HF 573 (LSB 2553YH (4) 88)

HOUSE FILE 573

BY  BEST

A BILL FOR

An Act relating to prescription drug benefits, pharmacies, pharmacy benefit managers, making penalties applicable, and including applicability provisions. 
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:

    Section 1.  Section 507B.2, subsection 1, Code 2019, is amended to read as follows:
   1.  “Person” shall mean any individual, corporation, association, partnership, reciprocal exchange, interinsurer, fraternal beneficiary association, and any other legal entity engaged in the business of insurance, including insurance producers and adjusters. “Person” shall also mean any corporation operating under the provisions of chapter 514, and any benevolent association as defined and operated under chapter 512A, and any pharmacy benefit manager pursuant to section 510C.1. For purposes of this chapter, corporations operating under the provisions of chapter 514 and chapter 512A shall be deemed to be engaged in the business of insurance.
    Sec. 2.  Section 507B.3, Code 2019, is amended by adding the following new subsection:
   NEW SUBSECTION.  3.  A person who violates a provision in chapter 510C.1 shall be deemed to have committed an unfair trade practice under this chapter.
    Sec. 3.  NEW SECTION.  510C.1  Pharmacy benefit managers —— retail pharmacies. 
   1.  As used in this section, unless the context otherwise requires:
   a.  “Commissioner” means the commissioner of insurance or the commissioner’s designee.
   b.  “Cost sharing” means any copayment, coinsurance, deductible, or other out-of-pocket expense requirement.
   c.  “Covered person”, “health benefit plan”, and “health carrier” mean the same as defined in section 514J.102.
   d.  “Pharmacy” and “prescription drug” mean the same as defined in section 155A.3.
   e.  “Pharmacy benefit manager” means a person who, pursuant to a contract or other relationship with a health carrier, either directly or through an intermediary, manages a prescription drug benefit provided by the health carrier and is certified pursuant to section 510B.2.
   f.  “Pharmacy benefit manager’s retail pharmacy network” means retail pharmacies who have contracted with a pharmacy benefit manager to dispense or sell prescription drugs to covered persons of a health carrier. 
   g.  “Prescription drug benefit” means a health benefit plan providing for third-party payment or prepayment of prescription drugs.
   h.  “Retail pharmacy” means a pharmacy that is open to the general public, dispenses prescription drugs to the general public, and makes face-to-face consultations available between licensed pharmacists and the general public to whom prescription drugs are dispensed.
   2.  a.  An otherwise qualified retail pharmacy that requests to enter into a contract with a pharmacy benefit manager to participate in the pharmacy benefit manager’s retail pharmacy network and that accepts the pharmacy benefit manager’s standard terms, conditions, formularies, and requirements relating to dispensing fees, payments, reimbursement amounts, and other pharmacy services shall be considered part of the pharmacy benefit manager’s retail pharmacy network for purposes of a covered person’s right to choose where to obtain the covered person’s prescription drugs.
   b.  It shall be a violation of this section for a pharmacy benefit manager to refuse to accept an otherwise qualified retail pharmacy as described in paragraph “a” as a part of the pharmacy benefit manager’s retail pharmacy network. It shall also be a violation of this section for a health carrier which has contracted with the pharmacy benefit manager to refuse to accept an otherwise qualified retail pharmacy as described in paragraph “a” as a part of the pharmacy benefit manager’s retail pharmacy network.
   c.  A contractual relationship entered into by an otherwise qualified retail pharmacy and a pharmacy benefit manager establishing the otherwise qualified retail pharmacy as part of the pharmacy benefit manager’s retail pharmacy network shall be renewed annually unless otherwise agreed to by the otherwise qualified retail pharmacy, the pharmacy benefit manager, and the health carrier. 
   d.  If a pharmacy benefit manager or a health carrier considers a retail pharmacy not to be otherwise qualified, the pharmacy benefit manager or the health carrier may file an appeal relating to the retail pharmacy’s qualifications with the insurance commissioner. The commissioner shall establish by rule the standards and requirements necessary for a retail pharmacy to be deemed “otherwise qualified” for purposes of this section. 
   e.  A pharmacy benefit manager that enters into a contractual relationship with an otherwise qualified retail pharmacy establishing the otherwise qualified retail pharmacy as part of the pharmacy benefit manager’s retail pharmacy network, and a health carrier whose prescription drug benefit the pharmacy benefit manager is managing, shall not do any of the following:
   (1)  Require a covered person to obtain any prescription exclusively from a mail order pharmacy.
   (2)  Impose any cost sharing or other condition on a covered person electing to use the retail pharmacy to obtain the covered person’s prescription drug if the cost sharing or other condition is not imposed upon a covered person electing to use a mail order pharmacy to obtain the same prescription drug.
