House File 2401 H-8192 Amend the amendment, H-8179, to House File 2401, as follows: 1 1. Page 2, after line 17 by inserting: 2 < DIVISION ___ 3 PHARMACY BENEFITS MANAGER REVERSE AUCTIONS 4 Sec. ___. NEW SECTION . 8A.319 Pharmacy benefits manager 5 reverse auctions. 6 1. This section may be cited as “The Iowa Competitive 7 Pharmacy Benefits Managers Marketplace Act” . 8 2. As used in this section, unless the context otherwise 9 requires: 10 a. “Market check” means a technology-driven evaluation of an 11 incumbent pharmacy benefits manager’s prescription drug pricing 12 based on benchmark comparators derived from pharmacy benefits 13 manager reverse auction processes conducted in the United 14 States over the immediately preceding twelve months. 15 b. “Participant bidding agreement” means an online 16 agreement that details common definitions, prescription drug 17 classifications, rules, data access and use rights, and other 18 optimal contract terms that benefit the state and that all 19 bidders must accept as a prerequisite for participation in a 20 pharmacy benefits manager reverse auction. 21 c. “Pharmacy benefits manager” means the same as defined in 22 section 510B.1. 23 d. “Pharmacy benefits manager reverse auction” means an 24 automated, transparent, and competitive bidding process 25 conducted online that starts with an opening round of bids 26 and allows qualified pharmacy benefits manager bidders to 27 counteroffer a lower price for as many rounds of bidding 28 as determined by the department for a multiple health plan 29 prescription drug purchasing group. 30 e. “Price” means the projected cost of a pharmacy benefits 31 manager’s bid to provide prescription drug benefits to allow 32 direct comparison of the comparably calculated costs of 33 competing pharmacy benefits managers’ proposals over the 34 duration of the pharmacy benefits manager’s services contract. 35 -1- H 8179.3655 (2) 90 nls/ko 1/ 8 #1.
f. “Real-time” means within no more than one hour. 1 g. “Self-funded private sector health plan” means any 2 self-funded private sector employer or multi-employer health 3 plan. 4 h. “Self-funded public sector health plan” means any group 5 benefit plan under chapter 509A. 6 3. Consistent with section 8A.311, and notwithstanding any 7 other law to the contrary, the department shall enter into a 8 contract for the services of a pharmacy benefits manager for 9 the administration of benefits of self-funded public sector 10 health plans in compliance with this section. 11 4. Prior to November 1, 2024, the department shall 12 procure, through solicitation of proposals from qualified 13 professional services vendors, all of the following based on 14 price, capabilities, and other factors deemed relevant by the 15 department: 16 a. A technology platform with the capabilities to conduct 17 a pharmacy benefits manager reverse auction. The department 18 shall ensure that the technology platform possesses, at a 19 minimum, the capacity to do all of the following: 20 (1) Conduct an automated, online, reverse auction of 21 pharmacy benefits manager services using a software application 22 and high-performance data infrastructure to intake, cleanse, 23 and normalize pharmacy benefits manager data with development 24 methods and information security standards that have been 25 validated by receiving service organization control 2 and 26 national institute of standards and technology certification, 27 or successor information technology security certifications, as 28 identified by the office of the chief information officer. 29 (2) Automate repricing of diverse and complex pharmacy 30 benefits managers’ prescription drug pricing proposals to allow 31 direct comparison by the state of the comparably calculated 32 costs of pharmacy benefits managers’ bids using one hundred 33 percent of annual prescription drug claims data available 34 for state-funded health plans, or a multiple health plan 35 -2- H 8179.3655 (2) 90 nls/ko 2/ 8
prescription drug purchasing group, and using code-based 1 classification of drugs from nationally accepted drug sources. 2 (3) Simultaneously evaluate in real-time diverse and 3 complex multiple proposals from full-service pharmacy benefits 4 managers, including average wholesale price, guaranteed 5 net cost, and national average drug acquisition cost 6 pricing models, as well as proposals from pharmacy benefits 7 administrators and specialty drug and rebate carve-out service 8 providers. 9 (4) Produce an automated report and analysis of pharmacy 10 benefits managers’ bids, including ranking of pharmacy benefits 11 managers’ bids based on comparative costs and qualitative 12 aspects of the bids in real-time following the close of each 13 round of reverse auction bidding. 14 (5) Perform real-time, electronic, line-by-line, 15 claim-by-claim review of one hundred percent of invoiced 16 pharmacy benefits managers’ prescription drug claims, and 17 identify all deviations from the specific terms of the pharmacy 18 benefits manager’s services contract that resulted from the 19 reserve auction process. 20 b. Related services from the operator of the technology 21 platform identified in paragraph “a” , which at a minimum shall 22 include all of the following: 23 (1) Evaluation of the qualifications of pharmacy benefits 24 manager bidders. 25 (2) Pharmacy benefits manager reverse auction services to 26 support the department in comparing pricing for the pharmacy 27 benefits manager procurement. 28 (3) Related professional services. 29 5. The department shall not award a contract for the 30 technology platform and technology operator services to a 31 vendor that is a pharmacy benefits manager or to a vendor that 32 is managed by, or a subsidiary or affiliate of, a pharmacy 33 benefits manager. 34 6. The vendor awarded the contract by the department shall 35 -3- H 8179.3655 (2) 90 nls/ko 3/ 8
