House File 496
HOUSE FILE
BY OSTERHAUS
Passed House, Date Passed Senate, Date
Vote: Ayes Nays Vote: Ayes Nays
Approved
A BILL FOR
1 An Act relating to the regulation of pharmacy benefit managers
2 and making appropriations.
3 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
4 TLSB 2507HH 80
5 pf/cf/24
PAG LIN
1 1 Section 1. NEW SECTION. 155B.1 SHORT TITLE.
1 2 This chapter shall be known and may be cited as the
1 3 "Pharmacy Benefits Manager Regulation Act".
1 4 Sec. 2. NEW SECTION. 155B.2 PURPOSE AND INTENT.
1 5 The purposes of this chapter are:
1 6 1. To establish standards and criteria for the regulation
1 7 and licensing of pharmacy benefits managers.
1 8 2. To promote, preserve, and protect the public health,
1 9 safety, and welfare by and through effective regulation and
1 10 licensing of pharmacy benefits managers.
1 11 Sec. 3. NEW SECTION. 155B.3 DEFINITIONS.
1 12 For purposes of this chapter, unless the context otherwise
1 13 requires:
1 14 1. "Board of pharmacy" or "board" means the board of
1 15 pharmacy examiners.
1 16 2. "Cease and desist order" means an order of the board
1 17 prohibiting a pharmacy benefits manager or other person from
1 18 continuing a particular course of conduct which violates this
1 19 chapter or the rules adopted under this chapter.
1 20 3. "Commissioner" means the commissioner of insurance.
1 21 4. "Enrollee" means an individual who is enrolled in a
1 22 pharmacy benefits management plan.
1 23 5. "Health insurance plan or contract" means a third=party
1 24 payment provider contract or policy that is an individual or
1 25 group policy of accident or health insurance or individual or
1 26 group hospital or health care services contract issued
1 27 pursuant to chapter 509, 509A, 514, or 514A, or an individual
1 28 or group health maintenance organization contract issued and
1 29 regulated under chapter 514B.
1 30 6. "Insolvent" or "insolvency" means a financial situation
1 31 in which, based upon the financial information required by
1 32 this chapter for the preparation of a pharmacy benefits
1 33 manager's annual statement, the assets of the pharmacy
1 34 benefits manager are less than the sum of all the company's
1 35 liabilities and required reserves.
2 1 7. "Maintenance drug" means a drug prescribed by a
2 2 practitioner who is licensed to prescribe drugs and used to
2 3 treat a medical condition for a period of more than thirty
2 4 days.
2 5 8. "Multisource drug" means a drug that is stocked and is
2 6 available from three or more suppliers.
2 7 9. "Pharmacist" means pharmacist as defined in section
2 8 155A.3.
2 9 10. "Pharmacists' services" include drug therapy and other
2 10 patient care services provided by a licensed pharmacist
2 11 intended to achieve outcomes related to the cure or prevention
2 12 of a disease, elimination or reduction of a patient's
2 13 symptoms, or arresting or slowing of a disease process as
2 14 defined by rule of the board.
2 15 11. "Pharmacy" means pharmacy as defined in section
2 16 155A.3.
2 17 12. "Pharmacy benefits management plan" means an
2 18 arrangement for the delivery of prescription services in which
2 19 a pharmacy benefits manager provides, arranges for, pays for,
2 20 or reimburses any of the costs of prescription services for an
2 21 enrollee on a prepaid or insured basis which provides all of
2 22 the following:
2 23 a. Contains one or more incentive arrangements intended to
2 24 influence the cost or level of prescription services between
2 25 the plan sponsor and one or more pharmacies with respect to
2 26 the delivery of prescription services.
2 27 b. Requires or creates benefit payment differential
2 28 incentives for enrollees to use under contract with the
2 29 pharmacy benefits manager.
2 30 "Pharmacy benefits management plan" does not mean an
2 31 employee welfare benefit plan as defined in the federal
2 32 Employee Retirement Income Security Act of 1974, 29 U.S.C. }
2 33 1002(1), which is self=insured or self=funded.
2 34 13. "Pharmacy benefits manager" or "company" means an
2 35 entity that administers the prescription drug or device
3 1 portion of a health insurance plan or contract on behalf of
3 2 the sponsors of the health insurance plan or contract.
3 3 14. "Plan sponsor" means an employer, insurance company,
3 4 union, or health maintenance organization that contracts with
3 5 a pharmacy benefits manager for delivery of prescription
3 6 services.
3 7 15. "Usual and customary price" means the price the
3 8 pharmacist would have charged a cash=paying patient for the
3 9 same services on the same date inclusive of any discounts
3 10 applicable.
3 11 Sec. 4. NEW SECTION. 155B.4 CERTIFICATE OF AUTHORITY.
