CHAPTER 180 HOUSE Substitute for Substitute for SENATE BILL No. 422 An  Act concerning the department of social and rehabilitation services; relating to pre-
scription drugs under the state medicaid program; providing for a state medicaid pre-
ferred drug formulary and an advisory committee therefor; medicaid drug utilization
review board duties, procedures and composition; amending K.S.A. 39-7,118, 39-7,119
and 39-7,120 and K.S.A. 2001 Supp. 77-421 and repealing the existing sections.
Be it enacted by the Legislature of the State of Kansas:

      New Section  1. (a) The secretary of social and rehabilitation services
may establish an advisory committee pursuant to K.S.A. 75-5313, and
amendments thereto, to advise the secretary in the development of a
preferred formulary listing of covered drugs by the state medicaid pro-
gram.

      (b) The secretary of social and rehabilitation services shall evaluate
drugs and drug classes for inclusion in the state medicaid preferred drug
formulary based on safety, effectiveness and clinical outcomes of such
treatments. In addition, the secretary shall evaluate drugs and drug classes
to determine whether inclusion of such drugs or drug classes in a starter
dose program would be clinically efficacious and cost effective. If the
factors of safety, effectiveness and clinical outcomes among drugs being
considered in the same class indicate no therapeutic advantage, then the
secretary shall consider the cost effectiveness and the net economic im-
pact of such drugs in making recommendations for inclusion in the state
medicaid preferred drug formulary. Drugs which do not have a signifi-
cant, clinically meaningful therapeutic advantage in terms of safety, ef-
fectiveness or clinical outcomes over other drugs in the same class which
have been selected for the preferred drug formulary may be excluded
from the preferred drug formulary and may be subject to prior authori-
zation in accordance with state and federal law, except, prior to July 1,
2003, where a prescriber has personally written ``dispense as written'' or
``D.A.W.'', or has signed the prescriber's name on the ``dispense as writ-
ten'' signature line in accordance with K.S.A. 65-1637, and amendments
thereto.

      (c) The secretary of social and rehabilitation services shall consider
the net economic impact of drugs selected or excluded from the preferred
formulary and may gather information on the costs of specific drugs,
rebates or discounts pursuant to 42 U.S.C. 1396r-8, dispensing costs, dos-
ing requirements and utilization of other drugs or other medicaid health
care services.

      (d) The secretary of social and rehabilitation services may accept all
services, including, but not limited to, disease state management, asso-
ciated with the delivery of pharmacy benefits under the state medicaid
program having a determinable cost effect in addition to the medicaid
prescription drug rebates required pursuant to 42 U.S.C. section 1396r-
8.

      (e) The state medicaid preferred drug formulary shall be submitted
to the medicaid drug utilization review board for review and policy rec-
ommendations.

      New Sec.  2. No requirements for prior authorization or other re-
strictions on medications used to treat mental illnesses such as schizo-
phrenia, depression or bipolar disorder may be imposed on medicaid
recipients. Medications that will be available under the state medicaid
plan without restriction for persons with mental illnesses shall include
atypical antipsychotic medications, conventional antipsychotic medica-
tions and other medications used for the treatment of mental illnesses.

      New Sec.  3. A prescription medication prescribed for a medicaid re-
cipient or a person who becomes eligible for medicaid assistance shall not
be subject to any requirement for prior authorization under the state
medicaid plan unless (a) such prescription, including all authorized refills,
has expired, or (b) the practitioner who prescribed the medication for
such recipient prescribes a different medication.

      New Sec.  4. (a) The state medicaid plan shall include provisions for
a program of differential dispensing fees for pharmacies that provide pre-
scriptions for adult care homes under a unit dose system in accordance
with rules and regulations of the state board of pharmacy and that par-
ticipate in the return of unused medications program under the state
medicaid plan.

      (b) The state medicaid plan shall include provisions for differential
ingredient cost reimbursement of generic and brand name pharmaceu-
ticals. The secretary of social and rehabilitation services shall set the rates
for differential cost reimbursement of generic and brand name pharma-
ceuticals by rules and regulations.

      New Sec.  5. (a) Except where a prescriber has personally written
``dispense as written'' or ``D.A.W.,'' or has signed the prescriber's name
on the ``dispense as written'' signature line in accordance with K.S.A. 65-
1637 and amendments thereto, the secretary of social and rehabilitation
services may limit reimbursement for a prescription under the medicaid
program to the multisource generic equivalent drug.

