Bill Text: IA HF2553 | 2019-2020 | 88th General Assembly | Introduced
Bill Title: A bill for an act related to pharmacy benefits managers and prescription drug prices, and including applicability provisions. (Formerly HSB 685.)
Spectrum: Committee Bill
Status: (Engrossed - Dead) 2020-03-12 - Subcommittee: Koelker, Miller-Meeks, and Quirmbach. S.J. 613. [HF2553 Detail]
Download: Iowa-2019-HF2553-Introduced.html
House
File
2553
-
Introduced
HOUSE
FILE
2553
BY
COMMITTEE
ON
HUMAN
RESOURCES
(SUCCESSOR
TO
HSB
685)
A
BILL
FOR
An
Act
related
to
pharmacy
benefits
managers
and
prescription
1
drug
prices,
and
including
applicability
provisions.
2
BE
IT
ENACTED
BY
THE
GENERAL
ASSEMBLY
OF
THE
STATE
OF
IOWA:
3
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Section
1.
Section
510B.1,
Code
2020,
is
amended
to
read
as
1
follows:
2
510B.1
Definitions.
3
As
used
in
this
chapter
,
unless
the
context
otherwise
4
requires:
5
1.
“Biological
product”
means
the
same
as
defined
in
section
6
155A.3.
7
2.
“Clean
claim”
means
a
claim
that
has
no
defect
or
8
impropriety,
including
a
lack
of
any
required
substantiating
9
documentation,
or
other
circumstances
requiring
special
10
treatment,
that
prevents
timely
payment
from
being
made
on
the
11
claim.
12
1.
3.
“Commissioner”
means
the
commissioner
of
insurance.
13
2.
“Covered
entity”
means
a
nonprofit
hospital
or
medical
14
services
corporation,
health
insurer,
health
benefit
plan,
or
15
health
maintenance
organization;
a
health
program
administered
16
by
a
department
or
the
state
in
the
capacity
of
provider
of
17
health
coverage;
or
an
employer,
labor
union,
or
other
group
of
18
persons
organized
in
the
state
that
provides
health
coverage.
19
“Covered
entity”
does
not
include
a
self-funded
health
coverage
20
plan
that
is
exempt
from
state
regulation
pursuant
to
the
21
federal
Employee
Retirement
Income
Security
Act
of
1974
22
(ERISA)
,
as
codified
at
29
U.S.C.
§1001
et
seq.
;
a
plan
issued
23
for
health
coverage
for
federal
employees;
or
a
health
plan
24
that
provides
coverage
only
for
accidental
injury,
specified
25
disease,
hospital
indemnity,
Medicare
supplemental,
disability
26
income,
or
long-term
care,
or
other
limited
benefit
health
27
insurance
policy
or
contract.
28
3.
“Covered
individual”
means
a
member,
participant,
29
enrollee,
contract
holder,
policyholder,
or
beneficiary
of
a
30
covered
entity
who
is
provided
health
coverage
by
the
covered
31
entity,
and
includes
a
dependent
or
other
person
provided
32
health
coverage
through
a
policy,
contract,
or
plan
for
a
33
covered
individual.
34
4.
“Generic
drug”
means
a
chemically
equivalent
copy
of
a
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brand-name
drug
with
an
expired
patent.
1
5.
“Labeler”
means
a
person
that
receives
prescription
2
drugs
from
a
manufacturer
or
wholesaler
and
repackages
those
3
drugs
for
later
retail
sale
and
that
has
a
labeler
code
from
4
the
federal
food
and
drug
administration
pursuant
to
21
C.F.R.
5
§207.20
.
6
6.
“Maximum
reimbursement
amount”
means
the
maximum
7
reimbursement
amount
for
a
therapeutically
and
pharmaceutically
8
equivalent
multiple-source
prescription
drug
that
is
listed
in
9
the
most
recent
edition
of
the
publication
entitled
“Approved
10
Drug
Products
with
Therapeutic
Equivalence
Evaluations”,
11
published
by
the
United
States
food
and
drug
administration,
12
otherwise
known
as
the
orange
book.
13
4.
“Contracted
pharmacy”
means
a
pharmacy
that
participates
14
in
a
pharmacy
benefits
manager’s
network
through
a
contract
15
with
any
of
the
following:
16
a.
A
pharmacy
benefits
manager.
17
b.
A
pharmacy
services
administration
organization.
18
c.
A
pharmacy
group
purchasing
organization.
19
5.
“Cost-sharing”
means
any
coverage
limit,
copayment,
20
coinsurance,
deductible,
or
other
out-of-pocket
expense
21
obligation
imposed
on
a
covered
person
by
a
health
benefit
plan
22
providing
for
third-party
payment
or
prepayment
of
health
or
23
medical
expenses.
24
6.
“Covered
person”
means
a
policyholder,
subscriber,
or
25
other
person
participating
in
a
health
benefit
plan
that
covers
26
prescription
drugs.
