Bill Text: CA AB2348 | 2019-2020 | Regular Session | Amended
Bill Title: Pharmacy benefit management.
Sponsorship: Partisan Bill (Democrat 1)
Status: (Introduced - Dead) 2020-05-05 - Re-referred to Com. on HEALTH. [AB2348 Detail]
Download: California-2019-AB2348-Amended.html
|
Amended
IN
Assembly
May 04, 2020 |
CALIFORNIA LEGISLATURE—
2019–2020 REGULAR SESSION
Assembly Bill
No. 2348
| Introduced by Assembly Member Wood |
February 18, 2020 |
LEGISLATIVE COUNSEL'S DIGEST
AB 2348, as amended, Wood.
Pharmacy benefit management.
Existing law provides for the regulation of health care service plans by the Department of Managed Health Care. A willful violation of those provisions is a crime. Existing law requires health care service plans that cover prescription drug benefits and contract with pharmacy providers and pharmacy benefit managers to meet specified requirements, including requiring pharmacy benefit managers with whom they contract to register with the department and exercise good faith and fair dealing, among other requirements. Under existing law, the department has the authority to enforce these requirements, to promulgate rules or regulations, and to issue guidance by means of all-plan letters or similar instructions, as necessary to implement the department’s enforcement authority. Existing law authorizes the department to contract with a consultant or consultants with relevant expertise to assist
the department in developing needed enforcement guidance.
This bill would make technical, nonsubstantive changes to these provisions.
Existing law provides for the registration and regulation of pharmacy benefit managers, as defined, that contract with health care service plans to manage their prescription drug coverage. Under existing law, a pharmacy benefit manager is required to submit specified information to the department to apply to register with the department.
This bill would require a pharmacy benefit manager to, beginning October 1, 2021, annually report specified information to the department regarding the covered drugs dispensed at a pharmacy and specified
information about the pharmacy benefit manager’s revenue, expenses, health care service plan contracts, the scope of services provided to the health care service plan, and the number of enrollees that the pharmacy benefit manager serves. The bill would require the department to compile this reported information and make the report publicly available, as specified, but would exempt records other than the report from public disclosure. The bill would include in the requirements that health care service plans are required to impose on a pharmacy benefit manager with which they contract, the requirement that the pharmacy benefit manager comply with these reporting requirements. Because a willful violation of these provisions by a health care service plan would be a crime, this bill would impose a state-mandated local program.
The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the
state. Statutory provisions establish procedures for making that reimbursement.
This bill would provide that no reimbursement is required by this act for a specified reason.
Existing constitutional provisions require that a statute that limits the right of access to the meetings of public bodies or the writings of public officials and agencies be adopted with findings demonstrating the interest protected by the limitation and the need for protecting that interest.
This bill would make legislative findings to that effect.
Digest Key
Vote: MAJORITY Appropriation: NO Fiscal Committee:Bill Text
The people of the State of California do enact as follows:
SECTION 1.
Section 1385.004 of the Health and Safety Code is amended to read:1385.004.
(a) A health care service plan that contracts with a pharmacy benefit manager for management of any or all of its prescription drug coverage shall require the pharmacy benefit manager to do all of the following:(1) Comply with the provisions of Section 1385.003. Sections 1385.003 and 1385.008.
(2) Register with the department pursuant to the requirements of this article.
(3) Exercise good faith and fair dealing in the performance of its
contractual duties to a health care service plan.
(4) Comply with the requirements of Chapter 9.5 (commencing with Section 4430) of Division 2 of the Business and Professions Code, as applicable.
(5) Inform all pharmacists under contract with or subject to contracts with the pharmacy benefit manager of the pharmacist’s rights to submit complaints to the department under Section 1371.39 and of the pharmacist’s rights as a provider under Section 1375.7.
(b) A pharmacy benefit manager shall notify a health care service plan in writing of any activity, policy, or practice of the pharmacy benefit manager that directly or indirectly presents a conflict of interest that interferes with the discharge of the pharmacy benefit manager’s duty to the health care service plan to exercise good faith and fair dealing in the
performance of its contractual duties pursuant to subdivision (a).
SEC. 2.
Section 1385.008 is added to the Health and Safety Code, to read:1385.008.