      (b) No pharmacist participating in the medical assistance program
shall be required to dispense a prescription-only drug that will not be
reimbursed by the medical assistance program.

      Sec.  6. K.S.A. 39-7,118 is hereby amended to read as follows: 39-
7,118. The secretary of social and rehabilitation services shall implement
a drug utilization review program with the assistance of a medicaid drug
utilization review board as provided in K.S.A. 39-7,119 and amendments
thereto to assure the appropriate utilization of drugs by patients receiving
medical assistance under the medicaid program. The drug utilization re-
view program shall include:

      (a) Monitoring of prescription information including overutilization
and underutilization of prescription-only drugs;

      (b) making periodic reports of findings and recommendations to the
secretary of social and rehabilitation services and the United States de-
partment of health and human services regarding the activities of the
board, drug utilization review programs, summary of interventions, as-
sessments of education interventions and drug utilization review cost es-
timates;

      (c) providing for prospective and retrospective drug utilization re-
view, as specified in the federal omnibus budget reconciliation act of 1990
(public law 101-508);

      (d) monitoring provider and recipient compliance with program ob-
jectives;

      (e) providing educational information on state program objectives,
directly or by contract, to private and public sector health care providers
to improve prescribing and dispensing practices;

      (f) reviewing the increasing costs of purchasing prescription drugs
and making recommendations on cost containment; and

      (g) reviewing profiles of medicaid beneficiaries who have multiple
prescriptions above a level specified by the board; and

      (h) recommending any modifications or changes to the medicaid pre-
scription drug program.

      Sec.  7. K.S.A. 39-7,119 is hereby amended to read as follows: 39-
7,119. (a) There is hereby created the medicaid drug utilization review
board which shall be responsible for the implementation of retrospective
and prospective drug utilization programs under the Kansas medicaid
program.

      (b) Except as provided in subsection (i), the board shall consist of at
least seven members appointed as follows:

      (1) Two licensed physicians actively engaged in the practice of med-
icine, nominated by the Kansas medical society and appointed by the
secretary of social and rehabilitation services from a list of four nominees;

      (2) one licensed physician actively engaged in the practice of osteo-
pathic medicine, nominated by the Kansas association of osteopathic
medicine and appointed by the secretary of social and rehabilitation serv-
ices from a list of four nominees;

      (3) two licensed pharmacists actively engaged in the practice of phar-
macy, nominated by the Kansas pharmacy association and appointed by
the secretary of social and rehabilitation services from a list of four nom-
inees;

      (4) one person licensed as a pharmacist and actively engaged in ac-
ademic pharmacy, appointed by the secretary of social and rehabilitation
services from a list of four nominees provided by the university of Kansas;
and

      (5) one licensed professional nurse actively engaged in long-term care
nursing, nominated by the Kansas state nurses association and appointed
by the secretary of social and rehabilitation services from a list of four
nominees.

      (c) The secretary of social and rehabilitation services may add two
additional members so long as no class of professional representatives
exceeds 51% of the membership.

      (d) The physician and pharmacist members shall have expertise in
the clinically appropriate prescribing and dispensing of outpatient drugs.

      (e) The appointments to the board shall be for terms of three years,
except that for the initial appointments to the board one physician and
one pharmacist, as designated by the secretary of social and rehabilitation
services, shall be appointed for two years. Thereafter, all appointments
shall be for three years. In making the appointments, the secretary of
social and rehabilitation services shall provide for geographic balance in
the representation on the board to the extent possible. Subject to the
provisions of subsection (i), members may be reappointed.

      (f) The board shall elect a chairperson from among board members
who shall serve a one-year term. The chairperson may serve consecutive
terms.

      (g) The board, in accordance with K.S.A. 75-4319 and amendments
thereto, may recess for a closed or executive meeting when it is consid-
ering matters relating to identifiable patients or providers.

      (h) All actions of the medicaid drug utilization review board shall be
upon the affirmative vote of five members of the board and the vote of
each member present when action was taken shall be recorded by roll call
vote.