3 12 1. A person shall not establish or operate as a pharmacy
3 13 benefits manager in this state to provide pharmacy benefits
3 14 management plans without first obtaining a certificate of
3 15 authority from the board of pharmacy examiners. A pharmacy
3 16 benefits manager providing pharmacy benefits management plans
3 17 in this state shall obtain a certificate of authority from the
3 18 board every four years.
3 19 2. A person may apply to the board to obtain a certificate
3 20 of authority to establish and operate as a pharmacy benefits
3 21 manager in compliance with this chapter if the person obtains
3 22 an annual license to do business in this state from the
3 23 commissioner under section 155B.5.
3 24 3. The board may suspend or revoke a certificate of
3 25 authority issued to a pharmacy benefits manager under this
3 26 chapter or may deny an application for a certificate of
3 27 authority if the board finds any of the following:
3 28 a. The pharmacy benefits manager is operating
3 29 significantly in contravention of its basic organizational
3 30 document.
3 31 b. The pharmacy benefits manager does not arrange for
3 32 pharmacists' services.
3 33 c. The pharmacy benefits manager has failed to meet the
3 34 requirements for issuance of a certificate of authority
3 35 established in this chapter.
4 1 d. The pharmacy benefits manager is unable to fulfill its
4 2 obligation to furnish pharmacists' services as required under
4 3 its pharmacy benefits management plan.
4 4 e. The pharmacy benefits manager is no longer financially
4 5 responsible and may reasonably be expected to be unable to
4 6 meet its obligations to enrollees or prospective enrollees.
4 7 f. The pharmacy benefits manager, or any person on the
4 8 company's behalf, has advertised or merchandised its services
4 9 in an untrue, misrepresentative, misleading, deceptive, or
4 10 unfair manner.
4 11 g. The continued operation of the pharmacy benefits
4 12 manager would be hazardous to its enrollees.
4 13 h. The pharmacy benefits manager has failed to file an
4 14 annual statement with the commissioner in a timely manner.
4 15 i. The pharmacy benefits manager has otherwise failed to
4 16 substantially comply with this chapter.
4 17 4. When the certificate of authority of a pharmacy
4 18 benefits manager is revoked, the company shall proceed,
4 19 immediately following the effective date of the order of
4 20 revocation, to conclude the company's affairs and shall
4 21 conduct no further business except as may be essential to the
4 22 orderly conclusion of the affairs of the company. The board
4 23 may permit further operation of the company as the board may
4 24 find to be in the best interest of enrollees so that the
4 25 enrollees will be afforded the greatest practical opportunity
4 26 to obtain pharmacists' services.
4 27 Sec. 5. NEW SECTION. 155B.5 LICENSE TO DO BUSINESS.
4 28 1. The commissioner shall not issue an annual license to
4 29 do business in this state to any pharmacy benefits manager
4 30 providing pharmacy benefits management plans until the
4 31 commissioner is satisfied that the pharmacy benefits manager
4 32 has complied with all of the following:
4 33 a. Paid all fees, taxes, and charges required by law.
4 34 b. Has made any deposit required by this chapter.
4 35 c. Has met the minimum capital and surplus requirements
5 1 specified by the commissioner.
5 2 d. Has filed any necessary financial statement and any
5 3 reports, certificates, or other documents the commissioner
5 4 considers necessary to secure a full and accurate knowledge of
5 5 the company's affairs and financial condition.
5 6 e. Is solvent, and the company's financial condition,
5 7 method of operation, and manner of doing business satisfy the
5 8 commissioner that the company can meet the company's
5 9 obligations to all enrollees.
5 10 f. Has otherwise complied with all the requirements of
5 11 law.
5 12 2. The license shall be in addition to the certificate of
5 13 authority required by the board. A nonrefundable license
5 14 application fee of five hundred dollars shall accompany each
5 15 application for a license to transact business in this state.
5 16 The fee shall be collected by the commissioner and shall be
5 17 deposited in the pharmacy benefits manager fund created in
5 18 section 155B.16.
5 19 3. The license shall be signed by the commissioner or the
5 20 commissioner's agent and shall expire on the next June 30
5 21 after the date on which the license becomes effective.
5 22 4. A pharmacy benefits manager providing pharmacy benefits
5 23 management plans shall obtain an annual renewal of the
5 24 company's license from the commissioner. The commissioner may
5 25 refuse to renew the license of any pharmacy benefits manager
5 26 or may renew the license, subject to any restrictions
5 27 considered appropriate by the commissioner, if the
5 28 commissioner finds an impairment of required capital and
5 29 surplus, or if the commissioner finds that the pharmacy
5 30 benefits manager has not satisfied all the conditions
5 31 specified in this chapter. The commissioner shall not fail to
5 32 renew the license of any pharmacy benefits manager to transact
5 33 business in this state without providing the pharmacy benefits
5 34 manager ten days' notice and providing the company an
5 35 opportunity to be heard. The hearing may be informal, and the
6 1 commissioner and the pharmacy benefits manager may waive the
6 2 required notice.
