ARTICLE 22 SUBSTITUTE A AS AMENDED

RELATING TO RESTRICTED RECEIPT ACCOUNTS

SECTION 1. Sections 42-66.2-4 and 42-66.2-10 of the General Laws in Chapter 42-66.2 entitled "Pharmaceutical Assistance to the Elderly Act" are hereby amended to read as follows:

42-66.2-4. Amount of payment. -- The state shall pay the percentage rate of the maximum allowable amount per prescription as formulated in the contract, as of the date of purchase of the drug, between the contractor and participating pharmacies in accordance with the income eligibility and co-payment shares set forth in section 42-66.2-5. The rebates generated pursuant to section 42-66.2-10 shall be used to offset the state's payment. The pharmacy shall collect from the consumer the percentage rate of the maximum allowable amount per prescription as formulated in the contract, as of the date of the purchase of the eligible drug or additional drug, between the contractor and participating pharmacies in accordance with the income eligibility and co-payment shares set forth in section 42-66.2-5.

42-66.2-10. Pharmaceutical manufacturer drug rebates. -- (a) The director shall enter into prescription drug rebate agreements with individual pharmaceutical manufacturers under which the department shall receive a rebate from the pharmaceutical manufacturer equal to the basic rebate supplied by the manufacturer under 42 U.S.C. section 1396a for every eligible prescription drug dispensed under the program. Each prescription drug rebate agreement shall provide that the pharmaceutical manufacturer shall make quarterly rebate payments to the department equal to the basic rebate supplied by the manufacturer under 42 U.S.C. section 1396a for the total number of dosage units of each form and strength of a prescription drug which the department reports as reimbursed to providers of prescription drugs, provided these payments shall not be due until thirty (30) days following the manufacturer's receipt of utilization data from the department including the number of dosage units reimbursed to providers of eligible prescription drugs during the quarter for which payment is due.

(b) (1) Upon receipt of the utilization data from the department, the pharmaceutical manufacturer shall calculate the quarterly payment. The department may, at its expense, hire a mutually agreed upon independent auditor to verify the calculation and payment. In the event that a discrepancy is discovered between the pharmaceutical manufacturer's calculation and the independent auditor's calculation, the pharmaceutical manufacturer shall justify its calculations or make payment to the department for any additional amount due.

(2) The pharmaceutical manufacturer may, at its expense, hire a mutually agreed upon independent auditor to verify the accuracy of the utilization data provided by the department. In the event that a discrepancy is discovered, the department shall justify its data or refund any excess payment to the pharmaceutical manufacturer. The department may, at its expense, establish a grievance adjudication procedure which provides for independent review of manufacturer documentation substantiating the basic rebate amount per unit delivered under 42 U.S.C. section 1396a. In the event that a discrepancy is discovered, the department shall justify its data or refund any excess payment to the pharmaceutical manufacturer.

(c) All eligible prescription drugs of a pharmaceutical manufacturer that enters into an agreement pursuant to subsection (a) shall be immediately available and the cost of these eligible drugs shall be reimbursed and not subject to any restrictions or prior authorization requirements. Any prescription drug of a manufacturer that does not enter into an agreement pursuant to subsection (a) shall not be reimbursable, unless the department determines the eligible prescription drug is essential to program participants.

(d) All rebates collected by the department from the rebate payments made for drugs for persons eligible under the provisions of section 42-66.2-5(a) shall be deposited as general revenues of the state. in a restricted receipt account, hereby created within the agency and known as Pharmaceutical Rebates, to pay costs in accordance with the provisions of section 42-66.2-4.

SECTION 2. Section 35-4-27 of the General Laws in Chapter 35-4 entitled “State Funds” is hereby amended to read as follows:

35-4-27. Indirect cost recoveries on restricted receipt accounts. – Indirect cost recoveries of seven percent (7%) ten percent (10%) of cash receipts shall be transferred from all restricted receipt accounts, to be recorded as general revenues in the general fund. However, there shall be no transfer from cash receipts with restrictions received exclusively: (1) from contributions from non-profit charitable organizations; (2) from the assessment of indirect cost recovery rates on federal grant funds; or (3) through transfers from state agencies to the department of administration for the payment of debt service. These indirect cost recoveries shall be applied to all accounts, unless prohibited by federal law or regulation, court order, or court settlement. The following restricted receipt accounts shall not be subject to the provisions of this section:

ACCOUNT PROGRAM 1052-80300 Ladd school – Patients’ benefit

1065-80300 IMH – Patients’ benefit

1072-80200 General hospital – Patients’ benefit

1074-80300 Zambarano – Patients’ benefit

1101-80601 Indirect cost recovery

1143-80100 Forfeited property – Drug control

Department of Human Services

1210-80102 Indirect cost recoveries

1210-80103 Indirect cost recoveries

1210-80105 Indirect cost recoveries

1210-80106 Indirect cost recoveries

1235-80100 Veterans’ home – Restricted account

1235-80300 Veterans’ home – Resident benefits

1260-80100 Organ transplant fund

1370-80100 Custody of U.S. detainees

1370-80300 ACI – Inmate benefits

1410-80100 Recovery of indirect costs

Department of Environmental Management

1725-80100 National heritage revolving fund

1725-80300 Blackstone River bicycle study

1732-80800 Non-game wildlife fund (G.L. 20-18)

1736-80600 Galilee Port improvement

1751-81000 RIDOT permits program

1753-80200 UST loan fund

1754-80200 Environmental response fund Ii II

1754-80700 RIDOT Quonset cleanup

1759-80100 Underground storage tanks

1912-80200 R.I.P.T.A.

1932-80200 Gasoline tax/debt service *

2024-80400 Asset forfeiture fund

2024-81200 Indirect cost recovery – SA

Rhode Island Council on the Arts

2061-80400 Art for public facilities fund

Rhode Island Historical Preservation and Heritage Commission

2062-80500 Historic preservation revolving loan fund

2062-80600 Hp rev. Historic Preservation loan fund – Interest revenue

State Police

2570-80100 Forfeited property – Retained

2570-80200 Seized & forfeited prop. Fed. distrbd.

Forfeitures - Federal

2570-80400 Forfeited property – Gambling

Attorney General

Forfeiture of property

Federal forfeitures

2230-82600 Attorney General multi-state initiative account

Department of Administration

2441-80100 COBRA

2450-80200 DEPCO escrow account

2473-80100 Public service corp. tax – Admin. expen.

2480-80400 Restore and replacement – Insurance coverage

2480-80800 Convention center authority rental payments

2920-80300 Debt service on borrowed funds

Investment Receipts –TANS

Car Rental Tax/Surcharge-Warwick Share

Legislature

2626-80100 Audit of federal assisted programs

2816-80100 Arts and tourism development fund

3260-81500 Intermodal surface transportation fund

Department of Elderly Affairs

Pharmaceutical Rebates Account

SECTION 3. This article shall take effect as of April 1, 2005.