(a) (1) A pharmacy benefit manager subject to Sections 1385.004 and 1385.005 shall report the information described in paragraph (2) to the department no later than October 1 of each year, beginning October 1, 2021.(2) For all covered prescription drugs, including generic drugs, brand name drugs, and specialty drugs dispensed at a plan pharmacy, network pharmacy, or mail order pharmacy for outpatient use, all of the following shall be reported:
(A) A list of the 100 most costly drugs.
(B) The 100 most frequently prescribed drugs.
(C) The 100 highest revenue-producing drugs, grouped by generic, brand, specialty, and other.
(D) For each drug that falls into the above categories:
(i) The pharmacy type used to fill the drug prescription, such as integrated, chain, independent, specialty, and mail order pharmacies.
(ii) Pricing and rebate information, including the amount of rebate the pharmacy benefit manager receives from the manufacturer, the amount of rebate the pharmacy benefit manager passes on to the health plan, the amount the health plan pays the pharmacy benefit manager, and the amount the pharmacy benefit manager pays the pharmacy.
(3) Pharmacy benefit managers shall also report all of the following information to the department:
(A) The health plans with which the pharmacy benefit manager contracts, the scope of services provided to the health plan, and the number of enrollees served by the pharmacy benefit manager.
(B) The pharmacy benefit manager’s revenue, including revenue from manufacturers, health plans, pharmacies, and other revenue.
(C) The pharmacy benefit manager’s expenses, including payments to pharmacies, claims processing, special programs, administration, and other expenses.
(b) The department shall compile the information reported pursuant to subdivision (a) into a report for the public and legislators that demonstrates the overall impact of drug costs on health care premiums, to determine pharmacy benefit manager market impact, and the value pharmacy benefit
managers provide to consumers. The data in the report shall be aggregated and shall not reveal information specific to individual pharmacy benefit managers.
(c) For the purposes of this section, a “specialty drug” is one that exceeds the threshold for a specialty drug under the Medicare Part D program (Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (Public Law 108-173)).
(d) By January 1 of each year, beginning January 1, 2022, the department shall publish on its internet website the report required pursuant to subdivision (b).
(e) After the department publishes the report required pursuant to subdivision (b), the department shall include the report as part of the public meeting required pursuant to subdivision (b) of Section 1385.045.
(f) Except for the report required pursuant to subdivision (b), the department shall keep confidential all of the information provided to the department pursuant to this section, and the information shall be exempt from disclosure under the California Public Records Act (Chapter 3.5 (commencing with Section 6250) of Division 7 of Title 1 of the Government Code).
SEC. 3.
No reimbursement is required by this act pursuant to Section 6 of Article XIII B of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIII B of the California Constitution.SEC. 4.
The Legislature finds and declares that Section 2 of this act, which adds Section 1385.008 to the Health and Safety Code, imposes a limitation on the public’s right of access to the meetings of public bodies or the writings of public officials and agencies within the meaning of Section 3 of Article I of the California Constitution. Pursuant to that constitutional provision, the Legislature makes the following findings to demonstrate the interest protected by this limitation and the need for protecting that interest:In order to protect confidential and
proprietary information submitted by pharmacy benefit managers, it is necessary for that information to remain confidential.
(a)Except as specified in Section 1385.007, the requirements of this article shall become operative on January 1, 2020.
(b)Notwithstanding subdivision (a), the department has the authority to enforce this article, including the authority to adopt, amend, or repeal any rules and regulations, not inconsistent with the laws of this state, as may be necessary for the protection of the public and to implement this article, including, but not limited to, the director’s enforcement authority under this chapter.
(c)Notwithstanding subdivision (a) and Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code, the department may implement, interpret, or make specific this
article by means of all-plan letters or similar instructions to plans and pharmacy benefit managers, without taking regulatory action, until such time as regulations are adopted.
(d)The department may contract with a consultant or consultants with expertise in this subject area to assist the department in developing guidance or instructions described in subdivision (c), or the report required pursuant to Section 1385.007. The department’s contract with a consultant shall include conflict-of-interest provisions to prohibit a person from participating in any report in which the person knows or has reason to know the person has a material financial interest, including, but not limited to, a person who has a consulting or other agreement with a person or organization that would be
affected by the results of the report.
(e)Contracts entered into pursuant to the authority in this article shall be exempt from Chapter 6 (commencing with Section 14825) of Part 5.5 of Division 3 of Title 2 of the Government Code, Section 19130 of the Government Code, and Part 2 (commencing with Section 10100) of Division 2 of the Public Contract Code, and shall be exempt from the review or approval of any division of the Department of General Services.