6 3 Sec. 6. NEW SECTION. 155B.6 ANNUAL STATEMENT.
6 4 1. A pharmacy benefits manager providing pharmacy
6 5 management benefits plans in this state shall file a statement
6 6 with the commissioner annually by March 1. The statement
6 7 shall be verified by at least two principal officers of the
6 8 pharmacy benefits manager and shall cover the preceding
6 9 calendar year. The pharmacy benefits manager shall also
6 10 submit a copy of the statement to the board.
6 11 2. The statement shall be on forms prescribed by the
6 12 commissioner and shall include all of the following:
6 13 a. A financial statement of the company, including its
6 14 balance sheet and income statement for the preceding year.
6 15 b. The number of persons enrolled during the year, the
6 16 number of enrollees as of the end of the year, and the number
6 17 of enrollments terminated during the year.
6 18 c. Any other information relating to the operations of the
6 19 pharmacy benefits manager required by the commissioner
6 20 pursuant to this chapter.
6 21 3. If the pharmacy benefits manager is audited annually by
6 22 an independent certified public accountant, a copy of the
6 23 certified audit report shall be filed annually with the
6 24 commissioner by June 30.
6 25 4. The commissioner may extend the time prescribed for any
6 26 pharmacy benefits manager for filing an annual statement or
6 27 other reports, or exhibits of the statement or report for good
6 28 cause shown. However, the commissioner shall not extend the
6 29 time for filing annual statements beyond sixty days after the
6 30 time prescribed by subsection 1. A pharmacy benefits manager
6 31 which fails to file its annual statement within the time
6 32 prescribed by this section may have its licensed revoked by
6 33 the commissioner or its certificate of authority revoked or
6 34 suspended by the board until the annual statement is filed.
6 35 The commission may waive the requirements for a pharmacy
7 1 benefits manager to file financial information if an affiliate
7 2 of the pharmacy benefits manager is also required to file the
7 3 same information.
7 4 Sec. 7. NEW SECTION. 155B.7 FINANCIAL EXAMINATION.
7 5 1. In lieu of or in addition to performing a financial
7 6 examination of a pharmacy benefits manager, the commissioner
7 7 may accept the report of a financial examination by another
7 8 person responsible for pharmacy benefits managers under the
7 9 laws of another state who is certified by the insurance
7 10 supervisory official, similar regulatory agency, or the state
7 11 health commissioner of the other state.
7 12 2. The commissioner shall coordinate financial
7 13 examinations of pharmacy benefits managers that provide
7 14 pharmacy management benefits plans in this state to ensure an
7 15 appropriate level of regulatory oversight and to avoid any
7 16 undue duplication of effort or regulation. The pharmacy
7 17 benefits manager being examined shall pay the cost of the
7 18 examination. Payments of the cost of the examination shall be
7 19 collected by the commissioner and shall be deposited in the
7 20 pharmacy benefits manager fund created in section 155B.16.
7 21 Sec. 8. NEW SECTION. 155B.8 ASSESSMENT.
7 22 1. The expense of administering this chapter, including
7 23 the costs incurred by the commissioner and the board, shall be
7 24 assessed annually by the board against all pharmacy benefits
7 25 managers operating in this state. Before determining the
7 26 assessment, the board shall request from the commissioner an
7 27 estimate of all expenses for the regulation, supervision, and
7 28 examination of all companies subject to regulation under this
7 29 chapter. The assessment shall be in proportion to the
7 30 business done in this state.
7 31 2. Assessments shall be collected by the commissioner and
7 32 shall be deposited in the pharmacy benefits manager fund
7 33 created in section 155B.16.
7 34 3. The board shall provide each pharmacy benefits manager
7 35 notice of the assessment, which shall be paid to the board on
8 1 or before March 1 of each year. A pharmacy benefits manager
8 2 that fails to pay the assessment on or before the date
8 3 prescribed shall be subject to a penalty imposed by the board
8 4 which is ten percent of the assessment and interest for the
8 5 period between the due date and the date of full payment. If
8 6 a payment is made in an amount later found to be in error, the
8 7 following shall apply:
8 8 a. If the error found is an underpayment and an additional
8 9 amount is due, the commission shall notify the company of the
8 10 additional amount and the company shall pay the additional
8 11 amount within fourteen days of the date of the notice.
8 12 b. If the error found is an overpayment, a refund shall be
8 13 ordered.
