A BILL TO BE ENTITLED
AN ACT TO PROVIDE that PRESCRIPTION DRUG BENEFITS UNDER THE TEACHERS' AND STATE EMPLOYEES' COMPREHENSIVE MAJOR MEDICAL PLAN ("PLAN") SHALL BE ADMINISTERED UNDER THE PLAN'S CONTRACT WITH BLUE CROSS BLUE SHIELD IF THERE IS NOT A SATISFACTORY RESOLUTION OF THE PLAN'S CONTRACT DISPUTE WITH ADVANCE PCS.
Whereas, more than 554,000 teachers, State employees, retired teachers and State employees, and members of their families have some 8,000,000 outpatient prescription drug claims with over $533 million in charges processed annually through the North Carolina Teachers’ and State Employees’ Comprehensive Major Medical Plan (hereafter "Plan"); and
Whereas, the Plan entered into a contract with ADVP Operations, LP, also known as AdvancePCS, on December 1, 2000, with an expiration of November 30, 2003, and extensions through November 30, 2005, at the option of the Plan, for the purpose of processing the Plan’s outpatient prescription drugs for members of the Plan; and
Whereas, the Plan’s contract with AdvancePCS requires AdvancePCS to have a network to serve members of the Plan with at least ninety‑seven percent (97%) of the pharmacies in North Carolina; and
Whereas, the Plan has reported that for approximately three‑quarters of the Plan's fiscal year beginning July 1, 2001, it has paid AdvancePCS approximately twenty million dollars ($20,000,000) more than the Plan should have paid under the terms of its contract with AdvancePCS; and
Whereas, on May 10, 2002, the Plan notified AdvancePCS of the Plan's intent to terminate the contract for the contractor’s failure to comply with the terms of the contract; and
Whereas, on or about May 24, 2002, AdvancePCS notified the pharmacies in the network compiled to serve the members of the Plan that, effective immediately, AdvancePCS payments to pharmacies on behalf of the Plan were being cut by AdvancePCS by forty percent (40%), amounting to approximately eight million dollars ($8,000,000) annually in dispensing fees, plus another nineteen million dollars ($19,000,000) annually in ingredient prices for branded and generic prescription drugs; and
Whereas, subsequent to receiving notice from AdvancePCS of the payment reduction, pharmacies throughout North Carolina notified members of the Plan that the pharmacies could no longer afford to accept the Plan’s payments as reduced by AdvancePCS in its notice to pharmacies sent on or about May 24, 2002; and
Whereas, the withdrawal of pharmacies from the network due to the AdvancePCS reduction in payments places AdvancePCS in violation of its contract with the Plan to have ninety‑seven percent (97%) of the pharmacies in North Carolina participating in the Plan’s network of pharmacies; and
Whereas, failure of AdvancePCS to maintain a ninety‑seven percent (97%) pharmacy network exposes Plan members to paying estimated charges of over five hundred thirty‑three million dollars ($533,000,000) annually to pharmacies instead of the Plan’s existing statutory copayments amounting to some one hundred sixty‑five million dollars ($165,000,000) annually paid to network pharmacies; and
Whereas, Blue Cross and Blue Shield of North Carolina was awarded a contract by the Plan to process the Plan’s claims for the period July 1, 1997, through June 30, 2005, with extensions through June 30, 2007, at the option of the Plan; and
Whereas, the claims processing contract between Blue Cross and Blue Shield of North Carolina and the Plan included the processing of outpatient prescription drug claims filed by pharmacies and Plan members; and
Whereas, Blue Cross and Blue Shield of North Carolina processed the outpatient prescription drug claims for the Plan in an outstanding manner, including providing rebates from pharmaceutical manufacturers on the contractor’s formularies; and
Whereas, contract payments to Blue Cross and Blue Shield of North Carolina paid by the Plan for the processing of outpatient prescription drugs were not reduced when the Plan entered into an outpatient prescription drug claims processing contract with AdvancePCS on December 1, 2000; Now, therefore,
The General Assembly of North Carolina enacts:
SECTION 1.  The Teachers' and State Employees' Comprehensive Major Medical Plan ("Plan") shall continue negotiations with AdvancePCS to reach, as soon as possible, a resolution of the contract dispute that does not adversely impact members of the Plan.  Notwithstanding the provisions of Article 3 of Chapter 135 of the General Statutes concerning a pharmacy benefit manager, if the Plan and AdvancePCS fail to reach a satisfactory resolution of the contract dispute by August 1, 2002, then the Plan shall return claim processing responsibilities for outpatient prescription drugs to Blue Cross and Blue Shield of North Carolina under the Plan's existing claims processing contract with Blue Cross and Blue Shield of North Carolina. A "satisfactory resolution" of the contract dispute between the Plan and AdvancePCS means a resolution that does not adversely impact members of the Plan.  In returning the processing of outpatient prescription drugs to Blue Cross and Blue Shield of North Carolina, the Plan’s Executive Administrator and Board of Trustees shall resume paying pharmacies on the basis of dispensing fees and ingredient prices for branded and generic drugs that was paid to the pharmacies on the Plan’s behalf for three‑fourths of the year beginning July 1, 2001.  If the Plan has not reached a satisfactory resolution of its contract dispute with AdvancePCS by August 1, 2002, then the Plan shall return the processing of outpatient prescription drugs to Blue Cross and Blue Shield of North Carolina on that date.
SECTION 2.  This act is effective when it becomes law.