Senate File 512 - Enrolled

PAG LIN



  1  1                                             SENATE FILE 512
  1  2
  1  3                             AN ACT
  1  4 RELATING TO THE REGULATION OF PHARMACY BENEFITS MANAGERS AND
  1  5    MAKING PENALTIES APPLICABLE, AND PROVIDING AN EFFECTIVE DATE.
  1  6
  1  7 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
  1  8
  1  9    Section 1.  NEW SECTION.  510B.1  DEFINITIONS.
  1 10    As used in this chapter, unless the context otherwise
  1 11 requires:
  1 12    1.  "Commissioner" means the commissioner of insurance.
  1 13    2.  "Covered entity" means a nonprofit hospital or medical
  1 14 services corporation, health insurer, health benefit plan, or
  1 15 health maintenance organization; a health program administered
  1 16 by a department or the state in the capacity of provider of
  1 17 health coverage; or an employer, labor union, or other group
  1 18 of persons organized in the state that provides health
  1 19 coverage.  "Covered entity" does not include a self=funded
  1 20 health coverage plan that is exempt from state regulation
  1 21 pursuant to the federal Employee Retirement Income Security
  1 22 Act of 1974 (ERISA), as codified at 29 U.S.C. } 1001 et seq.,
  1 23 a plan issued for health coverage for federal employees, or a
  1 24 health plan that provides coverage only for accidental injury,
  1 25 specified disease, hospital indemnity, Medicare supplemental,
  1 26 disability income, or long=term care, or other limited benefit
  1 27 health insurance policy or contract.
  1 28    3.  "Covered individual" means a member, participant,
  1 29 enrollee, contract holder, policyholder, or beneficiary of a
  1 30 covered entity who is provided health coverage by the covered
  1 31 entity, and includes a dependent or other person provided
  1 32 health coverage through a policy, contract, or plan for a
  1 33 covered individual.
  1 34    4.  "Generic drug" means a chemically equivalent copy of a
  1 35 brand=name drug with an expired patent.
  2  1    5.  "Labeler" means a person that receives prescription
  2  2 drugs from a manufacturer or wholesaler and repackages those
  2  3 drugs for later retail sale and that has a labeler code from
  2  4 the federal food and drug administration pursuant to 21 C.F.R.
  2  5 } 207.20.
  2  6    6.  "Pharmacy" means pharmacy as defined in section 155A.3.
  2  7    7.  "Pharmacy benefits management" means the administration
  2  8 or management of prescription drug benefits provided by a
  2  9 covered entity under the terms and conditions of the contract
  2 10 between the pharmacy benefits manager and the covered entity.
  2 11    8.  "Pharmacy benefits manager" means a person who performs
  2 12 pharmacy benefits management services.  "Pharmacy benefits
  2 13 manager" includes a person acting on behalf of a pharmacy
  2 14 benefits manager in a contractual or employment relationship
  2 15 in the performance of pharmacy benefits management services
  2 16 for a covered entity.  "Pharmacy benefits manager" does not
  2 17 include a health insurer licensed in the state if the health
  2 18 insurer or its subsidiary is providing pharmacy benefits
  2 19 management services exclusively to its own insureds, or a
  2 20 public self=funded pool or a private single employer
  2 21 self=funded plan that provides such benefits or services
  2 22 directly to its beneficiaries.
  2 23    9.  "Prescription drug" means prescription drug as defined
  2 24 in section 155A.3.
  2 25    10.  "Prescription drug order" means prescription drug
  2 26 order as defined in section 155A.3.
  2 27    Sec. 2.  NEW SECTION.  510B.2  CERTIFICATION AS A
  2 28 THIRD=PARTY ADMINISTRATOR REQUIRED.
  2 29    A pharmacy benefits manager doing business in this state
  2 30 shall obtain a certificate as a third=party administrator
  2 31 under chapter 510, and the provisions relating to a
  2 32 third=party administrator pursuant to chapter 510 shall apply
  2 33 to a pharmacy benefits manager.
  2 34    Sec. 3.  NEW SECTION.  510B.3  ENFORCEMENT == RULES.
  2 35    1.  The commissioner shall enforce the provisions of this
  3  1 chapter.
  3  2    2.  The commissioner shall adopt rules pursuant to chapter
  3  3 17A to administer this chapter including rules relating to all
  3  4 of the following:
  3  5    a.  Timely payment of pharmacy claims.
  3  6    b.  A process for adjudication of complaints and settlement
  3  7 of disputes between a pharmacy benefits manager and a licensed
  3  8 pharmacy related to pharmacy auditing practices, termination
  3  9 of pharmacy agreements, and timely payment of pharmacy claims.
  3 10    Sec. 4.  NEW SECTION.  510B.4  PERFORMANCE OF DUTIES ==
  3 11 GOOD FAITH == CONFLICT OF INTEREST.