8 14 4. If an assessment made under this chapter is not paid to
8 15 the board by the prescribed date, the amount of the
8 16 assessment, penalty, and interest may be recovered from the
8 17 defaulting company on motion of the board made in the name and
8 18 for the use of the state in the appropriate court after ten
8 19 days' notice to the company. The certificate of authority of
8 20 a defaulting company to transact business in this state may be
8 21 revoked or suspended by the board until the company has paid
8 22 the assessment.
8 23 Sec. 9. NEW SECTION. 155B.9 PHARMACY BENEFITS MANAGER
8 24 CONTRACTS.
8 25 1. A pharmacy benefits manager that contracts with a
8 26 pharmacy or pharmacist to provide pharmacists' services
8 27 through a pharmacy management plan for enrollees in this state
8 28 shall file the contract with the board thirty days before the
8 29 execution of the contract. The contract shall be deemed
8 30 approved unless the board disapproves the contract within
8 31 thirty days after the contract is filed with the board.
8 32 2. Disapproval of the contract shall be in writing,
8 33 stating the reasons for the disapproval, and a copy of the
8 34 written disapproval shall be delivered to the pharmacy
8 35 benefits manager.
9 1 3. The board, consistent with the board's responsibility
9 2 for protecting the public interest, shall develop formal
9 3 criteria for the approval and disapproval of pharmacy benefits
9 4 manager contracts.
9 5 4. The pharmacy benefits manager shall provide a contract
9 6 to the pharmacy or pharmacist that is written in plain
9 7 language that is generally understood by pharmacists.
9 8 5. A pharmacy benefits manager that contracts with a
9 9 pharmacy or pharmacist to provide pharmacist services through
9 10 a pharmacy benefits management plan for enrollees in this
9 11 state on behalf of any health plan sponsors shall be
9 12 identified as the agent of the health plan sponsor. The
9 13 health plan fiduciary responsibilities shall transfer to the
9 14 contracting pharmacy benefits manager.
9 15 6. A contract shall apply the same coinsurance, copayment,
9 16 and deductible to covered drug prescriptions filled by any
9 17 pharmacy or pharmacist who participates in the network.
9 18 7. This section shall not be construed to prohibit a
9 19 contract from applying different coinsurance, copayment, and
9 20 deductible factors between generic and brand=name drugs that
9 21 an enrollee may obtain with a prescription if the limits are
9 22 applied uniformly to all pharmacies or pharmacists in the
9 23 health insurance plan or contract network.
9 24 8. A pharmacy benefits management plan shall not require a
9 25 pharmacy or pharmacist to change an enrollee's maintenance
9 26 drug unless the prescribing physician and the enrollee agree
9 27 to the change.
9 28 9. A pharmacy's or pharmacist's participation in any plan
9 29 or network offered by a pharmacy benefits manager is optional
9 30 and at the discretion of the pharmacy or pharmacist. The
9 31 pharmacy's or pharmacist's participation or lack of
9 32 participation in one plan shall not affect the pharmacy's or
9 33 pharmacist's participation in any other plan or network
9 34 ordered by the pharmacy benefits manager.
9 35 10. A pharmacy benefits manager that initiates an audit of
10 1 a pharmacy or pharmacist under the provisions of the contract
10 2 shall limit the methods and procedures that are recognized as
10 3 fair and equitable for both the pharmacy benefits manager and
10 4 the pharmacy or pharmacist. An audit shall not allow for
10 5 extrapolation calculations. A pharmacy benefits manager shall
10 6 not recoup any moneys due from an audit by setoff from future
10 7 remittances until the results of the audit are resolved and
10 8 finalized by both the pharmacy benefits manager and the
10 9 pharmacy or pharmacist. If the findings of an audit cannot be
10 10 finalized and agreed to by both parties, the commissioner
10 11 shall establish an independent review board to adjudicate
10 12 unresolved grievances.
10 13 11. a. Prior to terminating a pharmacy or pharmacist from
10 14 the network, a pharmacy benefits manager shall provide the
10 15 pharmacy or pharmacist with a written explanation of the
10 16 reason for the termination at least thirty days before the
10 17 actual termination unless the contract termination action is
10 18 taken as the result of any of the following:
10 19 (1) Loss of the pharmacy's or pharmacist's license to
10 20 practice pharmacy or loss of professional liability insurance.
10 21 (2) Conviction of fraud or misrepresentation in regard to
10 22 the contract.
10 23 b. A pharmacy or pharmacist may request and receive,
10 24 within thirty days, a review of the proposed termination by
10 25 the board prior to the termination.
10 26 12. The pharmacy or pharmacist shall not be held
10 27 responsible for actions of the pharmacy benefits manager or
10 28 plan sponsors and the pharmacy benefits manager or plan
10 29 sponsors shall not be held responsible for the actions of the
10 30 pharmacy or pharmacist.
10 31 Sec. 10. NEW SECTION. 155B.10 ENFORCEMENT.
