HCS HB 3 -- PHARMACEUTICAL INVESTMENT PROGRAM FOR SENIORS

CO-SPONSORS:  Barry (Abel, Naeger)

COMMITTEE ACTION:  Voted "do pass" by the Committee on Children,
Families and Health by a vote of 15 to 0.

This substitute establishes a Pharmaceutical Investment Program
for eligible seniors who reside in Missouri.  In its main
provisions, the substitute:

(1)  Repeals the current $200 prescription tax credit for
eligible seniors;

(2)  Revises the current resource limit used to determine
eligibility for persons who apply for public assistance.  The
resource limit for an individual is increased from $1,000 to
$1,500; for a married couple, the resource limit is increased
from $2,000 to $2,500;

(3)  Increases the income limit to 100% of the federal poverty
level for persons eligible to receive Medicaid;

(4)  Establishes an 11-member Commission for the Pharmaceutical
Investment Program for Seniors within the Division of Aging in
the Department of Health and Senior Services.  The composition
and selection of members and duties of the commission are
contained in the substitute;

(5)  Establishes the Pharmaceutical Investment Program for
Seniors within the Division of Aging in the Department of Health
and Senior Services.  Various terms are defined;

(6)  Requires the commission to govern the program and to
solicit requests for proposals to administer the program from
private contractors;

(7)  Requires the commission to select a bid from the submitted
proposals.  If no bids are received, the program will be jointly
administered by the Department of Health and Senior Services and
the Department of Social Services;

(8)  Sets eligibility criteria for participation in the
program.  Residents are eligible to apply to the program if they
are 65 years of age, have not received pharmaceutical benefits
for at least 6 months prior to applying to the program, have not
received Medicaid benefits, and meet income eligibility
guidelines;

(9)  Establishes income eligibility limits of $17,000 for
individuals and $23,000 for married couples;

(10)  Makes the program the payer of last resort and not an
entitlement;

(11)  Requires that seniors submit an annual application to the
Division of Aging or the division's designee.  The commission
will develop and implement a means test requiring applicants to
meet the income requirement of the program;

(12)  Prohibits requiring applicants to accept Medicaid benefits
in lieu of participating in the program;

(13)  Requires that participants pay a deductible to participate
in the program.  Deductible amounts are $250 or $500 per
participant, depending on marital status and household income;

(14)  Requires that all household income levels established for
participation in the program be adjusted annually by an amount
equal to the cost-of-living adjustment for the federal poverty
level established by the federal Department of Health and Human
Services;

(15)  Requires that enrollees pay 40% of the purchase price of
prescription drugs.  In addition, eligible enrollees are
required to pay an annual co-insurance amount of $25 or $35
based on marital status and income level;

(16)  Establishes an annual program benefit limit of $5,000 per
enrollee;

(17)  Allows the Department of Health and Senior Services to
enter into a contract with any private individual, corporation,
or agency to implement the program;

(18)  Requires the division to utilize Area Agencies on Aging,
senior citizen centers, and related entities to provide
outreach, enrollment assistance, and education relating to the
program;

(19)  Requires the commission to submit quarterly reports to the
Governor, Senate Appropriations Committee, House of
Representatives Budget Committee, Speaker of the House of
Representatives, and President Pro Tem of the Senate;

(20)  Requires that program benefits be supported by moneys
appropriated by the General Assembly;

(21)  Requires the commission to implement cost control measures
if projected costs exceed the current program appropriation;

(22)  Allows the division to request a supplemental
appropriation to meet additional costs and requires
implementation of cost control measures;

(23)  Requires the program to cover eligible costs not covered
by a federal pharmaceutical assistance program if established;

(24)  Requires the commission to develop rules to implement the
program;

(25)  Makes any person who engages in fraudulent activities in
order to participate in the program guilty of a misdemeanor and
forfeits his or her rights to participate in the program;

(26)  Requires the program to be fully operational by July 1,
2002.  An initial enrollment period will be from April 1, 2002,
through May 30, 2002.  A second initial enrollment period will
be from November 1, 2002, through December 15, 2002, for persons
who did not enroll during the first initial enrollment period
for the 2003 calendar year.  Current enrollees do not have to
re-enroll during the second initial enrollment period for the
2003 calendar year.  Beginning with calendar year 2004, open
enrollment periods will be held from November 1 through December
15 of the preceding calendar year;

(27)  Allows an individual a 30-day enrollment period outside
the established enrollment periods;

(28)  Requires that the program use generic prescription drugs
when available.  Enrollees may receive brand name prescription
drugs when a generic prescription drug is available only if both
the prescribing physician and the enrollee request the brand
name prescription drug, the enrollee pays the co-insurance on
the generic drug, and the enrollee pays the difference in price
between the brand name drug and the generic drug;

(29)  Requires that pharmacists participating in the program be
reimbursed for costs resulting from obtaining and dispensing
medications.  Reimbursement formulas for brand name and generic
medications are contained in the substitute;

(30)  Requires the division to issue a certificate of
participation to pharmaceutical manufacturers who participate in
the program.  A manufacturer can apply for participation in the
program by submitting an application approved by the commission;

(31)  Requires pharmaceutical manufacturers to provide quarterly
rebates under the program.  The division is required to
negotiate annually with manufacturers for the rebate amounts.
Rebates for brand name prescription drugs may not be less than
15% and rebates for generic prescriptions may not be less than
11%.  Rebates will be used to fund the program;

(32)  Prohibits a pharmaceutical manufacturer's status under the
current Medicaid program from being affected if the manufacturer
refuses to participate in the program; and

(33)  Creates a Pharmaceutical Investment Program for Seniors
Fund which will be administered by the State Treasurer.  The
revenue sources for the fund are specified in the substitute,
and funds will not revert to the General Revenue Fund.

The substitute contains an emergency clause.

FISCAL NOTE: Not available at time of printing.

PROPONENTS:  Supporters say that the current pharmaceutical tax
credit is not meeting the needs of Missouri seniors and that a
fiscally responsible pharmaceutical assistance program is needed
for seniors who are on fixed incomes and are confronted with
choosing between paying for the increased costs of prescription
drugs, health care, and other household expenses.  Supporters
also state that revising the income and asset levels for persons
applying for public assistance will help ease the financial
burden experienced by individuals meeting the Medicaid "spend--
down" requirement.  Creating a pharmaceutical assistance program
is an initial phase of state government action responding to the
needs of Missouri seniors who need assistance paying for the
increased costs of prescribed medication.

Testifying for the bill were Lieutenant Governor Maxwell;
Representatives Abel, Naeger, Portwood, and Hollingsworth;
Silver Haired Legislature of Missouri; Missouri Coalition of
Community Mental Health Centers; National Alliance for the
Mentally Ill; AARP; Coalition for Affordable Prescriptions for
Seniors; and Cindy Eckstein.

OPPONENTS:  Those who oppose the bill say that the two-tiered
benefit contained in the pharmaceutical assistance program will
lead to difficulty estimating the actual number of program
participants and the actual costs of the program.  Due to these
uncertainties, a pharmaceutical assistance program should
contain a single benefit tier.

Testifying against the bill was Cathy Carroll.

Joseph Deering, Legislative Analyst

Missouri House of Representatives
Last Updated October 19, 2001 at 4:30 pm