  3 12    1.  A pharmacy benefits manager shall perform the pharmacy
  3 13 benefits manager's duties exercising good faith and fair
  3 14 dealing in the performance of its contractual obligations
  3 15 toward the covered entity.
  3 16    2.  A pharmacy benefits manager shall notify the covered
  3 17 entity in writing of any activity, policy, practice ownership
  3 18 interest, or affiliation of the pharmacy benefits manager that
  3 19 presents any conflict of interest.
  3 20    Sec. 5.  NEW SECTION.  510B.5  CONTACTING COVERED
  3 21 INDIVIDUAL == REQUIREMENTS.
  3 22    A pharmacy benefits manager, unless authorized pursuant to
  3 23 the terms of its contract with a covered entity, shall not
  3 24 contact any covered individual without the express written
  3 25 permission of the covered entity.
  3 26    Sec. 6.  NEW SECTION.  510B.6  DISPENSING OF SUBSTITUTE
  3 27 PRESCRIPTION DRUG FOR PRESCRIBED DRUG.
  3 28    1.  The following provisions shall apply when a pharmacy
  3 29 benefits manager requests the dispensing of a substitute
  3 30 prescription drug for a prescribed drug to a covered
  3 31 individual:
  3 32    a.  The pharmacy benefits manager may request the
  3 33 substitution of a lower priced generic and therapeutically
  3 34 equivalent drug for a higher priced prescribed drug.
  3 35    b.  If the substitute drug's net cost to the covered
  4  1 individual or covered entity exceeds the cost of the
  4  2 prescribed drug, the substitution shall be made only for
  4  3 medical reasons that benefit the covered individual.
  4  4    2.  A pharmacy benefits manager shall obtain the approval
  4  5 of the prescribing practitioner prior to requesting any
  4  6 substitution under this section.
  4  7    3.  A pharmacy benefits manager shall not substitute an
  4  8 equivalent prescription drug contrary to a prescription drug
  4  9 order that prohibits a substitution.
  4 10    Sec. 7.  NEW SECTION.  510B.7  DUTIES TO PHARMACY NETWORK
  4 11 PROVIDERS.
  4 12    1.  A pharmacy benefits manager shall not mandate basic
  4 13 recordkeeping that is more stringent than that required by
  4 14 state or federal law or regulation.
  4 15    2.  If a pharmacy benefits manager receives notice from a
  4 16 covered entity of termination of the covered entity's
  4 17 contract, the pharmacy benefits manager shall notify, within
  4 18 ten working days of the notice, all pharmacy network providers
  4 19 of the effective date of the termination.
  4 20    3.  Within three business days of a price increase
  4 21 notification by a manufacturer or supplier, a pharmacy
  4 22 benefits manager shall adjust its payment to the pharmacy
  4 23 network provider consistent with the price increase.
  4 24    Sec. 8.  PHARMACY BENEFITS MANAGER LEGISLATIVE INTERIM
  4 25 COMMITTEE.  The legislative council is requested to establish
  4 26 a legislative interim committee on pharmacy benefits managers
  4 27 to review all of the following:
  4 28    1.  Transparency and disclosure arrangements between
  4 29 pharmacy benefits managers and covered entities.
  4 30    2.  Confidentiality protections for information disclosed
  4 31 to covered entities and remedies for unauthorized disclosure.
  4 32    3.  The ability of covered entities to audit pharmacy
  4 33 benefits managers.
  4 34    4.  Appropriate remedies for covered entities to enforce a
  4 35 provision of or for violation of a provision of chapter 510B,
  5  1 as enacted in this Act.
  5  2    Sec. 9.  EFFECTIVE DATE == DIRECTIVE TO COMMISSIONER OF
  5  3 INSURANCE.
  5  4    1.  This Act takes effect January 1, 2008.
  5  5    2.  Notwithstanding the effective date of this Act, the
  5  6 commissioner of insurance shall commence the process of
  5  7 developing proposed rules to implement and administer this Act
  5  8 beginning July 1, 2007.
  5  9
  5 10
  5 11                                                             
  5 12                               JOHN P. KIBBIE
  5 13                               President of the Senate
  5 14
  5 15
  5 16                                                             
  5 17                               PATRICK J. MURPHY
  5 18                               Speaker of the House
  5 19
  5 20    I hereby certify that this bill originated in the Senate and
  5 21 is known as Senate File 512, Eighty=second General Assembly.
  5 22
  5 23
  5 24                                                             
  5 25                               MICHAEL E. MARSHALL
  5 26                               Secretary of the Senate
  5 27 Approved                , 2007
  5 28
  5 29
  5 30                                
  5 31 CHESTER J. CULVER
  5 32 Governor