27
7.
“Drug”
means
all
medicines
and
preparations
recognized
28
in
the
official
United
States
Pharmacopeia
or
the
official
29
National
Formulary
as
substances
intended
to
be
used
for
the
30
care,
mitigation,
or
prevention
of
disease.
31
8.
“Generically
equivalent
drug”
means
a
drug
that
is
32
pharmaceutically
and
therapeutically
equivalent
to
a
drug
that
33
is
prescribed.
34
9.
“Health
benefit
plan”
means
the
same
as
defined
in
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section
514J.102.
1
10.
“Health
care
professional”
means
the
same
as
defined
in
2
section
514J.102.
3
11.
“Health
carrier”
means
the
same
as
defined
in
section
4
514J.102.
5
12.
“Maximum
allowable
cost
list”
means
a
list
of
drugs
6
or
other
methodology
used
by
a
pharmacy
benefits
manager,
7
directly
or
indirectly,
setting
the
maximum
allowable
payment
8
to
a
pharmacy
for
a
generic
drug,
brand-name
drug,
biological
9
product,
or
other
prescription
drug.
“Maximum
allowable
cost
10
list”
includes
without
limitation
all
of
the
following:
11
a.
Average
acquisition
cost,
including
the
national
average
12
drug
acquisition
cost.
13
b.
Average
manufacturer
price.
14
c.
Average
wholesale
price.
15
d.
Brand
effective
rate.
16
e.
Generic
effective
rate.
17
f.
Discount
indexing.
18
g.
Federal
upper
limits.
19
h.
Wholesale
acquisition
cost.
20
i.
Any
other
term
that
a
pharmacy
benefits
manager
or
a
21
health
carrier
may
use
to
establish
reimbursement
rates
to
a
22
pharmacy
for
pharmacist
services.
23
13.
“Pharmaceutically
equivalent”
means
drugs
that
have
24
identical
amounts
of
the
same
active
chemical
ingredients
in
25
the
same
dosage
form
and
that
meet
the
identical,
compendious,
26
or
other
applicable
standards
of
strength,
quality,
and
purity
27
according
to
the
official
United
States
Pharmacopeia
or
other
28
nationally
recognized
compendium.
29
14.
“Pharmacist
services”
means
products,
goods,
and
30
services,
or
any
combination
of
products,
goods,
and
services,
31
provided
as
part
of
the
practice
of
pharmacy.
32
7.
15.
“Pharmacy”
means
pharmacy
the
same
as
defined
in
33
section
155A.3
.
34
16.
“Pharmacy
acquisition
cost”
means
the
amount
that
a
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pharmaceutical
wholesaler
charges
for
a
drug
as
listed
on
the
1
pharmacy’s
billing
invoice.
2
17.
“Pharmacy
benefits
manager
affiliate”
means
a
pharmacy
3
or
pharmacist
that
directly
or
indirectly,
through
one
or
more
4
intermediaries,
owns
or
controls,
is
owned
or
controlled
by,
or
5
is
under
common
ownership
or
control
with
a
pharmacy
benefits
6
manager.
7
8.
18.
“Pharmacy
benefits
management
services
”
means
the
8
administration
or
management
of
prescription
drug
benefits
9
provided
by
a
covered
entity
under
the
terms
and
conditions
10
of
the
contract
between
the
pharmacy
benefits
manager
and
the
11
covered
entity.
provision
of
any
of
the
following
services
on
12
behalf
of
a
health
carrier:
13
a.
The
procurement
of
prescription
drugs
at
a
negotiated
14
rate
for
dispensing
within
this
state.
15
b.
The
processing
of
prescription
drug
claims.
16
c.
The
administration
of
payments
related
to
prescription
17
drug
claims.
18
9.
19.
“Pharmacy
benefits
manager”
means
a
person
who
19
performs
pharmacy
benefits
management
services
,
pursuant
to
a
20
contract
or
other
relationship
with
a
health
carrier,
either
21
directly
or
through
an
intermediary,
provides
pharmacy
benefits
22
management
services
for
a
health
carrier
.
“Pharmacy
benefits
23
manager”
includes
a
person
acting
on
behalf
of
a
pharmacy
24
benefits
manager
in
a
contractual
or
employment
relationship
in
25
the
performance
of
pharmacy
benefits
management
services
for
a
26
covered
entity.
“Pharmacy
benefits
manager”
does
not
include
27
a
health
insurer
licensed
in
the
state
if
the
health
insurer
28
or
its
subsidiary
is
providing
pharmacy
benefits
management
29
services
exclusively
to
its
own
insureds,
or
a
public
30
self-funded
pool
or
a
private
single
employer
self-funded
31
plan
that
provides
such
benefits
or
services
directly
to
its
32
beneficiaries.
33
20.
