House File 160 - Introduced
HOUSE FILE
BY BELL
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 benefits managers
2 and providing for civil relief.
3 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
4 TLSB 1013YH 81
5 pf/gg/14
PAG LIN
1 1 Section 1. NEW SECTION. 155B.1 DEFINITIONS.
1 2 As used in this chapter unless the context otherwise
1 3 requires:
1 4 1. "Commissioner" means the commissioner of insurance.
1 5 2. "Covered entity" means a nonprofit hospital or medical
1 6 services corporation, health insurer, health benefit plan, or
1 7 health maintenance organization; a health program administered
1 8 by the state in the capacity of provider of health coverage;
1 9 or an employer, labor union, or other group of persons
1 10 organized in the state that provides health coverage to
1 11 covered individuals who are employed or reside in the state.
1 12 "Covered entity" does not include a self=funded plan that is
1 13 exempt from state regulation pursuant to the federal Employee
1 14 Retirement Income Security Act of 1974 (ERISA), as codified at
1 15 29 U.S.C. } 1001 et seq., a plan issued for coverage for
1 16 federal employees, or a health plan that provides coverage
1 17 only for accidental injury, specified disease, hospital
1 18 indemnity, Medicare supplemental, disability income, long=
1 19 term care, or other limited benefit health insurance policies
1 20 and contracts.
1 21 3. "Covered individual" means a member, participant,
1 22 enrollee, contract holder, policyholder, or beneficiary of a
1 23 covered entity who is provided health coverage by the covered
1 24 entity. "Covered individual" includes a dependent or other
1 25 person provided health coverage through a policy, contract, or
1 26 plan for a covered individual.
1 27 4. "Generic drug" means a chemically equivalent copy of a
1 28 brand=name drug with an expired patent.
1 29 5. "Labeler" means an entity or person that receives
1 30 prescription drugs from a manufacturer or wholesaler and
1 31 repackages those drugs for later retail sale and that has a
1 32 labeler code from the federal food and drug administration
1 33 under 21 C.F.R. } 270.20l.
1 34 6. "Pharmacy benefits management" means the procurement of
1 35 prescription drugs at a negotiated rate for dispensing within
2 1 this state to covered individuals, the administration or
2 2 management of prescription drug benefits provided by a covered
2 3 entity for the benefit of covered individuals, or any of the
2 4 following services provided with regard to the administration
2 5 of the following pharmacy benefits:
2 6 a. Mail service pharmacy.
2 7 b. Claims processing, retail network management, or
2 8 payment of claims to pharmacies for prescription drugs
2 9 dispensed to covered individuals.
2 10 c. Clinical formulary development and management services.
2 11 d. Rebate contracting and administration.
2 12 e. Certain patient compliance, therapeutic intervention,
2 13 or generic substitution programs.
2 14 f. Disease management programs involving prescription drug
2 15 utilization.
2 16 7. "Pharmacy benefits manager" means an entity that
2 17 performs pharmacy benefits management services. "Pharmacy
2 18 benefits manager" includes a person or entity acting for a
2 19 pharmacy benefits manager in a contractual or employment
2 20 relationship in the performance of pharmacy benefits
2 21 management services for a covered entity. "Pharmacy benefits
2 22 manager" does not include a health insurance carrier or its
2 23 subsidiary when the health insurance carrier or its subsidiary
2 24 is providing pharmacy benefits management services to its own
2 25 insureds; or a public self=funded pool or a private single
2 26 employer self=funded plan that provides such benefits or
2 27 services directly to its beneficiaries.
2 28 8. "Prescription drug" means prescription drug as defined
2 29 in section 155A.3.
2 30 9. "Prescription drug order" means a written order from a
2 31 practitioner or an oral order from a practitioner or the
2 32 practitioner's authorized agent who communicates the
2 33 practitioner's instructions for a prescription drug or device
2 34 to be dispensed.
2 35 10. "Proprietary information" means information on
3 1 pricing, costs, revenue, taxes, market share, negotiating
3 2 strategies, customers, or personnel held by private entities
3 3 and used for that private entity's business purposes.
