchases to a drug produced or distributed by that pharmaceutical manufacturer; and
     (d) Any other payment to the pharmacy benefit management company by a pharmaceutical manufacturer or its contractors; and
     (2) An affirmative statement that the pharmacy benefits management company will be capable of administering, and agree to abide by the terms of, any preferred drug list developed for use by state purchased health care programs.