   (3)  Restrict a prescription drug dispensed by the retail pharmacy to a covered person to a minimum or maximum quantity limit, or impose any requirement related to refills, if the limitations or requirements are not also imposed on the same prescription drug dispensed by a mail order pharmacy.
   (4)  Require a covered person to pay in whole or in part for any prescription drug dispensed to the covered person by the retail pharmacy and require the covered person to seek reimbursement, if the same requirement is not imposed on a covered person for a prescription drug dispensed by a mail order pharmacy.
   (5)  Impose any administrative burden, term, condition, or requirement related to a covered person electing to use a retail pharmacy that materially or unreasonably interferes with the covered person’s right to obtain a prescription drug from the retail pharmacy.
   3.  a.  Each pharmacy benefit manager and health carrier covered by this section shall file an attestation annually with the commissioner confirming compliance with all provisions of this section for the preceding calendar year. The attestation shall include a report that shall fully disclose the amounts, terms, and conditions relating to copayments, reimbursement options, and any other payments imposed on covered persons for prescription drug benefits that the health carrier offers or the pharmacy benefit manager manages.
   b.  The commissioner shall review and examine records of the pharmacy benefit manager and the health carrier that support the attestation and report. The pharmacy benefit manager and the health carrier shall provide any other records requested by the commissioner within ten business days of the commissioner’s request. 
   4.  The commissioner may take any action within the commissioner’s authority to enforce compliance with this section and may assess a pharmacy benefit manager and a health carrier a fine of up to ten thousand dollars for each violation of subsection 2.
   5.  Failure of a pharmacy benefit manager or of a health carrier to comply with any provision of this section shall be an unfair trade practice under section 507B.3, subsection 3. 
   6.  A pharmacy benefit manager or a health carrier may appeal any decision of the commissioner in accordance with chapter 17A. 
   7.  The commissioner shall adopt rules pursuant to chapter 17A to administer this section. 
    Sec. 4.  Section 514C.5, Code 2019, is amended by striking the section and inserting in lieu thereof the following:
   514C.5  Prescription drug benefits.
   1.  Notwithstanding the uniformity of treatment requirements of section 514C.6, a policy, contract, or plan providing for third-party payment or prepayment of prescription drug benefits shall not impose any terms, conditions, or requirements upon a person covered under the policy, contract, or plan for prescription drugs dispensed by a retail pharmacy which are different from the terms, conditions, or requirements imposed for prescription drugs dispensed by a mail order pharmacy.
   2.  This section applies to the following classes of third-party payment provider policies, contracts, or plans delivered, issued for delivery, continued, or renewed in this state on or after January 1, 2020:
   a.  Individual or group accident and sickness insurance providing coverage on an expense-incurred basis.
   b.  An individual or group hospital or medical service contract issued pursuant to chapter 509, 514, or 514A.
   c.  An individual or group health maintenance organization contract regulated under chapter 514B.
   d.  A plan established pursuant to chapter 509A for public employees.
   3.  This section shall not apply to accident-only, specified disease, short-term hospital or medical, hospital confinement indemnity, credit, dental, vision, Medicare supplement, long-term care, basic hospital and medical-surgical expense coverage as defined by the commissioner, disability income insurance coverage, coverage issued as a supplement to liability insurance, workers’ compensation or similar insurance, or automobile medical payment insurance.
   4.  The commissioner of insurance shall adopt rules pursuant to chapter 17A to administer this section. 
    Sec. 5.  APPLICABILITY.  The following apply to a health benefit plan that is delivered, issued for delivery, continued, or renewed in this state on or after January 1, 2020:
   The section of this Act enacting requirements for pharmacy benefit managers, retail pharmacies, and participation in pharmacy benefit manager retail pharmacy networks.
EXPLANATION
The inclusion of this explanation does not constitute agreement with
the explanation’s substance by the members of the general assembly.
   This bill relates to prescription drug benefits, pharmacies, and pharmacy benefit managers. 
   The bill provides that if an otherwise qualified retail pharmacy requests to enter into a contract with a pharmacy benefit manager to participate in the pharmacy benefit manager’s retail pharmacy network and accepts the pharmacy benefit manager’s standard terms and conditions, the pharmacy is considered part of the pharmacy benefit manager’s retail pharmacy network for purposes of a covered person’s right to choose where the covered person wants to obtain the covered person’s prescription drugs. The bill prohibits a pharmacy benefit manager or a health carrier from refusing to accept an otherwise qualified retail pharmacy as part of a pharmacy benefit manager’s retail pharmacy network.