3 4 11. "Trade secret" means information, including a
3 5 formula, pattern, compilation, program, device, method,
3 6 technique, or process, that meets all of the following
3 7 conditions:
3 8 a. Derives independent economic value, actual or
3 9 potential, from not being generally known to, and not being
3 10 readily ascertainable by proper means by, other persons who
3 11 can obtain economic value from its disclosure or use.
3 12 b. Is the subject of efforts that are reasonable under the
3 13 circumstances to maintain its secrecy.
3 14 Sec. 2. NEW SECTION. 155B.2 PHARMACY BENEFITS MANAGER ==
3 15 LICENSE.
3 16 1. A person shall not perform or act as a pharmacy
3 17 benefits manager in this state without obtaining an annual
3 18 license to do business in this state from the commissioner
3 19 under this section.
3 20 2. The commissioner shall adopt rules, pursuant to chapter
3 21 17A, relating to the issuance of a license under this section.
3 22 The rules shall include but are not limited to inclusion of
3 23 all of the following:
3 24 a. Definition of terms.
3 25 b. Use of prescribed forms.
3 26 c. Reporting requirements.
3 27 d. Enforcement procedures.
3 28 e. Protection of proprietary information and trade
3 29 secrets.
3 30 Sec. 3. NEW SECTION. 155B.3 MANAGER TO PERFORM DUTIES IN
3 31 GOOD FAITH.
3 32 Each pharmacy benefits manager shall perform its duties
3 33 exercising good faith and fair dealing toward the covered
3 34 entity and covered individuals.
3 35 Sec. 4. NEW SECTION. 155B.4 DISCLOSURE OF REVENUES
4 1 RECEIVED FROM PHARMACEUTICAL MANUFACTURER OR LABELER UNDER
4 2 CONTRACT WITH MANAGER == CONTENT == FEES.
4 3 1. A covered entity may request that any pharmacy benefits
4 4 manager with which it has a pharmacy benefits management
4 5 services contract disclose to the covered entity, the amount
4 6 of all rebate revenues and the nature, type, and amounts of
4 7 all other revenues that the pharmacy benefits manager receives
4 8 from each pharmaceutical manufacturer or labeler with whom the
4 9 pharmacy benefits manager has a contract. The pharmacy
4 10 benefits manager shall disclose all of the following in
4 11 writing:
4 12 a. The aggregate amount and, for a list of drugs to be
4 13 specified in the contract, the specific amount, of all rebates
4 14 and other retrospective utilization discounts received by the
4 15 pharmacy benefits manager, directly or indirectly, from each
4 16 pharmaceutical manufacturer or labeler that is earned in
4 17 connection with the dispensing of prescription drugs to
4 18 covered individuals of the health benefit plans issued by the
4 19 covered entity or for which the covered entity is the
4 20 designated administrator.
4 21 b. The nature, type, and amount of all other revenue
4 22 received by the pharmacy benefits manager directly or
4 23 indirectly from each pharmaceutical manufacturer or labeler
4 24 for any other products or services provided to the
4 25 pharmaceutical manufacturer or labeler by the pharmacy
4 26 benefits manager with respect to programs that the covered
4 27 entity offers or provides to its enrollees.
4 28 c. Any prescription drug utilization information requested
4 29 by the covered entity relating to covered individuals.
4 30 2. A pharmacy benefits manager shall provide the
4 31 information requested by the covered entity for such
4 32 disclosure within thirty days of receipt of the request. If
4 33 requested, the information shall be provided no less than once
4 34 each year. The contract entered into between the pharmacy
4 35 benefits manager and the covered entity shall specify any fees
5 1 to be charged for drug utilization reports requested by the
5 2 covered entity.
5 3 Sec. 5. NEW SECTION. 155B.5 PERMISSION OF ENTITY
5 4 REQUIRED TO CONTACT COVERED INDIVIDUAL == EXCEPTION.
5 5 A pharmacy benefits manager, unless authorized pursuant to
5 6 the terms of its contract with a covered entity, shall not
5 7 contact any covered individual without the express written
5 8 permission of the covered entity.