      (i) Upon the expiration of the term of office of any member of the
medicaid drug utilization review board on or after the effective date of
this act and in any case of a vacancy existing in the membership position
of any of member of the medicaid drug utilization review board on or
after the effective date of this act, a successor shall be appointed by the
secretary of social and rehabilitation services so that as the terms of mem-
bers expire, or vacancies occur, members are appointed and the compo-
sition of the board is changed in accordance with the following and such
appointment shall be made by the secretary in the following order of
priority:

      (1) One member shall be a licensed pharmacist who is actively per-
forming or who has experience performing medicaid pharmacy services
for a hospital and who is nominated by the Kansas hospital association
and appointed by the secretary from a list of two or more nominees;

      (2) one member shall be a licensed pharmacist who is actively per-
forming or who has experience performing medicaid pharmacy services
for a licensed adult care home and who is nominated by the state board
of pharmacy and appointed by the secretary from a list of two or more
nominees;

      (3) one member shall be a licensed physician who is actively engaged
in the general practice of allopathic medicine and who has practice ex-
perience with the state medicaid plan and who is nominated by the Kansas
medical society and appointed by the secretary from a list of two or more
nominees;

      (4) one member shall be a licensed physician who is actively engaged
in mental health practice providing care and treatment to persons with
mental illness, who has practice experience with the state medicaid plan
and who is nominated by the Kansas psychiatric society and appointed
by the secretary from a list of two or more nominees;

      (5) one member shall be a licensed physician who is the medical di-
rector of a nursing facility, who has practice experience with the state
medicaid plan and who is nominated by the Kansas medical society and
appointed by the secretary from a list of two or more nominees;

      (6) one member shall be a licensed physician who is actively engaged
in the general practice of osteopathic medicine, who has practice experi-
ence with the state medicaid plan and who is nominated by the Kansas
association of osteopathic medicine and who is appointed by the secretary
from a list of two or more nominees;

      (7) one member shall be a licensed pharmacist who is actively engaged
in retail pharmacy, who has practice experience with the state medicaid
plan and who is nominated by the state board of pharmacy and appointed
by the secretary from a list of two or more nominees;

      (8) one member shall be a licensed pharmacist who is actively engaged
in or who has experience in research pharmacy and who is nominated
jointly by the Kansas task force for the pharmaceutical research and man-
ufacturers association and the university of Kansas and appointed by the
secretary from a list of two or more jointly nominated persons; and

      (9) one member shall be a licensed advanced registered nurse prac-
titioner or physician assistant actively engaged in the practice of provid-
ing the health care and treatment services such person is licensed to per-
form, who has practice experience with the state medicaid plan and who
is nominated jointly by the Kansas state nurses' association and the Kansas
academy of physician assistants and appointed by the secretary from a
list of two or more jointly nominated persons.

      Sec.  8. K.S.A. 39-7,120 is hereby amended to read as follows: 39-
7,120. (a) The department secretary of social and rehabilitation services
shall not restrict patient access to prescription-only drugs pursuant to a
program of prior authorization or a restrictive formulary except by rules
and regulations adopted in accordance with K.S.A. 77-415 et seq., and
amendments thereto. Prior to the promulgation of any such rules and
regulations, the department secretary of social and rehabilitation services
shall submit such proposed rules and regulations to the medicaid drug
utilization review board for written comment. The secretary of social and
rehabilitation services may not implement permanent prior authorization
until 30 days after receipt of comments by the drug utilization review
board.

      (b) When considering recommendations from the medicaid drug util-
ization review board regarding the prior authorization of a drug, the
secretary of social and rehabilitation services shall consider the net eco-
nomic impact of such prior authorization, including, but not limited to,
the costs of specific drugs, rebates or discounts pursuant to 42 U.S.C.
1396r-8, dispensing costs, dosing requirements and utilization of other
drugs or other medicaid health care services which may be related to the
prior authorization of such drug.

      Sec.  9. K.S.A. 2001 Supp. 77-421 is hereby amended to read as fol-
lows: 77-421. (a) (1) Except as provided by subsection (a)(2) or subsection
(a)(3), prior to the adoption of any permanent rule and regulation or any
temporary rule and regulation which is required to be adopted as a tem-
porary rule and regulation in order to comply with the requirements of
the statute authorizing the same and after any such rule and regulation
has been approved by the secretary of administration and the attorney
general, the adopting state agency shall give at least 60 days' notice of its
intended action in the Kansas register and to the secretary of state and
to the joint committee on administrative rules and regulations established
by K.S.A. 77-436, and amendments thereto. The notice shall be mailed
to the secretary of state and to the chairperson of the joint committee
and shall be published in the Kansas register. A complete copy of all
proposed rules and regulations and the complete economic impact state-
ment required by K.S.A. 77-416, and amendments thereto, shall accom-
pany the notice sent to the secretary of state. The notice shall contain:
(A) A summary of the substance of the proposed rules and regulations;
(B) a summary of the economic impact statement indicating the estimated
economic impact on governmental agencies or units, persons subject to
the proposed rules and regulations and the general public; (C) a summary
of the environmental benefit statement, if applicable, indicating the need
for the proposed rules and regulations; (D) the address where a complete
copy of the proposed rules and regulations, the complete economic im-
pact statement, the environmental benefit statement, if applicable, re-
quired by K.S.A. 77-416, and amendments thereto, may be obtained; (E)
the time and place of the public hearing to be held; the manner in which
interested parties may present their views; and (F) a specific statement
that the period of 60 days' notice constitutes a public comment period
for the purpose of receiving written public comments on the proposed
rules and regulations and the address where such comments may be sub-
mitted to the state agency. Publication of such notice in the Kansas reg-
ister shall constitute notice to all parties affected by the rules and regu-
lations.