not outsource any part of the pharmacy benefits manager reverse 1 auction or any part of the automated, real-time, electronic, 2 line-by-line, claim-by-claim review of invoiced pharmacy 3 benefits manager prescription drug claims. 4 7. With technical assistance and support provided by the 5 technology platform operator, the department shall specify the 6 terms of the participant bidding agreement. The terms of the 7 participant bidding agreement shall not be modified except by 8 specific consent of the department. 9 8. a. The technology platform used to conduct the reverse 10 auction shall be repurposed over the duration of the pharmacy 11 benefits manager’s services contract as an automated pharmacy 12 claims adjudication engine to perform real-time, electronic, 13 line-by-line, claim-by-claim review of one hundred percent of 14 invoiced pharmacy benefits manager’s prescription drug claims, 15 and to identify all deviations from the specific terms of the 16 pharmacy benefits manager’s services contract. 17 b. The department shall reconcile the electronically 18 adjudicated pharmacy claims, as described in paragraph “a” , 19 with pharmacy benefits manager’s invoices on a monthly or 20 quarterly basis to ensure that state payments shall not exceed 21 the terms specified in any pharmacy benefits manager’s services 22 contract. 23 c. If following state payment to the pharmacy benefits 24 manager on the basis of the reconciliation under paragraph 25 “b” the pharmacy benefits manager asserts that the department 26 paid less than the amount owed, the pharmacy benefits manager 27 may seek resolution through a mutually acceptable dispute 28 resolution process that the parties agreed to in the terms of 29 the services contract under subsection 9, paragraph “a” . 30 9. a. The first pharmacy benefits manager reverse auction 31 shall be completed and the services contract shall be awarded 32 to the winning pharmacy benefits manager with an effective date 33 beginning July 1, 2025. Subsequent contracts must be awarded 34 no later than three months prior to termination or expiration 35 -4- H 8179.3655 (2) 90 nls/ko 4/ 8
of the current pharmacy benefits manager’s services contract 1 for a covered group, such as the state employees benefits 2 group, that includes only active employees and dependents, but 3 does not include retiree participants in a Medicare part D 4 employer group waiver program pursuant to the federal Medicare 5 Prescription Drug, Improvement, and Modernization Act of 2003, 6 Pub. L. No. 108-173. 7 b. In the event an eligible covered group that includes 8 retiree participants in a Medicare part D employer group 9 waiver program pursuant to the federal Medicare Prescription 10 Drug, Improvement, and Modernization Act of 2003, Pub. L. No. 11 108-173, opts to use the processes and procedures under this 12 section, the relevant pharmacy benefits manager reverse auction 13 shall be completed and the pharmacy benefits manager services 14 contract shall be awarded to the winning pharmacy benefits 15 manager no later than six months prior to termination or 16 expiration of the pharmacy benefits manager’s services contract 17 currently covering the retiree employer group waiver program 18 participants. 19 10. The department may perform a market check for providing 20 pharmacy benefits manager services during the term of the 21 current pharmacy benefits manager’s services contract in order 22 to ensure continuing competitiveness of incumbent prescription 23 drug pricing during the term of a pharmacy benefits manager’s 24 services contract. 25 11. To ensure that the department does not incur additional 26 expenditures associated with the pharmacy benefits manager 27 reverse auction, ongoing electronic review and validation 28 of pharmacy benefits managers’ claims, and periodic market 29 checks, the department shall implement a no-pay option that 30 obligates the winning pharmacy benefits manager, rather than 31 the state, to pay the cost of the technology platform and 32 related technology platform operator services by assessing the 33 pharmacy benefits manager a per-prescription fee in an amount 34 agreed to by the department and the technology operator, and 35 -5- H 8179.3655 (2) 90 nls/ko 5/ 8
