H.F. _____ Section 1. Section 510B.1, Code 2014, is amended by adding 1 the following new subsection: 2 NEW SUBSECTION . 5A. “Maximum reimbursement amount” means 3 the maximum reimbursement amount for a therapeutically and 4 pharmaceutically equivalent multiple-source prescription drug 5 that is listed in the most recent edition of the publication 6 entitled approved drug products with therapeutic equivalence 7 evaluations, published by the United States food and drug 8 administration, otherwise known as the orange book. 9 Sec. 2. NEW SECTION . 510B.8 Proof of financial solvency. 10 1. The commissioner may require a pharmacy benefits manager 11 to submit information to the commissioner related to the 12 pharmacy benefits manager’s financial solvency in accordance 13 with chapter 507, including but not limited to disclosure of 14 pricing methodology and rebate information. 15 2. For purposes of the disclosure of pricing methodology, 16 maximum reimbursement amounts shall be implemented as follows: 17 a. Established for multiple source prescription drugs 18 prescribed after the expiration of any generic exclusivity 19 period. 20 b. Established for any prescription drug with at least two 21 or more A-rated therapeutically equivalent, multiple source 22 prescription drugs with a significant cost difference. 23 c. Determined using comparable prescription drug prices 24 obtained from multiple nationally recognized comprehensive data 25 sources including wholesalers, prescription drug file vendors, 26 and pharmaceutical manufacturers for prescription drugs that 27 are nationally available and available for purchase locally by 28 multiple pharmacies in the state. 29 3. For those prescription drugs to which maximum 30 reimbursement amount pricing applies, a pharmacy benefits 31 manager shall include in a contract with a pharmacy information 32 regarding which of the national compendia is used to 33 obtain pricing data used in the calculation of the maximum 34 reimbursement amount pricing and shall provide a process to 35 -1- LSB 5250HC (5) 85 av/nh 1/ 4

H.F. _____ allow a pharmacy to comment on, contest, or appeal the maximum 1 reimbursement amount rates or maximum reimbursement amount 2 list. The right to comment on, contest, or appeal the maximum 3 reimbursement amount rates or maximum reimbursement amount list 4 shall be limited in duration and allow for retroactive payment 5 in the event that it is determined that maximum reimbursement 6 amount pricing has been applied incorrectly. 7 4. For purposes of the disclosure of rebate information, 8 the commissioner, in conjunction with an examination authorized 9 under this chapter or chapter 507, 507B, or 510, may request, 10 and a pharmacy benefits manager shall disclose to the 11 commissioner, the amount of all rebate revenues and the nature, 12 type, and amounts of all other revenues that the pharmacy 13 benefits manager receives from each pharmaceutical manufacturer 14 or labeler with whom the pharmacy benefits manager has a 15 contract. The pharmacy benefits manager shall disclose to the 16 commissioner, including but not limited to all of the following 17 information: 18 a. Both the aggregate amount, and the specific amounts for 19 each prescription drug, of all rebates and other retrospective 20 utilization discounts received by the pharmacy benefits 21 manager, directly or indirectly, from each pharmaceutical 22 manufacturer or labeler that are earned in connection with the 23 dispensing of prescription drugs to covered individuals of 24 the health benefit plans issued by a pharmacy or for which a 25 pharmacy is the designated administrator. 26 b. The nature, type, and amount of all other revenue 27 received by the pharmacy benefits manager directly or 28 indirectly from each pharmaceutical manufacturer or labeler for 29 any other products or services provided to the pharmaceutical 30 manufacturer or labeler by the pharmacy benefits manager with 31 respect to programs that a pharmacy offers or provides to 32 covered individuals. 33 c. Any prescription drug utilization information requested 34 by a pharmacy relating to covered individuals. 35 -2- LSB 5250HC (5) 85 av/nh 2/ 4

H.F. _____ EXPLANATION 1 The inclusion of this explanation does not constitute agreement with 2 the explanation’s substance by the members of the general assembly. 3 This bill relates to the regulation of pharmacy benefit 4 managers. The bill authorizes the commissioner of insurance 5 to require a pharmacy benefits manager to submit information 6 to the commissioner related to the pharmacy benefit manager’s 7 financial solvency, including information disclosing 8 pricing methodology and rebates received, pursuant to the 9 commissioner’s power to examine insurance companies under Code 10 chapter 507. 11 The bill provides that for purposes of the disclosure of 12 pricing methodology, a pharmacy benefits manager must use 13 maximum reimbursement amounts that meet specified criteria. 14 “Maximum reimbursement amount” is defined as the maximum 15 reimbursement amount for a therapeutically and pharmaceutically 16 equivalent multiple-source prescription drug that is listed in 17 the United States food and drug administration’s publication 18 entitled approved drug products with therapeutic equivalence 19 evaluations, otherwise known as the orange book. 20 For those prescription drugs to which maximum reimbursement 21 amount pricing applies, a pharmacy benefits manager must 22 include information in a contract with a pharmacy showing how 23 maximum reimbursement amount pricing is calculated and allowing 24 the pharmacy the opportunity to comment on, contest, or appeal 25 the maximum reimbursement amount rates and list. The contract 26 must also allow for retroactive payment if it is determined 27 that maximum reimbursement amount pricing has been applied 28 incorrectly. 29 The bill also provides that for purposes of disclosure of 30 rebate information, the commissioner in conjunction with an 31 examination authorized under Code chapter 507 (examination 32 of insurance companies), 507B (regulation of insurance trade 33 practices), 510 (regulation of managing general agents and 34 third-party administrators), or 510B (regulation of pharmacy 35 -3- LSB 5250HC (5) 85 av/nh 3/ 4

H.F. _____ benefits managers), can request information from a pharmacy 1 benefits manager concerning the amount of all rebate revenues, 2 and the nature, type, and amounts of all other revenues that 3 the pharmacy benefits manager receives from each pharmaceutical 4 manufacturer or labeler with whom the pharmacy benefits 5 manager has a contract. The bill specifies information which 6 a pharmacy benefits manager must disclose pursuant to such a 7 request by the commissioner. 8 -4- LSB 5250HC (5) 85 av/nh 4/ 4