S.F. 2204 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. Section 510B.2, Code 2014, is amended by adding the 10 following new unnumbered paragraph: 11 NEW UNNUMBERED PARAGRAPH . As a condition of complying with 12 this section regarding certification, a pharmacy benefits 13 manager shall enter into and maintain an agreement with 14 the commissioner setting out the terms of disclosure of 15 information, as deemed necessary by the commissioner, relating 16 to rebates received by the pharmacy benefits manager. 17 Sec. 3. NEW SECTION . 510B.8 Pricing methodology for maximum 18 reimbursement amount. 19 1. The commissioner may require a pharmacy benefits manager 20 to submit information to the commissioner related to the 21 pharmacy benefits manager’s pricing methodology for maximum 22 reimbursement amount. 23 2. For purposes of the disclosure of pricing methodology, 24 maximum reimbursement amounts shall be implemented as follows: 25 a. Established for multiple source prescription drugs 26 prescribed after the expiration of any generic exclusivity 27 period. 28 b. Established for any prescription drug with at least two 29 or more A-rated therapeutically equivalent, multiple source 30 prescription drugs with a significant cost difference. 31 c. Determined using comparable prescription drug prices 32 obtained from multiple nationally recognized comprehensive data 33 sources including wholesalers, prescription drug file vendors, 34 and pharmaceutical manufacturers for prescription drugs that 35 -1- LSB 5250SV (4) 85 av/rj 1/ 3

S.F. 2204 are nationally available and available for purchase locally by 1 multiple pharmacies in the state. 2 3. For those prescription drugs to which maximum 3 reimbursement amount pricing applies, a pharmacy benefits 4 manager shall include in a contract with a pharmacy information 5 regarding which of the national compendia is used to 6 obtain pricing data used in the calculation of the maximum 7 reimbursement amount pricing and shall provide a process to 8 allow a pharmacy to comment on, contest, or appeal the maximum 9 reimbursement amount rates or maximum reimbursement amount 10 list. The right to comment on, contest, or appeal the maximum 11 reimbursement amount rates or maximum reimbursement amount list 12 shall be limited in duration and allow for retroactive payment 13 in the event that it is determined that maximum reimbursement 14 amount pricing has been applied incorrectly. 15 Sec. 4. COMPLIANCE PERIOD FOR DISCLOSURE AGREEMENTS. In 16 order to comply with the certification and disclosure 17 requirements of section 510B.2, as amended in this Act, a 18 pharmacy benefits manager shall have one hundred eighty days 19 after the effective date of this Act within which to enter 20 into an agreement with the commissioner regarding disclosure 21 of rebate information. 22 EXPLANATION 23 The inclusion of this explanation does not constitute agreement with 24 the explanation’s substance by the members of the general assembly. 25 This bill relates to the regulation of pharmacy benefits 26 managers. The bill authorizes the commissioner of insurance 27 to require a pharmacy benefits manager to submit information 28 to the commissioner related to the pharmacy benefits manager’s 29 pricing methodology for maximum reimbursement amounts for 30 prescription drugs. “Maximum reimbursement amount” is defined 31 as the maximum reimbursement amount for a therapeutically 32 and pharmaceutically equivalent multiple-source prescription 33 drug that is listed in the United States food and drug 34 administration’s publication entitled approved drug products 35 -2- LSB 5250SV (4) 85 av/rj 2/ 3

S.F. 2204 with therapeutic equivalence evaluations, otherwise known as 1 the orange book. 2 For those prescription drugs to which maximum reimbursement 3 amount pricing applies, a pharmacy benefits manager must 4 include information in a contract with a pharmacy showing how 5 maximum reimbursement amount pricing is calculated and allowing 6 the pharmacy the opportunity to comment on, contest, or appeal 7 the maximum reimbursement amount rates and list. The contract 8 must also allow for retroactive payment if it is determined 9 that maximum reimbursement amount pricing has been applied 10 incorrectly. 11 The bill also allows the commissioner to implement the 12 information submission requirements in relation to generic 13 exclusivity, therapeutically equivalent drugs, and multiple 14 drug manufacturers, wholesalers, and vendors. 15 The bill provides that pharmacy benefits managers must, 16 within six months of the effective date of the bill, enter into 17 an agreement with the commissioner relating to disclosure of 18 rebates received by the pharmacy benefits managers. 19 -3- LSB 5250SV (4) 85 av/rj 3/ 3