10 32 1. The board shall develop formal investigation and
10 33 compliance procedures for responding to complaints by health
10 34 insurance plans or contract sponsors, pharmacists, or
10 35 enrollees concerning the failure of a pharmacy benefits
11 1 manager to comply with this chapter. If, based upon an
11 2 investigation or complaint, the board has reason to believe
11 3 that there is a violation of this chapter, the board shall
11 4 issue and serve upon the pharmacy benefits manager concerned a
11 5 statement of the charges and a notice of a hearing to be held
11 6 at a time and place fixed in the notice, which shall not be
11 7 less than thirty days after notice is served. The notice
11 8 shall require the pharmacy benefits manager to show cause why
11 9 an order should not be issued directing the company to cease
11 10 and desist from the violation. At the hearing, the pharmacy
11 11 benefits manager shall have an opportunity to be heard and to
11 12 show cause why an order should not be issued requiring the
11 13 pharmacy benefits manager to cease and desist from the
11 14 violation.
11 15 2. The board may perform an examination concerning the
11 16 quality of services of any pharmacy benefits manager and
11 17 providers with whom the pharmacy benefits manager has
11 18 contracts, agreements, or other arrangements pursuant to its
11 19 pharmacy benefits management plan as often as the board deems
11 20 necessary for the protection of the interests of the people of
11 21 this state. The pharmacy benefits manager being examined
11 22 shall pay the cost of the examination.
11 23 Sec. 11. NEW SECTION. 155B.11 PRESCRIPTION DRUG
11 24 REIMBURSEMENT COSTS.
11 25 Pharmacy benefits managers shall use a current and
11 26 nationally recognized benchmark on which to base
11 27 reimbursements for prescription drugs and products dispensed
11 28 by pharmacies and pharmacists as follows:
11 29 1. For brand=name, single=source products, the average
11 30 wholesale price as listed in first data bank or facts and
11 31 comparisons correct and current on the date the service was
11 32 provided shall be used as the index.
11 33 2. For generic drug, multisource products, maximum
11 34 allowable cost shall be established by referencing first data
11 35 bank facts and comparisons baseline prices. Only products
12 1 that are compliant with pharmacy laws as equivalent and
12 2 generically interchangeable with a federal food and drug
12 3 administration orange book rating of "A=B" shall be reimbursed
12 4 from a maximum allowable cost price methodology. In the event
12 5 a multisource product has no baseline price, the product shall
12 6 be treated as a single=source branded drug for the purpose of
12 7 valuing reimbursement.
12 8 Sec. 12. NEW SECTION. 155B.12 PROHIBITED PRACTICES.
12 9 1. A pharmacy benefits manager or its representative shall
12 10 not cause or knowingly permit any of the following:
12 11 a. The use of advertising that is untrue or misleading.
12 12 b. Solicitation that is untrue or misleading.
12 13 c. Any form of evidence of coverage that is deceptive.
12 14 2. A pharmacy benefits manager, unless licensed as an
12 15 insurer, shall not use in its name, contracts, or literature
12 16 any of the following:
12 17 a. Any form of the word "insurance", "casualty", "surety",
12 18 or "mutual".
12 19 b. Any other words descriptive of the insurance, casualty,
12 20 or surety business, or deceptively similar to the name or
12 21 description of any insurer or fidelity and surety insurer,
12 22 doing business in this state.
12 23 3. A pharmacy benefits manager shall not discriminate on
12 24 the basis of race, creed, color, sex, or religion in the
12 25 selection of pharmacies or pharmacists with whom the company
12 26 does business.
12 27 4. A pharmacy benefits manager shall not unfairly
12 28 discriminate against pharmacists when contracting for
12 29 pharmacists' services.
12 30 5. A pharmacy benefits manager shall be entitled access to
12 31 usual and customary pricing only for comparison to the
12 32 reimbursement of a specific claims payment made by the
12 33 pharmacy benefits manager. Usual and customary pricing is
12 34 confidential and a pharmacy benefits manager is prohibited
12 35 from any other use or disclosure of usual and customary
13 1 pricing.
13 2 6. A pharmacy benefits manager shall not move a plan to
13 3 another payment network unless the pharmacy benefits manager
13 4 receives written consent from the plan sponsor.
13 5 7. A pharmacy benefits manager shall not receive or accept
13 6 any rebate, kickback, or any special payment or favor or
13 7 advantage of any valuable consideration or inducement for
13 8 changing a patient's drug product unless the change is
13 9 specified in a written contract that has been filed with the
13 10 commissioner at least thirty days prior to the execution of
13 11 the contract.