“Pharmacy
services
administrative
organization”
means
34
an
organization
that
assists
pharmacies,
pharmacy
benefits
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managers,
or
third-party
payers
in
achieving
administrative
1
efficiencies,
including
contracting
and
payment
efficiencies.
2
10.
21.
“Prescription
drug”
means
prescription
drug
the
3
same
as
defined
in
section
155A.3
.
4
11.
22.
“Prescription
drug
order”
means
prescription
drug
5
order
the
same
as
defined
in
section
155A.3
.
6
23.
“Spread
pricing”
means
a
model
of
prescription
drug
7
pricing
in
which
a
pharmacy
benefits
manager
charges
a
health
8
benefit
plan
a
contracted
price
for
a
prescription
drug,
and
9
the
contracted
price
for
the
prescription
drug
differs
from
the
10
amount
the
pharmacy
benefits
manager
directly
or
indirectly
11
pays
a
pharmacy
for
the
same
prescription
drug.
12
24.
“Therapeutically
equivalent”
means
drugs
from
the
same
13
therapeutic
class
that
if
administered
in
appropriate
amounts
14
will
provide
the
same
therapeutic
effect,
identical
in
duration
15
and
intensity.
16
Sec.
2.
Section
510B.2,
Code
2020,
is
amended
to
read
as
17
follows:
18
510B.2
Certification
as
a
third-party
administrator
required
.
19
A
pharmacy
benefits
manager
doing
business
in
this
state
20
shall
obtain
a
certificate
of
registration
as
a
third-party
21
administrator
under
chapter
510
pursuant
to
section
510.21
,
and
22
the
provisions
relating
to
a
third-party
administrator
pursuant
23
to
chapter
510
shall
apply
to
a
pharmacy
benefits
manager.
24
Sec.
3.
Section
510B.4,
Code
2020,
is
amended
to
read
as
25
follows:
26
510B.4
Performance
of
duties
——
good
faith
——
conflict
of
27
interest.
28
1.
A
pharmacy
benefits
manager
shall
perform
the
pharmacy
29
benefits
manager’s
duties
exercising
exercise
good
faith
and
30
fair
dealing
in
the
performance
of
its
the
pharmacy
benefits
31
manager’s
contractual
obligations
toward
the
covered
entity
a
32
health
carrier
or
a
pharmacy
.
33
2.
A
pharmacy
benefits
manager
shall
notify
the
covered
34
entity
a
health
carrier
or
a
pharmacy
in
writing
of
any
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activity,
policy,
practice
ownership
interest,
or
affiliation
1
of
the
pharmacy
benefits
manager
that
presents
any
conflict
of
2
interest.
3
Sec.
4.
Section
510B.5,
Code
2020,
is
amended
to
read
as
4
follows:
5
510B.5
Contacting
covered
individual
——
requirements.
6
A
pharmacy
benefits
manager,
unless
authorized
pursuant
to
7
the
terms
of
its
contract
with
a
covered
entity
health
carrier
,
8
shall
not
contact
any
covered
individual
person
without
9
the
express
written
permission
of
the
covered
entity
health
10
carrier
.
11
Sec.
5.
Section
510B.6,
Code
2020,
is
amended
to
read
as
12
follows:
13
510B.6
Dispensing
of
substitute
prescription
drug
for
14
prescribed
drug
drugs
.
15
1.
The
following
provisions
shall
apply
when
if
a
pharmacy
16
benefits
manager
requests
the
dispensing
of
a
substitute
17
prescription
drug
for
a
prescribed
prescription
drug
prescribed
18
to
a
covered
individual
person
:
19
a.
The
pharmacy
benefits
manager
may
request
the
20
substitution
of
a
lower
priced
generic
and
therapeutically
21
equivalent
prescription
drug
for
a
higher
priced
prescribed
22
prescription
drug.
23
b.
If
the
substitute
prescription
drug’s
net
cost
to
24
the
covered
individual
person
or
covered
entity
the
health
25
carrier
exceeds
the
cost
of
the
prescribed
prescription
drug,
26
the
substitution
shall
be
made
only
for
medical
reasons
that
27
benefit
the
covered
individual
person
as
determined
by
the
28
covered
person’s
prescribing
health
care
professional
.
29
2.
A
pharmacy
benefits
manager
shall
obtain
the
approval
of
30
the
prescribing
practitioner
health
care
professional
prior
to
31
requesting
any
substitution
under
this
section
.
32
3.
A
pharmacy
benefits
manager
shall
not
substitute
an
33
equivalent
prescription
drug
contrary
to
a
prescription
drug
34
order
that
prohibits
a
substitution.
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Sec.
6.
Section
510B.7,
Code
2020,
is
amended
by
striking
1
the
section
and
inserting
in
lieu
thereof
the
following:
2
510B.7
Health
carrier
termination
of
contract
——
notice.
