Administration - California Discount Prescription Drug Program - Health & Safety - CA

Section § 130540

This law allows certain contracts, amendments, and change orders for a specific division to bypass several typical state requirements. Specifically, they don't have to follow the public contract code regulations, competitive bidding requirements, or certain project authority and budget rules. Pharmacies and drug manufacturers can be contracted with or without a bidding process. Additionally, any changes to contracts don't need an amendment. If there's a conflict with other exemptions, this section's rules take priority.

(a) Contracts, contract amendments, change orders, change requests, and any project or systems development notices, entered into for purposes of this division, shall be subject to the same exemptions provided for in the Medi-Cal drug program and those provided to the department in paragraph (4) of subdivision (c) of Section 124977. In addition, contracts, contract amendments, change orders, change requests, and any project or systems development notices, entered into for purposes of this division, are specifically exempt from:

(1) Part 2 (commencing with Section 10100) of Division 2 of the Public Contract Code.

(2) The competitive bidding requirements of State Administrative Manual Management Memo 03-10.

(3) The project authority requirements of State Administrative Manual, Section 4800 et seq.

(4) Section 11.00 and Provision 6 of Item 4260-001-0001 of Section 2 of the Budget Act of 2006 and related Budget letters.

(b) Contracts with pharmacies and drug manufacturers may be entered into on a bid or nonbid basis.

(d) To the extent that any exemption set forth in this section conflicts with exemptions set forth in paragraph (4) of subdivision (c) of Section 124977, the exemption in this section shall govern over the conflicting provision in Section 124977.

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Section § 130541

This law section allows the department to implement a program by working with a third-party vendor or using current healthcare systems, like Medi-Cal, for managing provider enrollment and payments. Any drug discount agreements made by a third party need to be reviewed by the department. The department can cancel any contract if it believes it is not beneficial for the state or the program users. Also, any contracts pharmacies enter as part of this program are directly with the department and cannot be influenced by other third-party contracts.

To implement the program, the department may contract with a third-party vendor or utilize existing health care service provider enrollment and payment mechanisms, including the Medi-Cal program’s fiscal intermediary. Drug discount agreements negotiated by a third party shall be subject to review by the department. The department may cancel a contract that it finds not in the best interests of the state or program participants. Participating pharmacy contracts entered into pursuant to Section 130505 shall be considered contracts between the participating pharmacy and the department and shall not be associated with, or leveraged against, other third-party agreements.

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Section § 130542

This law establishes the California Discount Prescription Drug Program Fund where all payments received by the department under this program are deposited. This fund is specifically set up in the State Treasury.

The fund is continuously available to the department for making payments to pharmacies involved in the program and covering administrative costs, without being limited to a specific fiscal year.

The money in this fund cannot be used for any other purposes, transferred, or loaned to other funds, except as specified in another section (130542.1). The fund will also collect any interest earned on its money.

(a) The department shall deposit all payments the department receives pursuant to this division into the California Discount Prescription Drug Program Fund, which is hereby established in the State Treasury.

(b) Notwithstanding Section 13340 of the Government Code, the fund is hereby continuously appropriated to the department without regard to fiscal year for the purpose of providing payment to participating pharmacies pursuant to this division and for defraying the costs of administering this division.

(c) Notwithstanding any other provision of law, no money in the fund is available for expenditure for any other purpose or for loaning or transferring to any other fund, including the General Fund, except as provided in Section 130542.1. The fund shall also contain any interest accrued on moneys in the fund.

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Section § 130542.1

This law states that the program must be funded by its own money and any state funds used must be paid back within five years. The department must give the Legislature a five-year budget plan showing revenue, spending, and how they plan to repay state funds. Up to 25% of the money gained from rebates can be used to manage the program, including setting up a fund to pay pharmacies before rebate money is received.

(a) It is the intent of the Legislature that the program shall be self-financing and that General Fund moneys provided to the fund shall be repaid within five years after implementation of the program begins. The department shall provide the Legislature with a five-year projection of program revenues and expenditures as part of its annual budget request. The projection shall include a projected General Fund repayment schedule.

(b) The department may use up to 25 percent of manufacturer rebate revenues to administer the program, including the funding of a float account to finance payments to participating pharmacies in advance of the receipt of manufacturer rebates.

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Section § 130543

This section allows the director to create rules necessary for managing this particular division of the law. While normally regulations are adopted through a detailed process, the director can use bulletins or similar tools to implement these rules temporarily. However, these temporary measures cannot last past August 1, 2015. It was intended for the formal regulations to be established by this date.

(a) The director may adopt regulations as are necessary to implement and administer this division.

(b) Notwithstanding Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code, the director may implement this division, in whole or in part, by means of a provider bulletin or other similar instructions, without taking regulatory action, provided that no bulletin or other similar instructions shall remain in effect after August 1, 2015. It is the intent that regulations adopted pursuant to this section shall be adopted on or before August 1, 2015.

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Section § 130544

This law says that if a court decides a part of this division is not valid or allowed, the rest of the division will still remain in effect. This means each part of this division can stand on its own, even if other parts are struck down.

If any provision of this division, or the application thereof, is for any reason, held invalid, ineffective, or unconstitutional by a court of competent jurisdiction, the remainder of this division, or the application of this provision, shall not be affected thereby, and to this end the provisions of this division are severable.

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