13 12 8. A claim paid by a pharmacy benefits manager shall not
13 13 be retroactively denied or adjusted after seven days from
13 14 adjudication of the claim. Acknowledgement of eligibility
13 15 shall not be retroactively reversed. A pharmacy benefits
13 16 manager may retroactively deny or adjust a claim only if the
13 17 original claim was submitted fraudulently, the original claim
13 18 payment was incorrect because the provider was previously paid
13 19 for services rendered, or the services were not rendered by
13 20 the pharmacist.
13 21 9. A pharmacy benefits manager shall not terminate a
13 22 pharmacy from a network based on any of the following:
13 23 a. The pharmacy expresses disagreement with the pharmacy
13 24 benefits manager's decision to deny or limit benefits to an
13 25 enrollee.
13 26 b. A pharmacist employed by the pharmacy discusses with a
13 27 current, former, or prospective enrollee any aspect of the
13 28 person's medical condition or treatment alternatives whether
13 29 or not the service is a covered service.
13 30 c. A pharmacist employed by the pharmacy makes a personal
13 31 recommendation regarding selecting a pharmacy benefits manager
13 32 based on the pharmacist's personal knowledge of the health
13 33 needs of the individual.
13 34 d. The pharmacy protests or expresses disagreement with a
13 35 medical decision, medical policy, or medical practice of a
14 1 pharmacy benefits manager.
14 2 e. The pharmacy has in good faith communicated with or
14 3 advocated on behalf of one or more of the pharmacy's current,
14 4 former, or prospective enrollees regarding the provisions,
14 5 terms, or requirements of the pharmacy benefits manager's
14 6 health benefit plans as they relate to the needs of the
14 7 individual regarding the method by which the pharmacy is
14 8 compensated for services provided under the agreement with the
14 9 pharmacy benefits manager.
14 10 10. A pharmacy benefits manager shall not terminate a
14 11 pharmacy from a network or otherwise penalize a pharmacy
14 12 solely because of the pharmacy's invoking of the pharmacy's
14 13 right under the contract or applicable law or regulation.
14 14 11. A pharmacy benefits manager's termination due to
14 15 incompetence or unprofessional behavior shall not release the
14 16 pharmacy benefits manager from the obligation to make any
14 17 payment due to the pharmacy for services provided in special
14 18 circumstances post=termination to the enrollees at less than
14 19 agreed=upon rates.
14 20 12. Participation or lack of participation by a pharmacy
14 21 in a plan or network shall not affect participation in any
14 22 other plan or network offered by a pharmacy benefits manager.
14 23 Sec. 13. NEW SECTION. 155B.13 DISCLOSURES.
14 24 1. The following shall be provided to the pharmacy
14 25 benefits manager enrollees at the time of enrollment or at the
14 26 time the contract is issued and shall be made available upon
14 27 request or at least annually:
14 28 a. A list of the names and locations of all affiliated
14 29 pharmacists' services providers.
14 30 b. A description of the service area or areas within which
14 31 the pharmacy benefits manager provides prescription services.
14 32 c. A description of the method of resolving complaints of
14 33 enrollees, including a description of any arbitration
14 34 procedure if complaints may be resolved through a specified
14 35 arbitration agreement.
15 1 d. Notice that the pharmacy benefits manager is subject to
15 2 regulation in this state by both the board of pharmacy
15 3 examiners and the commissioner of insurance.
15 4 e. A prominent notice included within the evidence of
15 5 coverage, providing substantially the following: "If you have
15 6 any questions regarding an appeal or grievance concerning the
15 7 pharmacists' services that you have been provided, which have
15 8 not been satisfactorily addressed by your plan, you may
15 9 contact the board of pharmacy examiners." The notice shall
15 10 also provide the toll=free telephone number, mailing address,
15 11 and electronic mail address of the board of pharmacy
15 12 examiners.
15 13 2. Any disclosure from a pharmacy benefits manager to
15 14 enrollees shall be written plainly, using terms generally
15 15 understood by the general public and a copy of the disclosure
15 16 shall be provided to all pharmacies that are members of the
15 17 network.
15 18 Sec. 14. NEW SECTION. 155B.14 PRIVACY.
15 19 An enrollee has the right to privacy and confidentiality in
15 20 the provision of pharmacists' services. This right may be
15 21 expressly waived in writing by the enrollee or the enrollee's
15 22 guardian.
15 23 Sec. 15. NEW SECTION. 155B.15 INSOLVENCY.
15 24 1. If a pharmacy benefits manager becomes insolvent or
15 25 ceases to be a company in this state in any assessable or
15 26 license year, the company shall remain liable for the payment
15 27 of the assessment for the period in which the company operated
15 28 as a pharmacy benefits manager in this state.
