"NEW SECTION.  Sec. 1   A new section is added to chapter 70.14 RCW to read as follows:
     (1) The administrator of the state health care authority shall, directly or by contract, adopt policies necessary for establishment of a prescription drug purchasing consortium. The consortium's purchasing activities shall be based upon the evidence-based prescription drug program established under RCW 70.14.050. State purchased health care programs, as defined in RCW 41.05.011(2), 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 pharmacies, unless exempted under this section. 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 individuals or entities participating in the consortium. The administrator shall explore joint purchasing opportunities with other states.
     (2) Participation in the purchasing consortium shall be offered as an option beginning January 1, 2006. Participation in the consortium is purely voluntary for units of local government, private entities, labor organizations, and for individuals who lack or are underinsured for prescription drug coverage. The administrator may set reasonable fees, including enrollment fees, to cover administrative costs attributable to participation in the prescription drug consortium.
     (3) The prescription drug consortium advisory committee is created within the authority. The function of the prescription drug advisory committee is to advise the administrator of the state health care authority on the implementation of the prescription drug purchasing consortium.
     (4) The prescription drug consortium advisory committee shall be composed of eleven members selected as provided in this subsection.
     (a) The administrator shall select one member of the prescription drug consortium advisory committee from each list of three nominees submitted by statewide organizations representing 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 who is a licensed advanced registered nurse practitioner;
     (v) One member representing a health carrier licensed under Title 48 RCW; and
     (vi) One member representing unions that represent private sector employees;
     (b) The administrator shall select two members of the advisory committee from a list of nominees submitted by statewide organizations representing consumers. One of the consumer members shall have knowledge or experience regarding senior citizen prescription drug cost and utilization issues;
     (c) The administrator shall select two members of the advisory committee 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; and
     (d) The administrator shall select one member who is versed in biologic medicine through research or academia from the University of Washington or Washington State University.
     (5) The administrator shall consult with the advisory committee on at least a quarterly basis on significant policy decisions related to implementation of the purchasing consortium.
     (6) 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 are exempt from the requirements of this section.
     (7) State purchased health care programs are exempt from the requirements of this section if they can demonstrate to the administrator that, as a result of the availability of federal programs or other purchasing arrangements, their other purchasing mechanisms will result in greater discounts and aggregate cost savings than would be realized through participation in the consortium.
     (8) The state health care authority is authorized to adopt rules implementing this act.

NEW SECTION.  Sec. 2   A new section is added to chapter 70.14 RCW to read as follows:
     The prescription drug consortium account is created in the custody of the state treasurer. All receipts from activities related to administration of the state drug purchasing consortium on behalf of participating individuals and organizations, other than state purchased health care programs, shall be deposited into the account. The receipts include but are not limited to rebates from manufacturers, and the fees established under section 1(2) of this act. Expenditures from the account may be used only for the purposes of section 1 of this act. Only the administrator of the state health care authority 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. 3   By December 1, 2008, the joint legislative audit and review committee shall conduct a performance audit on the operation of the consortium created in section 1 of this act. The audit shall review the operations and outcomes associated with the implementation of this consortium and identify the net savings, if any, to the members of the consortium, the percentage of targeted populations participating, and changes in the health outcomes of participants.

NEW SECTION.  Sec. 4   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. 5   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. 6   This act expires June 30, 2011."