HSB 623

This bill relates to pharmacy benefits managers (PBM), pharmacies, and prescription drug benefits. The bill provides that a PBM owes a fiduciary duty to each health carrier (carrier) for whom the PBM manages a prescription drug benefit (drug benefit) provided by the carrier, and shall discharge its duties in accordance with applicable state and federal law. The bill also provides that a carrier shall owe a fiduciary duty to each covered person participating in a health benefit plan (benefit plan) offered or issued by the carrier, and the carrier shall discharge its duties in accordance with applicable state and federal law. The bill prohibits a PBM, carrier, or benefit plan from discriminating against a pharmacy or 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. The bill requires a PBM to allow a pharmacy located in the state to participate in a pharmacy network (network) provided that the pharmacy accepts the same terms and conditions as the PBM imposes on the pharmacies in the network. “Pharmacy benefits manager” is defined in the bill as a person who, pursuant to a contract or other relationship with a carrier, either directly or through an intermediary, manages a drug benefit provided by the carrier. “Pharmacy network”, “pharmacist”, “pharmacy”, “prescription drug benefit”, and “health carrier” are also defined in the bill. The bill prohibits a PBM from assessing, charging, or collecting any form of remuneration that passes from a pharmacy in the network to the PBM including but not limited to claim processing fees, performance-based fees, network participation fees, or accreditation fees. The bill prohibits a covered person from being required to make a cost-sharing payment at the point-of-sale for a prescription drug (drug) in an amount that exceeds the maximum allowable cost (MAC) for that drug. _____ as the maximum amount that a pharmacy will be reimbursed by a PBM or a carrier for a generic drug, brand-name drug, biologic product, or other drug and that may include the average or national average acquisition cost; the average manufacturer price; the average wholesale price; the brand or generic effective rate; discount indexing; federal upper limits; wholesale acquisition cost; or any other term used by a PBM or carrier to establish reimbursement rates for a pharmacy. “Covered person” is defined in the bill. A PBM cannot prohibit a pharmacy from disclosing the availability of a lower-cost drug option to a covered person, or from selling a lower-cost drug option to a covered person. The bill requires that any amount paid by a covered person for a drug in the circumstances detailed in the bill must be applied to any deductible imposed by the covered person’s health benefit plan in accordance with the plan’s coverage documents. Under the bill, a covered person cannot be prohibited from filling a drug order at any pharmacy located in the state if the pharmacy accepts the same terms and conditions as the covered person’s benefit plan. A PBM cannot impose different cost-sharing or additional fees on a covered person based on the pharmacy at which a covered person fills their prescription. A PBM cannot require a covered person, as a condition of payment or reimbursement, to purchase pharmacy services, including drugs, exclusively through a mail-order pharmacy. The bill requires that a covered person’s cost-sharing for a drug shall be calculated at the point-of-sale based on a price that is reduced by an amount equal to at least 100 percent of all rebates that have been received, or that will be received, by the health carrier or a PBM in connection with the dispensing or administration of the drug. A health carrier may decrease a covered person’s cost-sharing by a greater amount. “Rebate” is defined in the bill. _____ calculating the covered person’s total contribution toward the covered person’s cost-sharing. “Cost-sharing” is defined in the bill. The bill allows a pharmacy to decline to dispense a drug to a covered person if, as a result of the maximum allowable cost list (MACL) to which the pharmacy is subject, the pharmacy will be reimbursed less than the pharmacy’s acquisition cost. “Pharmacy acquisition cost” is defined in the bill. “Maximum allowable cost list” is defined in the bill as a list of prescription drugs that includes the MAC for each drug and that is used, directly or indirectly, by a PBM. “Pharmacy acquisition cost” is also defined in the bill. The bill requires that prior to placement of a particular drug on a MACL, a PBM must ensure that the drug is listed as therapeutically and pharmaceutically equivalent in the most recent edition of the “Approved Drug Products with Therapeutic Equivalence Evaluations”, published by the United States food and drug administration; the drug cannot be obsolete or temporarily unavailable; and the drug must be available for purchase by all pharmacies in the state from a national or regional wholesale distributor that is licensed in the state. “Wholesale distributor” is defined in the bill. The bill requires a PBM to provide each pharmacy in a network reasonable access to the MACL to which the pharmacy is subject, and to update each MACL within seven calendar days from the date of an increase of percent or more in the pharmacy acquisition cost of a drug by one or more wholesale distributors doing business in the state. The PBM must also update a MACL within seven calendar days from the date of a change in the methodology, or a change in a value of a variable applied in the methodology, on which the MACL is based. The PBM is also required to provide a process for each pharmacy in a network to receive prompt notice of all changes to a MACL. _____ the drug is administered or dispensed. In addition to the reimbursement, a PBM shall reimburse the pharmacy or pharmacist a professional dispensing fee that is no less than the pharmacy dispensing fee published in the Iowa Medicaid enterprise provider fee schedule on the date that the drug is administered or dispensed. The bill prohibits a PBM from reimbursing a pharmacy located in the state in an amount less than the amount that the PBM reimburses a PBM affiliate for dispensing the same drug as the pharmacy. “Pharmacy benefits manager affiliate” is defined in the bill. The bill provides that after the date of receipt of a clean claim submitted by a pharmacy, a PBM cannot retroactively reduce payment on the claim, either directly or indirectly, except if the claim is found not to be a clean claim during the course of a routine audit. “Clean claim” is defined in the bill. The bill requires a PBM to provide a process for pharmacies to appeal a MAC, or a reimbursement made under a MACL. The requirements for the appeal process are detailed in the bill. The commissioner of insurance (commissioner) is required to take any enforcement action under the commissioner’s authority to enforce compliance with the bill.7, and may suspend or revoke a PBM’s certificate of registration as a third-party administrator upon a finding that the PBM violated any requirements of the bill, or any applicable requirements pertaining to third-party administrators under Code chapter 510. A PBM is subject to the commissioner’s authority to conduct an examination pursuant to Code chapter 507 and a proceeding pursuant to Code chapter 507B. A PBM is also subject to the commissioner’s authority to conduct an examination, audit, or inspection pursuant to Code chapter 510. _____ commissioner conducts an examination, a proceeding, an audit, or an inspection, all information received from the PBM, and all documents related to the examination, proceeding, audit, or inspection are confidential records pursuant to Code chapter 22.4, for which the commissioner may issue an order or impose a penalty. The bill requires the commissioner to adopt rules to administer the bill. If a provision of the bill or its application to any person or circumstance is held invalid, the invalidity does not affect other provisions or applications of the bill that can be given effect without the invalid provision or application.9.10 (enforcement). The bill applies to PBMs that manage a health carrier’s prescription drug benefit in the state on or after the effective date of the bill.