House File 2465 - Introduced HOUSE FILE 2465 BY PRICHARD , NIELSEN , FORBES , OURTH , GASKILL , JAMES , KURTZ , STECKMAN , JUDGE , BENNETT , MASCHER , DERRY , LENSING , DONAHUE , KURTH , M. SMITH , WOLFE , B. MEYER , OLDSON , KONFRST , BRECKENRIDGE , STAED , McKEAN , HALL , HUNTER , WILBURN , THEDE , WILLIAMS , R. SMITH , McCONKEY , ISENHART , ABDUL-SAMAD , WESSEL-KROESCHELL , SUNDE , MATSON , BEARINGER , BROWN-POWERS , KRESSIG , JACOBY , RUNNING-MARQUARDT , KACENA , and ANDERSON A BILL FOR An Act relating to pharmacy benefit managers and the cost of 1 prescription drug benefits, and including applicability 2 provisions. 3 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 4 TLSB 5406YH (4) 88 ko/rn

H.F. 2465 Section 1. NEW SECTION . 514M.1 Definitions. 1 As used in this chapter, unless the context otherwise 2 requires: 3 1. “Commissioner” means the commissioner of insurance. 4 2. “Cost sharing” means any coverage limit, copayment, 5 coinsurance, deductible, or other out-of-pocket expense imposed 6 on a covered person. 7 3. “Covered person” means the same as defined in section 8 514J.102. 9 4. “Dispenser” means the same as defined in section 124.101. 10 5. “Health benefit plan” means the same as defined in 11 section 514J.102. 12 6. “Health carrier” means the same as defined in section 13 514J.102. 14 7. “Pharmacy benefit manager” means a person who, pursuant 15 to a contract or other relationship with a health carrier, 16 either directly or through an intermediary, manages a 17 prescription drug benefit provided by the health carrier. 18 8. “Prescription drug benefit” means a health benefit plan 19 providing for third-party payment or prepayment of prescription 20 drugs. 21 9. “Rebate” means all discounts and other negotiated price 22 concessions paid directly or indirectly by a pharmaceutical 23 manufacturer or other entity, other than a covered person, 24 in the prescription drug supply chain to a pharmacy benefit 25 manager, and which may be based on any of the following: 26 a. A pharmaceutical manufacturer’s list price for a 27 prescription drug. 28 b. Utilization. 29 c. To maintain a net price for a prescription drug for 30 a specified period of time for the pharmacy benefit manager 31 in the event the pharmaceutical manufacturer’s list price 32 increases. 33 d. Reasonable estimates of the volume of a prescribed drug 34 that will be dispensed by a pharmacy to covered persons. 35 -1- LSB 5406YH (4) 88 ko/rn 1/ 4

H.F. 2465 10. “Trade secret” means the same as defined in section 1 550.2. 2 Sec. 2. NEW SECTION . 514M.2 Cost sharing —— prescription 3 drug benefit. 4 1. If a health carrier provides a prescription drug benefit 5 to a covered person under a health benefit plan, and the 6 prescription drug benefit is managed by a pharmacy benefit 7 manager, the pharmacy benefit manager shall reduce, at the 8 point of sale, any cost sharing for a prescription drug by any 9 of the following: 10 a. A dollar amount that equals not less than fifty-one 11 percent of the aggregate rebates received by the pharmacy 12 benefit manager for that particular prescription drug. 13 b. A dollar amount greater than the dollar amount in 14 paragraph “a” . 15 2. A pharmacy benefit manager shall not increase a 16 participating pharmacy’s, participating pharmacist’s, or other 17 participating dispenser’s cost of participation to offset the 18 reduction in cost sharing pursuant to subsection 1. 19 3. In complying with this section, a pharmacy benefit 20 manager and the pharmacy benefit manager’s agents shall 21 not publish or otherwise disclose, directly or indirectly, 22 any information regarding the actual amount of rebates the 23 pharmacy benefit manager receives for a specific prescription 24 drug or from a specific pharmaceutical manufacturer. Rebate 25 information is a trade secret under chapter 550 and is a 26 confidential record under section 22.7, subsection 3. 27 4. A pharmacy benefit manager shall have a written agreement 28 with any third-party vendor or downstream entity requiring 29 the third-party vendor or downstream entity to comply with 30 subsection 3 if the third-party vendor or downstream entity 31 receives or has access to the pharmacy benefit manager’s rebate 32 information in the course of performing any services on behalf 33 of the pharmacy benefit manager. 34 Sec. 3. NEW SECTION . 514M.3 Rules. 35 -2- LSB 5406YH (4) 88 ko/rn 2/ 4