3
If
a
pharmacy
benefits
manager
receives
notice
from
a
health
4
carrier
of
termination
of
the
health
carrier’s
contract
with
5
the
pharmacy
benefits
manager,
the
pharmacy
benefits
manager
6
shall
notify
all
contracted
pharmacies
of
the
effective
date
7
of
the
termination
within
ten
working
days
of
receipt
of
the
8
notice.
9
Sec.
7.
Section
510B.8,
Code
2020,
is
amended
by
striking
10
the
section
and
inserting
in
lieu
thereof
the
following:
11
510B.8
Maximum
allowable
cost
lists
——
requirements.
12
1.
Before
a
pharmacy
benefits
manager
places
or
continues
a
13
particular
drug
on
a
maximum
allowable
cost
list,
all
of
the
14
following
requirements
must
be
satisfied:
15
a.
If
the
drug
is
a
generically
equivalent
drug,
the
16
drug
shall
be
listed
as
therapeutically
equivalent
and
17
pharmaceutically
equivalent
“A”
or
“B”
rated
in
the
most
recent
18
edition
of
the
publication
entitled
“Approved
Drug
Products
19
with
Therapeutic
Equivalence
Evaluations”,
published
by
the
20
United
States
food
and
drug
administration,
otherwise
known
as
21
the
orange
book,
or
have
an
NR
or
NA
rating
by
a
nationally
22
recognized
reference.
23
b.
The
drug
shall
be
available
for
purchase
by
each
pharmacy
24
in
this
state
from
a
national
or
regional
wholesaler
licensed
25
pursuant
to
section
155A.17.
26
c.
The
drug
shall
not
be
obsolete.
27
2.
A
pharmacy
benefits
manager
shall
comply
with
all
of
the
28
following
requirements:
29
a.
The
pharmacy
benefits
manager
must
provide
each
pharmacy
30
subject
to
a
maximum
allowable
cost
list
access
to
the
maximum
31
allowable
cost
list.
32
b.
The
pharmacy
benefits
manager
must
update
the
maximum
33
allowable
cost
list
within
seven
calendar
days
of
any
of
the
34
following
dates:
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(1)
The
date
of
an
increase
in
the
pharmacy
acquisition
1
cost.
2
(2)
The
date
of
a
change
in
the
methodology
on
which
the
3
maximum
allowable
cost
list
is
based.
4
(3)
The
date
of
a
change
in
any
value
of
any
variable
5
involved
in
the
methodology
on
which
the
maximum
allowable
cost
6
list
is
based.
7
c.
The
pharmacy
benefits
manager
must
provide
a
process
8
for
each
pharmacy
subject
to
the
maximum
allowable
cost
list
9
to
receive
prompt
notification
of
any
update
to
the
maximum
10
allowable
cost
list.
11
d.
The
pharmacy
benefits
manager
shall
not
reimburse
any
12
pharmacy
in
this
state
for
a
prescription
drug
in
an
amount
13
less
than
the
amount
that
the
pharmacy
benefits
manager
14
reimburses
a
pharmacy
benefits
manager
affiliate
for
providing
15
the
same
prescription
drug.
The
amount
shall
be
calculated
on
16
a
per
unit
basis
based
on
the
same
generic
product
identifier
17
or
generic
code
number.
18
3.
A
pharmacy
may
decline
to
provide
pharmacist
services
19
to
a
pharmacy
benefits
manager
or
to
a
covered
person
if,
as
a
20
result
of
a
maximum
allowable
cost
list,
a
pharmacy
is
to
be
21
paid
less
than
that
pharmacy’s
pharmacy
acquisition
cost
for
22
the
pharmacist
services.
23
Sec.
8.
NEW
SECTION
.
510B.8A
Maximum
allowable
cost
lists
24
——
appeal
procedure.
25
1.
A
pharmacy
benefits
manager
shall
provide
an
appeal
26
procedure
to
allow
a
pharmacy
to
challenge
a
maximum
allowable
27
cost
list,
and
any
reimbursement
made
under
a
maximum
allowable
28
cost
list,
for
a
specific
drug
for
any
of
the
following
29
reasons:
30
a.
Failure
to
meet
the
requirements
of
section
510B.8.
31
b.
The
maximum
allowable
cost
falls
below
the
pharmacy
32
acquisition
cost.
33
2.
The
appeal
procedure
shall
include
all
of
the
following:
34
a.
A
dedicated
telephone
number,
email
address,
and
internet
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site
for
the
pharmacy
to
submit
appeals.
1
b.
The
ability
to
submit
an
appeal
directly
to
the
2
pharmacy
benefits
manager
or
directly
to
the
pharmacy
service
3
administration
organization.
4
c.
A
time
limit
of
no
less
than
thirty
business
days
to
5
submit
an
appeal
from
the
date
of
any
of
the
following:
6
(1)
Access
to
a
maximum
allowable
cost
list
pursuant
to
7
section
510B.8,
subsection
2,
paragraph
“a”
.
