Senate File 563 - Reprinted SENATE FILE 563 BY COMMITTEE ON HUMAN RESOURCES (SUCCESSOR TO SF 347) (As Amended and Passed by the Senate April 10, 2019 ) A BILL FOR An Act relating to pharmacy benefit managers and information 1 related to the management of prescription drug benefits, and 2 including applicability provisions. 3 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 4 SF 563 (3) 88 ko/lh/mb

S.F. 563 Section 1. NEW SECTION . 510C.1 Definitions. 1 As used in this chapter unless the context otherwise 2 requires: 3 1. “Administrative fees” means a fee or payment, other than 4 a rebate, under a contract between a pharmacy benefit manager 5 and a pharmaceutical drug manufacturer in connection with the 6 pharmacy benefit manager’s management of a health carrier’s 7 prescription drug benefit, that is paid by a pharmaceutical 8 drug manufacturer to a pharmacy benefit manager or is retained 9 by the pharmacy benefit manager. 10 2. “Aggregate retained rebate percentage” means the 11 percentage of all rebates received by a pharmacy benefit 12 manager that is not passed on to the pharmacy benefit manager’s 13 health carrier clients. 14 3. “Commissioner” means the commissioner of insurance. 15 4. “Covered person” means the same as defined in section 16 514J.102. 17 5. “Formulary” means a complete list of prescription drugs 18 eligible for coverage under a health benefit plan. 19 6. “Health benefit plan” means the same as defined in 20 section 514J.102. 21 7. “Health carrier” means the same as defined in section 22 514J.102. 23 8. “Health carrier administrative service fee” means a fee 24 or payment under a contract between a pharmacy benefit manager 25 and a health carrier in connection with the pharmacy benefit 26 manager’s administration of the health carrier’s prescription 27 drug benefit that is paid by a health carrier to a pharmacy 28 benefit manager or is otherwise retained by a pharmacy benefit 29 manager. 30 9. “Pharmacy benefit manager” means a person who, pursuant 31 to a contract or other relationship with a health carrier, 32 either directly or through an intermediary, manages a 33 prescription drug benefit provided by the health carrier. 34 10. “Prescription drug benefit” means a health benefit 35 -1- SF 563 (3) 88 ko/lh/mb 1/ 4

S.F. 563 plan providing for third-party payment or prepayment for 1 prescription drugs. 2 11. “Rebate” means all discounts and other negotiated price 3 concessions paid directly or indirectly by a pharmaceutical 4 manufacturer or other entity, other than a covered person, 5 in the prescription drug supply chain to a pharmacy benefit 6 manager, and which may be based on any of the following: 7 a. A pharmaceutical manufacturer’s list price for a 8 prescription drug. 9 b. Utilization. 10 c. To maintain a net price for a prescription drug for 11 a specified period of time for the pharmacy benefit manager 12 in the event the pharmaceutical manufacturer’s list price 13 increases. 14 d. Reasonable estimates of the volume of a prescribed drug 15 that will be dispensed by a pharmacy to covered persons. 16 Sec. 2. NEW SECTION . 510C.2 Annual report to the 17 commissioner. 18 1. Each pharmacy benefit manager shall provide a report 19 annually by February 15 to the commissioner that contains 20 all of the following information regarding prescription drug 21 benefits provided to covered persons of each health carrier 22 with whom the pharmacy manager has contracted during the prior 23 calendar year: 24 a. The aggregate dollar amount of all rebates received by 25 the pharmacy benefit manager. 26 b. The aggregate dollar amount of all administrative fees 27 received by the pharmacy benefit manager. 28 c. The aggregate dollar amount of all health carrier 29 administrative service fees received by the pharmacy benefit 30 manager. 31 d. The aggregate dollar amount of all rebates received by 32 the pharmacy benefit manager that the pharmacy benefit manager 33 did not pass through to the health carrier. 34 e. The aggregate amount of all administrative fees received 35 -2- SF 563 (3) 88 ko/lh/mb 2/ 4

S.F. 563 by the pharmacy benefit manager that the pharmacy benefit 1 manager did not pass through to the health carrier. 2 f. The aggregate retained rebate percentage as calculated by 3 dividing the dollar amount in paragraph “d” by the dollar amount 4 in paragraph “a” . 5 g. Across all health carrier clients with whom the pharmacy 6 manager was contracted, the highest and the lowest aggregate 7 retained rebate percentages. 8 2. a. A pharmacy benefit manager shall provide the 9 information pursuant to subsection 1 to the commissioner in a 10 format approved by the commissioner that does not directly or 11 indirectly disclose any of the following: 12 (1) The identity of a specific health carrier. 13 (2) The price charged by a specific pharmaceutical 14 manufacturer for a specific prescription drug or for a class 15 of prescription drugs. 16 (3) The amount of rebates provided for a specific 17 prescription drug or class of prescription drugs. 18 b. Information provided under this section by a pharmacy 19 benefit manager to the commissioner that may reveal the 20 identity of a specific health carrier, the price charged 21 by a specific pharmaceutical manufacturer for a specific 22 prescription drug or class of prescription drugs, or the amount 23 of rebates provided for a specific prescription drug or class 24 of prescription drugs shall be considered a confidential record 25 and be recognized and protected as a trade secret pursuant to 26 section 22.7, subsection 3. 27 3. The commissioner shall publish, within sixty calendar 28 days of receipt, the nonconfidential information received by 29 the commissioner on a publicly accessible internet site. The 30 information shall be made available to the public in a format 31 that complies with subsection 2, paragraph “a” . 32 Sec. 3. NEW SECTION . 510C.3 Rules. 33 The commissioner of insurance shall adopt rules pursuant to 34 chapter 17A as necessary to administer this chapter. 35 -3- SF 563 (3) 88 ko/lh/mb 3/ 4

S.F. 563 Sec. 4. NEW SECTION . 510C.4 Enforcement. 1 The commissioner may take any action within the 2 commissioner’s authority to enforce compliance with this 3 chapter. 4 Sec. 5. NEW SECTION . 510C.5 Applicability. 5 This chapter is applicable to a health benefit plan that is 6 delivered, issued for delivery, continued, or renewed in this 7 state on or after January 1, 2020. 8 -4- SF 563 (3) 88 ko/lh/mb 4/ 4