HF 2401 (LSB 5093HV (1) 90)

HOUSE FILE 2401

BY  COMMITTEE ON COMMERCE

(SUCCESSOR TO HSB 640)

A BILL FOR

An Act relating to pharmacy benefits managers, pharmacies, and prescription drug pricing, and providing applicability provisions.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:

    Section 1.  Section 510B.1, Code 2024, is amended by adding the following new subsections:
   NEW SUBSECTION.  11A.  “Pass-through pricing” means a model of prescription drug pricing in which payments made by a third-party payor to a pharmacy benefits manager for prescription drugs are any of the following:
   a.  Equivalent to the payments the pharmacy benefits manager makes to the dispensing pharmacy or dispensing health care provider for the prescription drugs, including any professional dispensing fee.
   b.  Passed through by the third-party payor or by the pharmacy benefits manager to the dispensing pharmacy or dispensing health provider, and the payments are not offset by any reconciliation.
   NEW SUBSECTION.  21A.  “Spread pricing” means a model of prescription drug pricing in which a pharmacy benefits manager charges a third-party payor more for prescription drugs dispensed to a covered person than the amount the pharmacy benefits manager reimburses the pharmacy for dispensing the prescription drugs to a covered person.
    Sec. 2.  Section 510B.4, Code 2024, is amended by adding the following new subsection:
   NEW SUBSECTION.  4.  A pharmacy benefits manager, health carrier, health benefit plan, or third-party payor shall not discriminate against a pharmacy or a pharmacist with respect to participation, referral, reimbursement of a covered service, or indemnification if a pharmacist is acting within the scope of the pharmacist’s license and the pharmacy is operating in compliance with all applicable laws and rules.
    Sec. 3.  NEW SECTION.  510B.8D  Pharmacy benefits manager contracts —— spread pricing.
   1.  All contracts executed, amended, adjusted, or renewed on or after July 1, 2024, that apply to prescription drug benefits on or after January 1, 2025, between a pharmacy benefits manager and a third-party payor, or between a person and a third-party payor, shall include all of the following requirements:
   a.  The pharmacy benefits manager shall use pass-through pricing unless paragraph “b” applies.
   b.  The pharmacy benefits manager may use direct or indirect spread pricing only if the difference between the amount the third-party payor pays the pharmacy benefits manager for a prescription drug and the amount the pharmacy benefits manager reimburses the dispensing pharmacy or dispensing health care provider for the prescription drug is passed through by the pharmacy benefits manager to the person contracted to receive third-party payor services.
   c.  Payments received by a pharmacy benefits manager for services provided by the pharmacy benefits manager to a third-party payor or to a pharmacy shall be used or distributed pursuant to the pharmacy benefits manager’s contract with the third-party payor or with the pharmacy, or as otherwise required by law.
   2.  Unless otherwise prohibited by law, subsection 1 shall supersede any contractual terms to the contrary in any contract executed, amended, adjusted, or renewed on or after July 1, 2024, that applies to prescription drug benefits on or after January 1, 2025, between a pharmacy benefits manager and a third-party payor, or between a person and a third-party payor.
    Sec. 4.  NEW SECTION.  510B.8E  Appeals and disputes.
   1.  A pharmacy benefits manager shall provide a reasonable process to allow a pharmacy to appeal a maximum allowable cost or reimbursement rate for a specific prescription drug for any of the following reasons:
   a.  The pharmacy benefits manager violated section 510B.8A.
   b.  The maximum allowable cost or the reimbursement rate is below the pharmacy acquisition cost.
   2.  The appeals process must include all of the following:
   a.  A dedicated telephone number at which a pharmacy may contact the pharmacy benefits manager and speak directly with an individual who is involved with the appeals process.
   b.  A dedicated electronic mail address or internet site for the purpose of submitting an appeal directly to the pharmacy benefits manager.
   c.  A period of no less than thirty business days after the date of a pharmacy’s initial submission of a clean claim during which the pharmacy may initiate an appeal.
   3.  The pharmacy benefits manger shall respond to an appeal within seven business days after the date on which the pharmacy benefits manager receives the appeal.
   a.  If the pharmacy benefits manager grants a pharmacy’s appeal, the pharmacy benefits manager shall do all of the following:
   (1)  Adjust the maximum allowable cost or the reimbursement rate of the prescription drug that is the subject of the appeal and provide the national drug code number that the adjustment is based on to the appealing pharmacy.
   (2)  Permit the appealing pharmacy to reverse and resubmit the claim that is the subject of the appeal.
   (3)  Make the adjustment pursuant to subparagraph (1) applicable to all of the following:
   (a)  Each pharmacy that is under common ownership with the pharmacy that submitted the appeal.
   (b)  Each pharmacy in the state that demonstrates the inability to purchase the prescription drug for less than the established maximum allowable cost or reimbursement rate.
   b.  If the pharmacy benefits manager denies a pharmacy’s appeal, the pharmacy benefits manager shall do all of the following:
   (1)  Provide the appealing pharmacy the national drug code number and the name of a wholesale distributor licensed pursuant to section 155A.17 from which the pharmacy can obtain the prescription drug at or below the maximum allowable cost or reimbursement rate.
   (2)  If the prescription drug identified by the national drug code number provided by the pharmacy benefits manager pursuant to subparagraph (1) is not available below the pharmacy acquisition cost from the wholesale distributor from whom the pharmacy purchases the majority of its prescription drugs for resale, the pharmacy benefits manager shall adjust the maximum allowable cost or the reimbursement rate above the appealing pharmacy’s pharmacy acquisition cost, and permit the pharmacy to reverse and resubmit each claim affected by the pharmacy’s inability to procure the prescription drug at a cost that is equal to or less than the previously appealed maximum allowable cost or the reimbursement rate.
    Sec. 5.  APPLICABILITY.  This Act applies to pharmacy benefits managers that manage a prescription drug benefit in the state on or after July 1, 2024.
EXPLANATION
The inclusion of this explanation does not constitute agreement with
the explanation’s substance by the members of the general assembly.
   This bill relates to pharmacy benefits managers (PBMs), pharmacies, and prescription drug pricing.
   The bill prohibits a PBM from discriminating against a pharmacy or a pharmacist with regards to participation, referral, reimbursement of a covered service, or indemnification if a pharmacist acts within the scope of the pharmacist’s license and the pharmacy is operating in accordance with all applicable laws and rules.
   The bill requires all contracts executed, amended, adjusted, or renewed on or after July 1, 2024, which are applicable to prescription drug benefits on or after January 1, 2025, between a PBM and a third-party payor, or between a person and a third-party payor, to use a pass-through pricing model; to exclude terms that allow for spread pricing unless the entire amount of the difference caused by spread pricing is passed through by the pharmacy benefits manager; and to ensure that payments received in relation to providing services to a third-party payor or a pharmacy are used or distributed pursuant to the PBM’s contract with the third-party payor or with the pharmacy, or as otherwise required. “Pass-through pricing” and “spread pricing” are defined in the bill.
   The bill requires a PBM to provide a process for pharmacies to appeal a maximum allowable cost, or a reimbursement made under a maximum allowable cost list. The requirements for the appeal process are detailed in the bill.
   The bill applies to pharmacy benefits managers that manage a prescription drug benefit in the state on or after July 1, 2024.