8
(2)
A
reimbursement
that
falls
below
the
pharmacy
9
acquisition
cost
for
a
drug.
10
3.
A
pharmacy
benefits
manager
shall
respond
in
writing
to
11
a
pharmacy’s
appeal
within
ten
business
days
of
the
date
of
12
receipt
of
the
appeal.
13
4.
If
a
pharmacy
benefits
manager
upholds
a
pharmacy’s
14
appeal,
the
pharmacy
benefits
manager
shall
comply
with
all
of
15
the
following:
16
a.
The
pharmacy
benefits
manager
shall
permit
the
17
challenging
pharmacy
to
reverse
and
rebill
the
claim
in
18
question.
19
b.
The
pharmacy
benefits
manager
shall
make
a
change
in
the
20
maximum
allowable
cost
list
for
the
drug
that
is
the
subject
of
21
the
appeal
so
that
the
reimbursement
for
such
drug
is
at
least
22
equal
to
the
pharmacy
acquisition
cost.
23
c.
The
pharmacy
benefits
manager
shall
provide
the
pharmacy
24
with
the
national
drug
code
that
is
the
basis
for
the
increase
25
or
change
in
the
price
of
the
drug.
26
d.
The
pharmacy
benefits
manager
shall
make
the
changes
27
pursuant
to
paragraphs
“a”
and
“b”
immediately
effective
for
all
28
similarly
situated
pharmacies
in
this
state.
29
5.
If
a
pharmacy
benefits
manager
denies
a
pharmacy’s
30
appeal,
the
pharmacy
benefits
manager
shall
comply
with
all
of
31
the
following:
32
a.
The
pharmacy
benefits
manager
shall
provide
the
appealing
33
pharmacy
the
national
drug
code
and
the
name
of
a
national
or
34
regional
wholesaler
licensed
pursuant
to
section
155A.17
that
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has
the
drug
currently
in
stock
at
a
price
below
the
maximum
1
allowable
cost
list.
2
b.
If
the
national
drug
code
provided
by
the
pharmacy
3
benefits
manager
is
not
available
pursuant
to
paragraph
4
“a”
,
the
pharmacy
benefits
manager
shall
adjust
the
maximum
5
allowable
cost
list
for
the
drug
that
is
the
basis
of
the
6
appeal
to
a
price
greater
than
the
appealing
pharmacy’s
7
pharmacy
acquisition
cost
for
that
drug,
and
permit
the
8
appealing
pharmacy
to
reverse
and
rebill
each
claim
affected
9
by
the
pharmacy’s
inability
to
procure
the
drug
at
a
cost
that
10
is
equal
to
or
less
than
the
previously
challenged
maximum
11
allowable
cost.
12
Sec.
9.
NEW
SECTION
.
510B.8B
Prohibited
actions
and
13
activities.
14
1.
A
pharmacy
benefits
manager
or
a
health
carrier
shall
15
not,
as
a
condition
of
payment,
reimbursement,
or
network
16
participation,
require
any
of
the
following
of
a
pharmacy:
17
a.
To
meet
accreditation,
certification,
or
credentialing
18
standards
that
are
inconsistent
with,
more
stringent
than,
or
19
in
addition
to
the
federal
and
state
requirements
applicable
to
20
a
pharmacy
in
this
state.
21
b.
To
satisfy
any
insurance,
surety
bond,
or
other
22
financial
guarantee
requirements
that
are
inconsistent
with,
23
more
stringent
than,
or
in
addition
to
the
federal
and
state
24
requirements
applicable
to
a
pharmacy
in
this
state.
25
2.
A
pharmacy
benefits
manager
or
a
health
carrier
shall
not
26
directly
or
indirectly
charge
or
hold
a
pharmacy
responsible
27
for
a
fee
related
to
a
claim
in
any
of
the
following
28
circumstances:
29
a.
The
fee
is
not
readily
apparent
to
the
pharmacy
at
the
30
time
the
pharmacy
submits
the
claim.
31
b.
The
fee
is
not
reported
on
the
remittance
advice
of
an
32
adjudicated
claim.
33
c.
The
fee
is
not
processed
at
the
time
a
claim
is
34
adjudicated
at
the
point
of
sale.
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3.
A
pharmacy
benefits
manager
is
prohibited
from
1
conducting
spread
pricing
in
this
state.
2
4.
A
pharmacy
benefits
manager
shall
not
terminate
a
3
contracted
pharmacy
solely
on
the
basis
that
the
contracted
4
pharmacy
offers
or
provides
store-direct
delivery
or
mail
5
prescriptions
as
an
ancillary
service
to
a
covered
person.
6
Sec.
10.
Section
510B.9,
Code
2020,
is
amended
to
read
as
7
follows:
8
510B.9
Submission,
approval,
and
use
of
prior
Prior
9
authorization
form
.