H.F. 2465 The commissioner of insurance shall adopt rules pursuant to 1 chapter 17A as necessary to administer this chapter. 2 Sec. 4. NEW SECTION . 514M.4 Enforcement. 3 The commissioner may take any action within the 4 commissioner’s authority to enforce compliance with this 5 chapter. 6 Sec. 5. NEW SECTION . 514M.5 Applicability. 7 This chapter is applicable to a health benefit plan that is 8 delivered, issued for delivery, continued, or renewed in this 9 state on or after January 1, 2021. 10 EXPLANATION 11 The inclusion of this explanation does not constitute agreement with 12 the explanation’s substance by the members of the general assembly. 13 This bill relates to pharmacy benefit managers, health 14 carriers, and the cost of prescription drug benefits. 15 “Pharmacy benefit manager” is defined in the bill as a person 16 who, pursuant to a contract or an employment relationship with 17 a health carrier, either directly or through an affiliate or 18 intermediary, manages a prescription drug benefit provided by 19 the health carrier. The bill defines a “health carrier” as an 20 entity subject to the insurance laws and regulations of this 21 state, or subject to the jurisdiction of the commissioner, 22 including an insurance company offering sickness and accident 23 plans, a health maintenance organization, a nonprofit health 24 service corporation, a plan established pursuant to Code 25 chapter 509A for public employees, or any other entity 26 providing a plan of health insurance, health care benefits, or 27 health care services. 28 The bill provides that if a health carrier provides a 29 prescription drug benefit to a covered person under a health 30 benefit plan, and the prescription drug benefit is managed 31 by a pharmacy benefit manager, the pharmacy benefit manager 32 must reduce, at the point of sale, any cost sharing for a 33 prescription drug by either a dollar amount that equals not 34 less than 51 percent of the aggregate rebates received by the 35 -3- LSB 5406YH (4) 88 ko/rn 3/ 4

H.F. 2465 pharmacy benefit manager for that particular prescription 1 drug, or a dollar amount greater than that amount. The 2 bill prohibits a pharmacy benefit manager from increasing a 3 participating pharmacy’s, participating pharmacist’s, or other 4 participating dispenser’s cost of participation to offset the 5 required reduction in cost sharing. 6 A pharmacy benefit manager is prohibited from disclosing 7 any information regarding the actual amount of rebates the 8 pharmacy benefit manager received for a specific drug, or from 9 a specific pharmaceutical manufacturer in order to comply with 10 the cost-sharing requirement. Rebate information is protected 11 as a trade secret and is a confidential record. A pharmacy 12 benefit manager is also required to have an agreement with the 13 pharmacy benefit manager’s third-party vendors and downstream 14 entities as necessary to ensure the information is protected 15 as a trade secret. 16 The bill requires the commissioner of insurance to adopt 17 rules as necessary to administer the provisions of the bill. 18 The bill also allows the commissioner to take any action within 19 the commissioner’s authority to enforce compliance with the 20 provisions of the bill. 21 The bill is applicable to health benefit plans that are 22 delivered, issued for delivery, continued, or renewed in this 23 state on or after January 1, 2021. 24 -4- LSB 5406YH (4) 88 ko/rn 4/ 4