5 9 Sec. 6. NEW SECTION. 155B.6 CONFIDENTIALITY OF
5 10 INFORMATION == INJUNCTION == DAMAGES.
5 11 1. With the exception of utilization information, a
5 12 covered entity shall maintain any information disclosed in
5 13 response to a request pursuant to section 155B.4 as
5 14 confidential and proprietary information, and shall not use
5 15 such information for any other purpose or disclose such
5 16 information to any other person except as provided in this
5 17 chapter or in the pharmacy benefits management services
5 18 contract between the parties.
5 19 2. A covered entity that discloses information in
5 20 violation of this section is subject to an action for
5 21 injunctive relief and is liable for any damages which are the
5 22 direct and proximate result of such disclosure.
5 23 3. This section does not prohibit a covered entity from
5 24 disclosing confidential or proprietary information to the
5 25 commissioner, upon request. Any such information obtained by
5 26 the commissioner is confidential and privileged and is not
5 27 open to public inspection or disclosure.
5 28 Sec. 7. NEW SECTION. 155B.7 AUDITS OF MANAGER'S RECORDS.
5 29 1. A covered entity may have the pharmacy benefits
5 30 manager's records related to the rebates or other information
5 31 described in section 155B.4 audited, to the extent the
5 32 information relates directly or indirectly to such covered
5 33 entity's contract, in accordance with the terms of the
5 34 pharmacy benefits management services contract between the
5 35 parties. However, if the parties have not expressly provided
6 1 for audit rights and the pharmacy benefits manager has advised
6 2 the covered entity that other reasonable options are available
6 3 and subject to negotiation, the covered entity may have such
6 4 records audited as follows:
6 5 a. An audit may be conducted no more frequently than once
6 6 in each twelve=month period upon not less than thirty business
6 7 days' written notice to the pharmacy benefits manager.
6 8 b. The covered entity may select an independent firm to
6 9 conduct the audit, and the independent firm shall sign a
6 10 confidentiality agreement with the covered entity and the
6 11 pharmacy benefits manager ensuring that all information
6 12 obtained during the audit will be treated as confidential.
6 13 The firm may not use, disclose, or otherwise reveal any such
6 14 information in any manner or form to any person or entity
6 15 except as otherwise permitted under the confidentiality
6 16 agreement. The covered entity shall treat all information
6 17 obtained as a result of the audit as confidential, and may not
6 18 use or disclose such information except as may be otherwise
6 19 permitted under the terms of the contract between the covered
6 20 entity and the pharmacy benefits manager or if ordered by a
6 21 court of competent jurisdiction for good cause shown.
6 22 c. Any audit shall be conducted at the pharmacy benefits
6 23 manager's office where such records are located, during normal
6 24 business hours, without undue interference with the pharmacy
6 25 benefits manager's business activities, and in accordance with
6 26 reasonable audit procedures.
6 27 Sec. 8. NEW SECTION. 155B.8 DISPENSING OF SUBSTITUTE
6 28 PRESCRIPTION DRUG FOR PRESCRIBED DRUG.
6 29 1. With regard to the dispensing of a substitute
6 30 prescription drug for a prescribed drug to a covered
6 31 individual, when the pharmacy benefits manager requests a
6 32 substitution, the following provisions shall apply:
6 33 a. The pharmacy benefits manager may request the
6 34 substitution of a lower=priced generic and therapeutically
6 35 equivalent drug for a higher=priced prescribed drug.
7 1 b. With regard to substitutions in which the substitute
7 2 drug's net cost is more for the covered individual or the
7 3 covered entity than the prescribed drug, the substitution
7 4 shall be made only for medical reasons that benefit the
7 5 covered individual.
7 6 2. If a substitution is being requested pursuant to this
7 7 section, the pharmacy benefits manager shall obtain the
7 8 approval of the prescribing health professional prior to the
7 9 substitution.
7 10 3. A pharmacy benefits manager shall not substitute an
7 11 equivalent drug product contrary to a prescription drug order
7 12 that prohibits a substitution.