10
A
pharmacy
benefits
manager
shall
file
with
and
have
11
approved
by
the
commissioner
a
single
prior
authorization
12
form
as
provided
in
section
505.26
comply
with
all
applicable
13
prior
authorization
requirements
pursuant
to
section
505.26
.
14
A
pharmacy
benefits
manager
shall
use
the
single
prior
15
authorization
form
as
provided
in
section
505.26
.
16
Sec.
11.
Section
510B.10,
Code
2020,
is
amended
by
striking
17
the
section
and
inserting
in
lieu
thereof
the
following:
18
510B.10
Disclosure
of
lower-cost
options
——
pharmacists.
19
1.
A
pharmacy
benefits
manager
shall
not
require
a
covered
20
person
to
make
a
cost-sharing
payment
at
the
point
of
sale
21
for
a
prescription
drug
in
an
amount
that
exceeds
the
amount
22
the
covered
person
would
pay
for
the
prescription
drug
if
the
23
covered
person
purchased
the
prescription
drug
without
using
24
the
covered
person’s
health
benefit
plan.
25
2.
A
pharmacy
benefits
manager
shall
not
prohibit
a
26
contracted
pharmacy
from
disclosing,
and
shall
not
apply
a
27
penalty
or
any
other
type
of
disincentive
to
a
contracted
28
pharmacy
that
discloses,
lower-cost
prescription
drug
options
29
to
a
covered
person
including
those
options
that
are
available
30
to
the
covered
person
if
the
covered
person
purchases
the
31
prescription
drug
without
using
the
covered
person’s
health
32
benefit
plan.
33
3.
Any
amount
paid
by
a
covered
person
for
a
prescription
34
drug
purchased
without
using
the
covered
person’s
health
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benefit
plan
pursuant
to
subsection
2
shall
be
applied
to
any
1
deductible
imposed
by
the
covered
person’s
health
benefit
plan
2
in
accordance
with
the
covered
person’s
health
benefit
plan
3
coverage
documents.
4
4.
Any
provision
of
a
contract
that
conflicts
with
5
subsection
1
or
2
shall
be
void
and
unenforceable.
6
5.
A
violation
of
this
section
shall
be
an
unlawful
practice
7
and
shall
be
a
violation
of
section
507B.4.
8
Sec.
12.
NEW
SECTION
.
510B.11
Clean
claims
——
retroactive
9
reductions.
10
1.
After
the
date
of
receipt
of
a
clean
claim
for
payment
11
made
by
a
contracted
pharmacy,
a
pharmacy
benefits
manager
12
shall
not
retroactively
reduce
payment
on
the
claim,
either
13
directly
or
indirectly,
through
an
aggregated
effective
rate,
14
direct
or
indirect
remuneration,
a
quality
assurance
program,
15
or
any
other
means,
except
if
the
claim
is
found
not
to
be
16
a
clean
claim
during
the
course
of
a
routine
audit
performed
17
pursuant
to
an
agreement
between
the
pharmacy
benefits
manager
18
and
the
contracted
pharmacy.
19
2.
If
a
contracted
pharmacy
adjudicates
a
claim
at
the
point
20
of
sale,
the
reimbursement
amount
provided
to
the
contracted
21
pharmacy
by
the
pharmacy
benefits
manager
shall
constitute
a
22
final
reimbursement
amount.
23
3.
Nothing
in
this
section
shall
be
construed
to
prohibit
24
any
retroactive
increase
in
payment
to
a
contracted
pharmacy
25
pursuant
to
a
contract
between
a
pharmacy
benefits
manager
and
26
a
pharmacy
services
administration
organization,
or
between
a
27
pharmacy
benefits
manager
and
a
pharmacy.
28
4.
A
pharmacy
benefits
manager
shall
not
recoup
funds
from
a
29
contracted
pharmacy
in
connection
with
any
claims
for
which
the
30
contracted
pharmacy
has
already
been
paid
unless
the
recoupment
31
is
a
result
of
any
of
the
following:
32
a.
The
recoupment
is
otherwise
permitted
or
required
by
law.
33
b.
The
recoupment
is
based
on
an
audit
performed
pursuant
34
to
a
contract
between
the
pharmacy
benefits
manager
and
the
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contracted
pharmacy.
1
c.
The
recoupment
is
a
result
of
an
audit
performed
pursuant
2
to
a
contract
between
the
pharmacy
benefits
manager
and
a
3
designated
pharmacy
services
administrative
organization.
4
5.
The
provisions
of
this
section
shall
not
apply
to
5
an
investigative
audit
of
a
contracted
pharmacy’s
records
6
conducted
by
a
pharmacy
benefits
manager
in
any
of
the
7
following
circumstances:
8
a.
Fraud,
waste,
abuse,
or
other
intentional
misconduct
is
9
indicated
by
a
review
of
the
contracted
pharmacy’s
claims
data
10
or
statements.
11
b.
