House File 2401 H-8190 Amend the amendment, H-8179, to House File 2401, as follows: 1 1. Page 2, after line 17 by inserting: 2 < ___. Page 4, after line 14 by inserting: 3 < DIVISION ___ 4 PHARMACY BENEFITS MANAGER REVERSE AUCTIONS 5 Sec. ___. NEW SECTION . 8A.319 Pharmacy benefits manager 6 reverse auctions. 7 1. This section may be cited as “The Iowa Competitive 8 Pharmacy Benefits Managers Marketplace Act” . 9 2. As used in this section, unless the context otherwise 10 requires: 11 a. “Market check” means a technology-driven evaluation of an 12 incumbent pharmacy benefits manager’s prescription drug pricing 13 based on benchmark comparators derived from pharmacy benefits 14 manager reverse auction processes conducted in the United 15 States over the immediately preceding twelve months. 16 b. “Participant bidding agreement” means an online 17 agreement that details common definitions, prescription drug 18 classifications, rules, data access and use rights, and other 19 optimal contract terms that benefit the state and that all 20 bidders must accept as a prerequisite for participation in a 21 pharmacy benefits manager reverse auction. 22 c. “Pharmacy benefits manager” means the same as defined in 23 section 510B.1. 24 d. “Pharmacy benefits manager reverse auction” means an 25 automated, transparent, and competitive bidding process 26 conducted online that starts with an opening round of bids 27 and allows qualified pharmacy benefits manager bidders to 28 counteroffer a lower price for as many rounds of bidding 29 as determined by the department for a multiple health plan 30 prescription drug purchasing group. 31 e. “Price” means the projected cost of a pharmacy benefits 32 manager’s bid to provide prescription drug benefits to allow 33 direct comparison of the comparably calculated costs of 34 competing pharmacy benefits managers’ proposals over the 35 -1- H 8179.3620 (2) 90 nls/ko 1/ 7 #1.
duration of the pharmacy benefits manager’s services contract. 1 f. “Real-time” means within no more than one hour. 2 g. “Self-funded private sector health plan” means any 3 self-funded private sector employer or multi-employer health 4 plan. 5 h. “Self-funded public sector health plan” means any group 6 benefit plan under chapter 509A. 7 3. Consistent with section 8A.311, and notwithstanding any 8 other law to the contrary, the department shall enter into a 9 contract for the services of a pharmacy benefits manager for 10 the administration of benefits of self-funded public sector 11 health plans in compliance with this section. 12 4. Prior to November 1, 2024, the department shall 13 procure, through solicitation of proposals from qualified 14 professional services vendors, all of the following based on 15 price, capabilities, and other factors deemed relevant by the 16 department: 17 a. A technology platform with the capabilities to conduct 18 a pharmacy benefits manager reverse auction. The department 19 shall ensure that the technology platform possesses, at a 20 minimum, the capacity to do all of the following: 21 (1) Conduct an automated, online, reverse auction of 22 pharmacy benefits manager services using a software application 23 and high-performance data infrastructure to intake, cleanse, 24 and normalize pharmacy benefits manager data with development 25 methods and information security standards that have been 26 validated by receiving service organization control 2 and 27 national institute of standards and technology certification, 28 or successor information technology security certifications, as 29 identified by the office of the chief information officer. 30 (2) Automate repricing of diverse and complex pharmacy 31 benefits managers’ prescription drug pricing proposals to allow 32 direct comparison by the state of the comparably calculated 33 costs of pharmacy benefits managers’ bids using one hundred 34 percent of annual prescription drug claims data available 35 -2- H 8179.3620 (2) 90 nls/ko 2/ 7
for state-funded health plans, or a multiple health plan 1 prescription drug purchasing group, and using code-based 2 classification of drugs from nationally accepted drug sources. 3 (3) Simultaneously evaluate in real-time diverse and 4 complex multiple proposals from full-service pharmacy benefits 5 managers, including average wholesale price, guaranteed 6 net cost, and national average drug acquisition cost 7 pricing models, as well as proposals from pharmacy benefits 8 administrators and specialty drug and rebate carve-out service 9 providers. 10 (4) Produce an automated report and analysis of pharmacy 11 benefits managers’ bids, including ranking of pharmacy benefits 12 managers’ bids based on comparative costs and qualitative 13 aspects of the bids in real-time following the close of each 14 round of reverse auction bidding. 