requiring the pharmacy benefits manager to pay the fees to the 1 technology operator over the duration of the pharmacy benefits 2 manager’s services contract. The obligation of the winning 3 pharmacy benefits manager to pay the per-prescription fee shall 4 be incorporated as a term of the participant bidding agreement 5 and the pharmacy benefits manager’s services contract awarded 6 to the pharmacy benefits manager reverse auction winner. 7 12. All of the following shall be incorporated as terms of 8 the participant bidding agreement and the pharmacy benefits 9 manager’s services contract awarded to the pharmacy benefits 10 manager reverse auction winner: 11 a. The department shall require an average acquisition 12 cost reimbursement methodology for pharmacy ingredient cost 13 reimbursement of all prescription drugs covered by a pharmacy 14 benefits manager. 15 b. A reasonable professional service fee shall be provided 16 to a pharmacist for the pharmacist’s time and service included 17 in dispensing prescription drugs covered by a pharmacy benefits 18 manager. 19 c. A covered person shall not be prohibited from filling a 20 prescription drug order at any pharmacy in the state provided 21 that the pharmacy accepts the same terms and conditions as the 22 pharmacies participating in the covered person’s health benefit 23 plan’s network. 24 d. With the exception of incentives in value-based programs 25 established by a health carrier or a pharmacy benefits manager 26 to promote the use of higher quality pharmacies, a pharmacy 27 benefits manager shall not impose different cost-sharing or 28 additional fees on a covered person based on the pharmacy at 29 which the covered person fills a prescription drug order. 30 e. A pharmacy benefits manager shall not require a covered 31 person, as a condition of payment or reimbursement, to purchase 32 pharmacy services, including prescription drugs, exclusively 33 through a mail-order pharmacy. 34 13. a. This section shall apply to group benefit plans 35 -6- H 8179.3655 (2) 90 nls/ko 6/ 8
under chapter 509A. This section shall not apply to nonprofit, 1 nongovernmental health maintenance organizations with respect 2 to managed care plans that provide a majority of covered health 3 care services through a single contracted medical group. 4 b. (1) Three years after the first service contract is 5 awarded to a pharmacy benefits manager pursuant to subsection 6 9, paragraph “a” , any self-funded private sector health plan 7 with substantial participation by Iowa employees and the 8 employees’ dependents shall have the option to conduct a 9 pharmacy benefits manager reverse auction for the specific 10 self-funded private sector health plan utilizing the technology 11 platform and technology operator services selected by the 12 department under this section. The department may charge the 13 self-funded private sector health plan a fee, as established 14 by the department by rule, sufficient to cover any incremental 15 cost associated with the pharmacy benefits manager reverse 16 auction. 17 (2) A pharmacy benefits manager selected by a self-funded 18 private sector health plan as a result of a pharmacy benefits 19 manager reverse auction conducted pursuant to subparagraph 20 (1) shall be assessed a per-prescription fee, pursuant to 21 subsection 11, in an amount determined by the department by 22 rule. 23 c. Any self-funded public sector health plans or self-funded 24 private sector health plans that opt to conduct a pharmacy 25 benefits manager reverse auction shall retain full autonomy 26 over determination of the individual health plan’s respective 27 prescription drug formularies and pharmacy benefit designs, 28 and shall not be required to adopt a common prescription drug 29 formulary or common prescription pharmacy benefit design. 30 d. Any pharmacy benefits manager providing services to the 31 department, to a self-funded public sector health plan, or 32 to a self-funded private sector health plan as described in 33 this section shall provide the department, each participating 34 self-funded public sector health plan, and each participating 35 -7- H 8179.3655 (2) 90 nls/ko 7/ 8
self-funded private sector health plan access to complete 1 pharmacy claims data necessary to conduct the pharmacy 2 benefits manager reverse auction and to carry out applicable 3 administrative and management duties. 4 14. Notwithstanding subsection 3, the department may elect 5 to vacate the outcome of a pharmacy benefits manager reverse 6 auction if the lowest-cost pharmacy benefits manager’s bid 7 is not less than the projected cost trend for the incumbent 8 pharmacy benefits manager’s services contract as verified by 9 the department. The department may utilize a consultant to 10 conduct the verification. The cost trend shall be projected 11 by the technology platform operator using industry-recognized 12 data sources and shall be subject to review and approval by 13 the department in advance of the pharmacy benefits manager 14 reverse auction. Methodology shall be applied consistently in 15 projection of cost and savings to the state with regard to the 16 incumbent pharmacy benefits manager’s services contract and 17 competing pharmacy benefits manager reverse auction bids. > 18 2. By renumbering as necessary. 19 ______________________________ LUNDGREN of Dubuque -8- H 8179.3655 (2) 90 nls/ko 8/ 8 #2.