Other
investigative
methods
utilized
by
the
pharmacy
12
benefits
manager
indicate
that
the
contracted
pharmacy
is
13
or
has
been
engaged
in
criminal
wrongdoing,
fraud,
or
other
14
intentional
or
willful
misrepresentation.
15
Sec.
13.
NEW
SECTION
.
510B.12
Compensation
program
——
16
commissioner
approval.
17
The
commissioner
may
review
and
approve
the
compensation
18
program
of
a
pharmacy
benefits
manager
for
a
health
carrier
to
19
ensure
that
the
reimbursement
for
pharmacist
services
provided
20
by
a
contracted
pharmacy
is
fair,
reasonable,
and
appropriate
21
to
provide
an
adequate
pharmacy
benefits
manager’s
network
for
22
the
health
carrier.
23
Sec.
14.
NEW
SECTION
.
510B.13
Rules.
24
The
commissioner
shall
adopt
rules
pursuant
to
chapter
17A
25
to
administer
this
chapter.
26
Sec.
15.
NEW
SECTION
.
510B.14
Enforcement.
27
1.
The
commissioner
shall
take
any
enforcement
action
under
28
the
commissioner’s
authority
to
enforce
compliance
with
this
29
chapter.
30
2.
After
notice
and
hearing,
the
commissioner
may
impose
31
any
or
all
of
the
sanctions
pursuant
to
section
507B.7
and
may
32
suspend
or
revoke
a
pharmacy
benefits
manager’s
certificate
of
33
registration
as
a
third-party
administrator
upon
a
finding
that
34
the
pharmacy
benefits
manager
violated
any
of
the
requirements
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of
this
chapter,
or
of
chapter
510
pertaining
to
third-party
1
administrators.
2
3.
A
pharmacy
benefits
manager,
as
an
agent
or
vendor
of
a
3
health
carrier,
is
subject
to
the
commissioner’s
authority
to
4
conduct
an
examination
pursuant
to
chapter
507.
The
procedures
5
set
forth
in
chapter
507
regarding
examination
reports
shall
6
apply
to
an
examination
of
a
pharmacy
benefits
manager
under
7
this
chapter.
8
4.
A
pharmacy
benefits
manager
is
subject
to
the
9
commissioner’s
authority
to
conduct
an
investigation
pursuant
10
to
chapter
507B.
The
procedures
set
forth
in
chapter
507B
11
regarding
investigations
shall
apply
to
an
investigation
of
a
12
pharmacy
benefits
manager
under
this
chapter.
13
5.
A
pharmacy
benefits
manager
is
subject
to
the
14
commissioner’s
authority
to
conduct
an
examination,
audit,
15
or
inspection
pursuant
to
chapter
510
for
third-party
16
administrators.
The
procedures
set
forth
in
chapter
510
for
17
third-party
administrators
shall
apply
to
an
examination,
18
audit,
or
inspection
of
a
pharmacy
benefits
manager
under
this
19
chapter.
20
6.
If
the
commissioner
conducts
an
examination
of
a
pharmacy
21
benefits
manager
under
chapter
507;
a
proceeding
under
chapter
22
507B;
or
an
examination,
audit,
or
inspection
under
chapter
23
510,
all
information
received
from
the
pharmacy
benefits
24
manager,
and
all
notes,
work
papers,
or
other
documents
25
related
to
the
examination,
investigation,
audit,
or
inspection
26
of
the
pharmacy
benefits
manager,
shall
be
confidential
27
records
pursuant
to
chapter
22
and
shall
be
accorded
the
same
28
confidentiality
as
notes,
work
papers,
investigatory
materials,
29
or
other
documents
related
to
the
examination
of
an
insurer
as
30
provided
in
section
507.14.
31
Sec.
16.
NEW
SECTION
.
510B.15
Severability.
32
If
any
provision
of
this
chapter
or
the
application
33
thereof
to
any
person
or
circumstances
is
held
invalid,
the
34
invalidity
shall
not
affect
other
provisions
or
applications
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of
the
chapter
which
can
be
given
effect
without
the
invalid
1
provisions
or
application
and,
to
this
end,
the
provisions
of
2
this
chapter
are
severable.
3
Sec.
17.
REPEAL.
Section
510B.3,
Code
2020,
is
repealed.
4
Sec.
18.
APPLICABILITY.
This
Act
applies
to
a
pharmacy
5
benefits
manager
providing
pharmacy
benefits
management
6
services
in
this
state
on
or
after
the
effective
date
of
this
7
Act.
8
EXPLANATION
9
The
inclusion
of
this
explanation
does
not
constitute
agreement
with
10
the
explanation’s
substance
by
the
members
of
the
general
assembly.
11
This
bill
relates
to
pharmacy
benefits
managers
and
12
prescription
drug
prices.
13
“Pharmacy
benefits
manager”
(PBM)
is
defined
in
the
bill
as
14
a
person
who,
pursuant
to
a
contract
or
other
relationship
with
15
a
health
carrier,
either
directly
or
through
an
intermediary,
16
provides
pharmacy
benefits
management
services
for
the
17
health
carrier.