15 29 2. If a pharmacy benefits manager becomes insolvent, the
15 30 commissioner may, after notice and hearing, levy an
15 31 assessment, in addition to an assessment pursuant to section
15 32 155B.8, on pharmacy benefits managers licensed to do business
15 33 in this state. The assessments shall be paid quarterly to the
15 34 commissioner, and upon receipt by the commissioner shall be
15 35 paid over into an escrow account in the pharmacy benefits
16 1 manager fund. The escrow account shall be used solely for the
16 2 benefit of enrollees of the insolvent pharmacy benefits
16 3 manager.
16 4 Sec. 16. NEW SECTION. 155B.16 PHARMACY BENEFITS MANAGER
16 5 FUND == USES == ESCROW ACCOUNT.
16 6 1. A pharmacy benefits manager fund is created in the
16 7 state treasury under the authority of the commissioner of
16 8 insurance. Moneys received from licensure of pharmacy
16 9 benefits managers pursuant to section 155B.5, from
16 10 examinations collected pursuant to section 155B.7, and from
16 11 assessments collected pursuant to section 155B.8 shall be
16 12 deposited in the fund. Moneys in the fund shall be used and
16 13 an amount necessary is appropriated, annually, to the division
16 14 of insurance of the department of commerce for the purposes of
16 15 enforcing this chapter.
16 16 2. An escrow account is created in the pharmacy benefits
16 17 manager fund. Assessments collected pursuant to section
16 18 155B.15 shall be deposited in the account and are appropriated
16 19 to the division of insurance of the department of commerce to
16 20 be used solely for the benefit of the enrollees of an
16 21 insolvent pharmacy benefits manager.
16 22 EXPLANATION
16 23 This bill establishes regulation of pharmacy benefits
16 24 managers. The bill defines terms used in the bill, including
16 25 "pharmacy benefits manager" (PBM), which is an entity that
16 26 administers the prescription drug or device portion of a
16 27 health insurance plan or contract on behalf of the sponsors of
16 28 the health insurance plan or contract. The bill requires a
16 29 PBM to obtain a certificate of authority from the board of
16 30 pharmacy examiners every four years. A prerequisite for
16 31 obtaining a certificate of authority is the obtaining of a
16 32 license to do business in the state from the commissioner of
16 33 insurance. The bill provides criteria that the board may use
16 34 to suspend or revoke a PBM's certificate of authority.
16 35 The bill requires a PBM to obtain a license to do business
17 1 from the commissioner of insurance. Issuance of the license
17 2 is based on a determination by the commissioner that the PBM
17 3 is financially sound. A PBM is required to pay a license
17 4 application fee of $500. The license expires every June 30
17 5 following the date of issuance.
17 6 The bill requires a PBM to file an annual statement with
17 7 the commissioner of insurance by March 1, and also provide a
17 8 copy of the statement to the board of pharmacy examiners. The
17 9 annual statement is to be verified by at least two principal
17 10 officers of the PBM, cover the preceding calendar year, and
17 11 include: a financial statement of the company, including its
17 12 balance sheet and income statement for the preceding year; the
17 13 number of persons enrolled during the year, the number of
17 14 enrollees as of the end of the year, and the number of
17 15 enrollments terminated during the year; and any other
17 16 information relating to the operations of the PBM required by
17 17 the commissioner pursuant to the bill. If the PBM is audited
17 18 annually by an independent certified public accountant, a copy
17 19 of the certified audit report is to be filed annually with the
17 20 commissioner by June 30. The bill provides for an extension
17 21 in the time prescribed for submission of the annual statement
17 22 or other reports by the insurance commissioner for good cause
17 23 shown. If a PBM fails to file the annual statement in the
17 24 prescribed time, the commissioner may revoke its license and
17 25 the board may suspend or revoke the certificate of authority.
17 26 The bill provides for waiver of the required filing of a
17 27 financial statement if an affiliate of the PBM is also
17 28 required to file the same information.
17 29 The bill provides for the coordination of financial
17 30 examinations of PBMs, provides that the PBM is to pay the cost
17 31 of the examination, and provides that the payments collected
17 32 are to be deposited in the pharmacy benefits manager fund
17 33 created in the bill.
17 34 The bill provides that the expenses of administering the
17 35 regulation of PBMs, including the costs incurred by the
18 1 commissioner and the board, shall be assessed annually by the
18 2 board against all pharmacy benefits managers operating in the
18 3 state. The assessment is to be based upon the commissioner's
18 4 estimate, provided to the board, of all expenses for the
18 5 regulation, supervision, and examination of all entities
18 6 subject to regulation. Assessments are to be collected by the
18 7 commissioner by March 1, annually, and are to be deposited in
18 8 the pharmacy benefits manager fund created in the bill. The
18 9 bill directs the board to provide each pharmacy benefits
18 10 manager notice of the assessment. A pharmacy benefits manager
18 11 that fails to pay the assessment on or before the date
18 12 prescribed is subject to a penalty imposed by the board which
18 13 is 10 percent of the assessment and interest for the period
18 14 between the due date and the date of full payment. The bill
18 15 provides for payment of additional amounts or refunds if a
18 16 payment is made in an amount later found to be in error. If
18 17 an assessment is not paid to the board by the prescribed date,
18 18 the amount of the assessment, penalty, and interest may be
18 19 recovered and the certificate of authority of any defaulting
18 20 company to transact business in this state may be revoked or
18 21 suspended by the board until the company has paid the
18 22 assessment.