   The bill defines a “pharmacy benefit manager” as a person who, pursuant to a contract or other relationship with a health carrier, either directly or through an intermediary, manages a prescription drug benefit provided by the health carrier. “Pharmacy” is defined in the bill as a location where prescription drugs are compounded, dispensed, or sold by a pharmacist and where prescription drug orders are received or processed in accordance with the pharmacy laws of this state. “Pharmacy benefit manager’s retail pharmacy network” is defined as retail pharmacies who have contracted with a pharmacy benefit manager to dispense or sell prescription drugs to covered persons of a health carrier. “Retail pharmacy” is defined as a pharmacy that is open to the general public, dispenses prescription drugs to the general public, and makes face-to-face consultations available between licensed pharmacists and the general public. 
   A contractual relationship entered into by an otherwise qualified retail pharmacy and a pharmacy benefit manager establishing the otherwise qualified retail pharmacy as part of the pharmacy benefit manager’s retail pharmacy network must be renewed annually unless otherwise agreed by the retail pharmacy, the pharmacy benefit manager, and the health carrier.
   If a pharmacy benefit manager or a health carrier considers a retail pharmacy not otherwise qualified, the pharmacy benefit manager or the health carrier may file an appeal relating to the retail pharmacy’s qualifications with the insurance commissioner. The commissioner shall establish by rule the standards and requirements necessary for a retail pharmacy to be deemed “otherwise qualified”. 
   If an otherwise qualified retail pharmacy is a part of a pharmacy benefit manager’s retail pharmacy network, the bill prohibits a pharmacy benefit manager or a health carrier from imposing certain specific restrictions and conditions on a covered person who obtains prescriptions from the retail pharmacy. The commissioner of insurance may assess a pharmacy benefit manager or a health carrier a fine of up to $10,000 for each violation.
   Each pharmacy benefit manager and health carrier must file an annual attestation with the commissioner confirming compliance with all requirements related to retail pharmacies and the pharmacy benefit manager’s retail pharmacy network for the preceding calendar year, which shall include a report disclosing certain information as described in the bill. The commissioner is required to examine the pharmacy benefit manager’s and the health carrier’s records supporting the accuracy and completeness of each report. The pharmacy benefit manager and health carrier are required to provide any additional records requested by the commissioner within ten business days of the commissioner’s request. 
   The failure of a pharmacy benefit manager or of a health carrier to comply with any provision of the section of the bill as described above is made an unfair trade practice under Code section 507B.3(3). The commissioner is authorized to take any action within the commissioner’s authority to enforce compliance with this section of the bill and must adopt rules to administer this section of the bill. A pharmacy benefit manager or a health carrier may appeal any decision, in accordance with chapter 17A, of the commissioner under this section. This section of the bill applies to a health benefit plan that is delivered, issued for delivery, continued, or renewed in this state on or after January 1, 2020. 
   The bill also prohibits a policy, contract, or plan providing for third-party payment or prepayment of prescription drug benefits from imposing any terms, conditions, or requirements upon a person covered under the policy, contract, or plan for prescription drugs dispensed by a retail pharmacy which are different from the terms, conditions, or requirements imposed for prescription drugs dispensed by a mail order pharmacy. This prohibition applies to the following classes of third-party payment provider policies, contracts, or plans delivered, issued for delivery, continued, or renewed in this state on or after January 1, 2020, including individual or group accident and sickness insurance providing coverage on an expense-incurred basis; an individual or group hospital or medical service contract issued pursuant to Code chapter 509, 514, or 514A; an individual or group health maintenance organization contract regulated under Code chapter 514B; and a plan established pursuant to Code chapter 509A for public employees. The prohibition does not apply to accident-only, specified disease, short-term hospital or medical, hospital confinement indemnity, credit, dental, vision, Medicare supplement, long-term care, basic hospital and medical-surgical expense coverage as defined by the commissioner, disability income insurance coverage, coverage issued as a supplement to liability insurance, workers’ compensation or similar insurance, or automobile medical payment insurance. The commissioner of insurance must adopt rules under Code chapter 17A to administer the requirements established in the bill.