15 (5) Perform real-time, electronic, line-by-line, 16 claim-by-claim review of one hundred percent of invoiced 17 pharmacy benefits managers’ prescription drug claims, and 18 identify all deviations from the specific terms of the pharmacy 19 benefits manager’s services contract that resulted from the 20 reserve auction process. 21 b. Related services from the operator of the technology 22 platform identified in paragraph “a” , which at a minimum shall 23 include all of the following: 24 (1) Evaluation of the qualifications of pharmacy benefits 25 manager bidders. 26 (2) Pharmacy benefits manager reverse auction services to 27 support the department in comparing pricing for the pharmacy 28 benefits manager procurement. 29 (3) Related professional services. 30 5. The department shall not award a contract for the 31 technology platform and technology operator services to a 32 vendor that is a pharmacy benefits manager or to a vendor that 33 is managed by, or a subsidiary or affiliate of, a pharmacy 34 benefits manager. 35 -3- H 8179.3620 (2) 90 nls/ko 3/ 7
6. The vendor awarded the contract by the department shall 1 not outsource any part of the pharmacy benefits manager reverse 2 auction or any part of the automated, real-time, electronic, 3 line-by-line, claim-by-claim review of invoiced pharmacy 4 benefits manager prescription drug claims. 5 7. With technical assistance and support provided by the 6 technology platform operator, the department shall specify the 7 terms of the participant bidding agreement. The terms of the 8 participant bidding agreement shall not be modified except by 9 specific consent of the department. 10 8. a. The technology platform used to conduct the reverse 11 auction shall be repurposed over the duration of the pharmacy 12 benefits manager’s services contract as an automated pharmacy 13 claims adjudication engine to perform real-time, electronic, 14 line-by-line, claim-by-claim review of one hundred percent of 15 invoiced pharmacy benefits manager’s prescription drug claims, 16 and to identify all deviations from the specific terms of the 17 pharmacy benefits manager’s services contract. 18 b. The department shall reconcile the electronically 19 adjudicated pharmacy claims, as described in paragraph “a” , 20 with pharmacy benefits manager’s invoices on a monthly or 21 quarterly basis to ensure that state payments shall not exceed 22 the terms specified in any pharmacy benefits manager’s services 23 contract. 24 c. If following state payment to the pharmacy benefits 25 manager on the basis of the reconciliation under paragraph 26 “b” the pharmacy benefits manager asserts that the department 27 paid less than the amount owed, the pharmacy benefits manager 28 may seek resolution through a mutually acceptable dispute 29 resolution process that the parties agreed to in the terms of 30 the services contract under subsection 9, paragraph “a” . 31 9. a. The first pharmacy benefits manager reverse auction 32 shall be completed and the services contract shall be awarded 33 to the winning pharmacy benefits manager with an effective date 34 beginning July 1, 2025. Subsequent contracts must be awarded 35 -4- H 8179.3620 (2) 90 nls/ko 4/ 7
no later than three months prior to termination or expiration 1 of the current pharmacy benefits manager’s services contract 2 for a covered group, such as the state employees benefits 3 group, that includes only active employees and dependents, but 4 does not include retiree participants in a Medicare part D 5 employer group waiver program pursuant to the federal Medicare 6 Prescription Drug, Improvement, and Modernization Act of 2003, 7 Pub. L. No. 108-173. 8 b. In the event an eligible covered group that includes 9 retiree participants in a Medicare part D employer group 10 waiver program pursuant to the federal Medicare Prescription 11 Drug, Improvement, and Modernization Act of 2003, Pub. L. No. 12 108-173, opts to use the processes and procedures under this 13 section, the relevant pharmacy benefits manager reverse auction 14 shall be completed and the pharmacy benefits manager services 15 contract shall be awarded to the winning pharmacy benefits 16 manager no later than six months prior to termination or 17 expiration of the pharmacy benefits manager’s services contract 18 currently covering the retiree employer group waiver program 19 participants. 20 10. The department may perform a market check for providing 21 pharmacy benefits manager services during the term of the 22 current pharmacy benefits manager’s services contract in order 23 to ensure continuing competitiveness of incumbent prescription 24 drug pricing during the term of a pharmacy benefits manager’s 25 services contract. 