      (2) Prior to adopting any rule and regulation which establishes sea-
sons and fixes bag, creel, possession, size or length limits for the taking
or possession of wildlife and after such rule and regulation has been ap-
proved by the secretary of administration and the attorney general, the
secretary of the department of wildlife and parks shall give at least 30
days' notice of its intended action in the Kansas register and to the sec-
retary of state and to the joint committee on administrative rules and
regulations created pursuant to K.S.A. 77-436, and amendments thereto.
All other provisions of subsection (a)(1) shall apply to such rules and
regulations, except that the statement required by subsection (a)(1)(E)
shall state that the period of 30 days' notice constitutes a public comment
period on such rules and regulations.

      (3) Prior to adopting any rule and regulation which establishes any
permanent prior authorization on a prescription-only drug pursuant to
K.S.A. 39-7,120, and amendments thereto, or which concerns coverage or
reimbursement for pharmaceuticals under the pharmacy program of the
state medicaid plan, and after such rule and regulation has been approved
by the secretary of administration and the attorney general, the secretary
of social and rehabilitation services shall give at least 30 days' notice of
such secretary's intended action in the Kansas register and to the secretary
of state and to the joint committee on administrative rules and regulations
created pursuant to K.S.A. 77-436, and amendments thereto. All other
provisions of subsection (a)(1) shall apply to such rules and regulations,
except that the statement required by subsection (a)(1)(E) shall state that
the period of 30 days' notice constitutes a public comment period on such
rules and regulations.

      (b) On the date of the hearing, all interested parties shall be given
reasonable opportunity to present their views or arguments on adoption
of the rule and regulation, either orally or in writing. When requested to
do so, the state agency shall prepare a concise statement of the principal
reasons for adopting the rule and regulation or amendment thereto.
Whenever a state agency is required by any other statute to give notice
and hold a hearing before adopting, amending, reviving or revoking a rule
and regulation, the state agency, in lieu of following the requirements or
statutory procedure set out in such other law, may give notice and hold
hearings on proposed rules and regulations in the manner prescribed by
this section. Notwithstanding the other provisions of this section, the Kan-
sas parole board and the secretary of corrections, may give notice or an
opportunity to be heard to any inmate in the custody of the secretary of
corrections with regard to the adoption of any rule and regulation, but
the secretary shall not be required to give such notice or opportunity.

      (c) When, pursuant to this or any other statute, a state agency holds
a hearing on the adoption of a proposed rule and regulation, the agency
shall cause written minutes or other records, including a record main-
tained on sound recording tape or on any electronically accessed media
or any combination of written or electronically accessed media records of
the hearing to be made. If the proposed rule and regulation is adopted
and becomes effective, the state agency shall maintain, for not less than
three years after its effective date, such minutes or other records, together
with a list of all persons who appeared at the hearing and who they rep-
resented, any written testimony presented at the hearing and any written
comments submitted during the public comment period.

      (d) No rule and regulation shall be adopted by a board, commission,
authority or other similar body except at a meeting which is open to the
public and notwithstanding any other provision of law to the contrary, no
rule and regulation shall be adopted by a board, commission, authority
or other similar body unless it receives approval by roll call vote of a
majority of the total membership thereof. 
Sec.  10. K.S.A. 39-7,118, 39-7,119 and 39-7,120 and K.S.A. 2001
Supp. 77-421 are hereby repealed.
 Sec.  11. This act shall take effect and be in force from and after its
publication in the Kansas register.

Approved May 29, 2002.
 Published in the Kansas Register June 6, 2002.
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