7 13 Sec. 9. NEW SECTION. 155B.9 CIVIL ACTION == ENFORCEMENT
7 14 OF CHAPTER == DAMAGES.
7 15 A covered entity may bring a civil action to enforce the
7 16 provisions of this chapter or to seek civil damages for the
7 17 violation of the provisions of this chapter.
7 18 Sec. 10. NEW SECTION. 155B.10 APPLICATION OF CHAPTER TO
7 19 CERTAIN CONTRACTS.
7 20 The provisions of this chapter apply only to pharmacy
7 21 benefits management services contracts entered into or renewed
7 22 on or after July 1, 2005.
7 23 EXPLANATION
7 24 This bill provides for the regulation of pharmacy benefits
7 25 managers. The bill provides definitions, requires that a
7 26 pharmacy benefits manager in this state obtain an annual
7 27 license from the commissioner of insurance, and directs the
7 28 commissioner of insurance to adopt rules related to defining
7 29 of terms, use of prescribed forms, reporting requirements,
7 30 enforcement procedures, and protection of proprietary
7 31 information and trade secrets.
7 32 The bill requires pharmacy benefits managers to perform
7 33 their duties exercising good faith and fair dealing toward the
7 34 covered entity and covered individuals.
7 35 The bill provides that a covered entity may request that a
8 1 pharmacy benefits manager with which it has a pharmacy
8 2 benefits management services contract disclose to the covered
8 3 entity the amount of all rebate revenues and the nature, type,
8 4 and amounts of all other revenues that the pharmacy benefits
8 5 manager receives from each pharmaceutical manufacturer or
8 6 labeler with whom the pharmacy benefits manager has a
8 7 contract. The bill specifies the information that the
8 8 pharmacy benefits manager is to disclose in writing, requires
8 9 the pharmacy benefits manager to provide the information
8 10 requested by the covered entity within 30 days of receipt of
8 11 the request, provides that if requested, the information is to
8 12 be provided no less than once each year, and requires that the
8 13 contract entered into between the pharmacy benefits manager
8 14 and the covered entity specify any fees to be charged for drug
8 15 utilization reports requested by the covered entity.
8 16 The bill prohibits a pharmacy benefits manager from
8 17 contacting a covered individual without the express written
8 18 permission of the covered entity, unless authorized pursuant
8 19 to the terms of its contract with a covered entity.
8 20 The bill provides that with the exception of utilization
8 21 information, a covered entity is required to maintain any
8 22 information disclosed in response to a request as confidential
8 23 and proprietary information, and prohibits the covered entity
8 24 from using any such information for any other purpose or
8 25 disclosing such information to any other person except as
8 26 provided in the bill or in the pharmacy benefits management
8 27 services contract between the parties. The bill provides that
8 28 any covered entity who discloses information in violation of
8 29 the bill is subject to an action for injunctive relief and is
8 30 liable for any damages which are the direct and proximate
8 31 result of such disclosure. The bill provides that the
8 32 prohibition against disclosure of information provided does
8 33 not prohibit a covered entity from disclosing confidential or
8 34 proprietary information to the commissioner of insurance, upon
8 35 request, but also provides that any such information obtained
9 1 by the commissioner is confidential and privileged and is not
9 2 open to public inspection or disclosure.
9 3 The bill provides for auditing of the pharmacy benefits
9 4 manager's records to the extent the information included in
9 5 the records relates directly or indirectly to the covered
9 6 entity's contract.
9 7 The bill provides that a pharmacy benefits manager may
9 8 request a substitution for a prescribed drug to a covered
9 9 individual and provides certain limitations on the
9 10 substitution.
9 11 The bill provides that a covered entity may bring a civil
9 12 action to enforce the provisions of the bill or to seek civil
9 13 damages for a violation of the bill. The bill provides that
9 14 the provisions of the bill apply only to pharmacy benefits
9 15 management services contracts entered into or renewed on or
9 16 after July 1, 2005.
9 17 LSB 1013YH 81
9 18 pf/gg/14