18 23 The bill requires a PBM that contracts with a pharmacy or
18 24 pharmacist to provide pharmacists' services to file the
18 25 contract with the board 30 days before the execution of the
18 26 contract. The contract is deemed approved unless the board
18 27 disapproves the contract within 30 days after the contract is
18 28 filed with the board. Disapproval of the contract is to be in
18 29 writing and a copy is to be delivered to the PBM. The bill
18 30 directs the board to develop formal criteria for the approval
18 31 and disapproval of PBM contracts.
18 32 The bill also requires the PBM to provide a contract to the
18 33 pharmacy or pharmacist that is written in plain language that
18 34 is generally understood by pharmacists; requires that the PBM
18 35 is to be identified as the agent of the health plan sponsor
19 1 under the contract thereby transferring the health plan's
19 2 fiduciary responsibilities to the PBM; requires that the
19 3 contract applies the same coinsurance, copayment, and
19 4 deductible to covered drug prescriptions filled by any
19 5 pharmacy or pharmacist who participates in the network;
19 6 provides that the provisions relating to the PBM contract are
19 7 not to be construed to prohibit a contract from applying
19 8 different coinsurance, copayment, and deductible factors
19 9 between generic and brand=name drugs that an enrollee may
19 10 obtain with a prescription if the limits are applied uniformly
19 11 to all pharmacies or pharmacists in the health insurance plan
19 12 or contract network; prohibits a pharmacy benefits management
19 13 plan from requiring a pharmacy or pharmacist to change an
19 14 enrollee's maintenance drug unless the prescribing physician
19 15 and the enrollee agree to the change; provides that a
19 16 pharmacy's or pharmacist's participation in any plan or
19 17 network offered by a PBM is optional and at the discretion of
19 18 the pharmacy or pharmacist and is not to affect the pharmacy's
19 19 or pharmacist's participation in any other plan or network
19 20 ordered by the pharmacy benefits manager; requires a PBM that
19 21 initiates an audit of a pharmacy or pharmacist to limit the
19 22 methods and procedures that are recognized as fair and
19 23 equitable for both the PBM and the pharmacy or pharmacist;
19 24 specifies measures to be taken by a PBM for terminating a
19 25 pharmacy or pharmacist from the network; and provides that the
19 26 pharmacy or pharmacist is not to be held responsible for
19 27 actions of the PBM or plan sponsors and the PBM or plan
19 28 sponsors are not to be held responsible for the actions of the
19 29 pharmacy or pharmacist.
19 30 The bill provides for enforcement of the new Code chapter,
19 31 specifies medication reimbursement costs, specifies prohibited
19 32 practices by PBMs, requires PBMs to make certain disclosures
19 33 to enrollees, and provides that enrollees have the right to
19 34 privacy and confidentiality in the provision of pharmacists'
19 35 services which right may be expressly waived in writing by the
20 1 enrollee or the enrollee's guardian. The bill provides that
20 2 if a PBM becomes insolvent or ceases to be a company in this
20 3 state in any assessable or license year, the company remains
20 4 liable for the payment of the assessment for the period in
20 5 which the company operated as a PBM in the state. The bill
20 6 also provides that if a PBM becomes insolvent, the
20 7 commissioner may, after notice and hearing, levy an additional
20 8 assessment on PBMs licensed to do business in the state. The
20 9 assessments are to be paid quarterly to the commissioner,
20 10 deposited in an escrow account in the pharmacy benefits
20 11 manager fund, and are to be used solely for the benefit of
20 12 enrollees of the insolvent PBM.
20 13 The bill creates the pharmacy benefits manager fund in the
20 14 state treasury under the authority of the commissioner of
20 15 insurance. Moneys received from licensure of PBMs from
20 16 examination fees collected and from assessments collected are
20 17 deposited in the fund. Moneys in the fund are to be used and
20 18 an amount necessary is appropriated, annually, to the division
20 19 of insurance of the department of commerce for the purposes of
20 20 enforcing the provisions of the bill. The bill also creates
20 21 an escrow account within the fund. Assessments collected
20 22 relative to an insolvent PBM are to be deposited in the
20 23 account and are to be used solely for the benefit of the
20 24 enrollees of the insolvent PBM.
20 25 LSB 2507HH 80
20 26 pf/cf/24