26 11. To ensure that the department does not incur additional 27 expenditures associated with the pharmacy benefits manager 28 reverse auction, ongoing electronic review and validation 29 of pharmacy benefits managers’ claims, and periodic market 30 checks, the department shall implement a no-pay option that 31 obligates the winning pharmacy benefits manager, rather than 32 the state, to pay the cost of the technology platform and 33 related technology platform operator services by assessing the 34 pharmacy benefits manager a per-prescription fee in an amount 35 -5- H 8179.3620 (2) 90 nls/ko 5/ 7
agreed to by the department and the technology operator, and 1 requiring the pharmacy benefits manager to pay the fees to the 2 technology operator over the duration of the pharmacy benefits 3 manager’s services contract. The obligation of the winning 4 pharmacy benefits manager to pay the per-prescription fee shall 5 be incorporated as a term of the participant bidding agreement 6 and the pharmacy benefits manager’s services contract awarded 7 to the pharmacy benefits manager reverse auction winner. 8 12. a. This section shall apply to group benefit plans 9 under chapter 509A. This section shall not apply to nonprofit, 10 nongovernmental health maintenance organizations with respect 11 to managed care plans that provide a majority of covered health 12 care services through a single contracted medical group. 13 b. (1) Three years after the first service contract is 14 awarded to a pharmacy benefits manager pursuant to subsection 15 9, paragraph “a” , any self-funded private sector health plan 16 with substantial participation by Iowa employees and the 17 employees’ dependents shall have the option to conduct a 18 pharmacy benefits manager reverse auction for the specific 19 self-funded private sector health plan utilizing the technology 20 platform and technology operator services selected by the 21 department under this section. The department may charge the 22 self-funded private sector health plan a fee, as established 23 by the department by rule, sufficient to cover any incremental 24 cost associated with the pharmacy benefits manager reverse 25 auction. 26 (2) A pharmacy benefits manager selected by a self-funded 27 private sector health plan as a result of a pharmacy benefits 28 manager reverse auction conducted pursuant to subparagraph 29 (1) shall be assessed a per-prescription fee, pursuant to 30 subsection 11, in an amount determined by the department by 31 rule. 32 c. Any self-funded public sector health plans or self-funded 33 private sector health plans that opt to conduct a pharmacy 34 benefits manager reverse auction shall retain full autonomy 35 -6- H 8179.3620 (2) 90 nls/ko 6/ 7
over determination of the individual health plan’s respective 1 prescription drug formularies and pharmacy benefit designs, 2 and shall not be required to adopt a common prescription drug 3 formulary or common prescription pharmacy benefit design. 4 d. Any pharmacy benefits manager providing services to the 5 department, to a self-funded public sector health plan, or 6 to a self-funded private sector health plan as described in 7 this section shall provide the department, each participating 8 self-funded public sector health plan, and each participating 9 self-funded private sector health plan access to complete 10 pharmacy claims data necessary to conduct the pharmacy 11 benefits manager reverse auction and to carry out applicable 12 administrative and management duties. 13 13. Notwithstanding subsection 3, the department may elect 14 to vacate the outcome of a pharmacy benefits manager reverse 15 auction if the lowest-cost pharmacy benefits manager’s bid 16 is not less than the projected cost trend for the incumbent 17 pharmacy benefits manager’s services contract as verified by 18 the department. The department may utilize a consultant to 19 conduct the verification. The cost trend shall be projected 20 by the technology platform operator using industry-recognized 21 data sources and shall be subject to review and approval by 22 the department in advance of the pharmacy benefits manager 23 reverse auction. Methodology shall be applied consistently in 24 projection of cost and savings to the state with regard to the 25 incumbent pharmacy benefits manager’s services contract and 26 competing pharmacy benefits manager reverse auction bids. >> 27 2. By renumbering, redesignating, and correcting internal 28 references as necessary. 29 ______________________________ LUNDGREN of Dubuque -7- H 8179.3620 (2) 90 nls/ko 7/ 7 #2.