“Pharmacy
benefits
management
services”
is
18
defined
as,
on
behalf
of
a
health
carrier,
the
procurement
of
19
prescription
drugs
at
a
negotiated
rate
for
dispensing
within
20
this
state,
the
processing
of
prescription
drug
claims,
or
the
21
administration
of
payments
related
to
prescription
drug
claims.
22
The
bill
details
the
requirements
that
must
be
satisfied
23
before
a
PBM
places
a
particular
drug
on
a
maximum
allowable
24
cost
list,
or
continues
a
particular
drug
on
a
maximum
25
allowable
cost
list.
“Maximum
allowable
cost
list”
(MAC
list)
26
is
defined
in
the
bill
as
a
list
of
drugs
or
other
methodology
27
used
by
a
PBM,
directly
or
indirectly,
setting
the
maximum
28
allowable
payment
to
a
pharmacy
for
a
generic
drug,
brand-name
29
drug,
biological
product,
or
other
prescription
drug.
A
PBM
30
cannot
place
a
drug
on
the
MAC
list
unless
the
PBM
first
31
complies
with
the
requirements
in
the
bill,
including
ensuring
32
that
the
drug
is
available
for
purchase
by
each
pharmacy
in
33
this
state
for
a
national
or
regional
wholesaler
licensed
in
34
this
state.
35
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A
PBM
must
allow
a
pharmacy
that
is
subject
to
a
MAC
list
1
to
have
access
to
the
list.
The
PBM
is
required
to
update
a
2
MAC
list
within
seven
calendar
days
of
the
date
of
an
increase
3
in
the
pharmacy
acquisition
cost,
a
change
in
methodology
on
4
which
the
MAC
is
based,
or
a
change
in
any
value
of
any
variable
5
involved
in
the
methodology
on
which
the
MAC
list
is
based.
6
The
PBM
must
provide
a
pharmacy
subject
to
a
MAC
list
with
7
prompt
notification
of
any
updates
to
the
MAC
list.
8
The
bill
provides
that
a
PBM
cannot
reimburse
a
pharmacy
in
9
this
state
for
a
prescription
drug
in
an
amount
less
than
the
10
amount
that
the
PBM
reimburses
a
PBM
affiliate
for
providing
11
the
same
prescription
drug.
A
pharmacy
may
decline
to
provide
12
pharmacist
services
to
a
PBM
or
to
a
covered
person
if,
as
a
13
result
of
a
maximum
allowable
cost
list,
a
pharmacy
is
to
be
14
paid
less
than
that
pharmacy’s
pharmacy
acquisition
cost
for
15
the
prescription
drug.
16
The
bill
requires
a
PBM
to
provide
an
appeal
procedure
to
17
allow
a
pharmacy
to
challenge
a
maximum
allowable
cost
list,
18
and
any
reimbursement
made
under
a
maximum
allowable
cost
19
list.
The
appeal
procedure
must
include
a
dedicated
telephone
20
number,
email
address,
and
internet
site
for
a
pharmacy
to
21
submit
appeals,
and
must
include
the
ability
to
submit
an
22
appeal
directly
to
the
PBM
or
directly
to
the
pharmacy
service
23
administration
organization.
Additional
requirements
for
the
24
appeals
process,
including
the
PBM’s
obligations
if
an
appeal
25
is
upheld
or
denied,
are
detailed
in
the
bill.
26
The
bill
prohibits
a
PBM
or
a
health
carrier
from,
as
a
27
condition
of
payment,
reimbursement,
or
network
participation,
28
requiring
a
pharmacy
to
meet
accreditation,
certification,
29
or
credentialing
standards
that
are
inconsistent
with,
more
30
stringent
than,
or
in
addition
to
the
federal
and
state
31
requirements
applicable
to
a
pharmacy
in
this
state;
or
32
to
satisfy
any
insurance,
surety
bond,
or
other
financial
33
guarantee
requirements
that
are
inconsistent
with,
more
34
stringent
than,
or
in
addition
to
the
federal
and
state
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requirements
applicable
to
a
pharmacy
in
this
state.
The
bill
1
also
prohibits
the
PBM
from
charging
or
holding
a
pharmacy
2
responsible
for
certain
fees
as
detailed
in
the
bill.
3
A
PBM
or
a
health
carrier
also
cannot
directly
or
indirectly
4
charge
or
hold
a
pharmacy
responsible
for
a
fee
related
to
a
5
claim
in
any
of
the
circumstances
detailed
in
the
bill.
A
6
PBM
is
additionally
prohibited
from
conducting
spread
pricing
7
in
this
state.
“Spread
pricing”
is
defined
as
a
model
of
8
prescription
drug
pricing
in
which
a
PBM
charges
a
health
9
benefit
plan
a
contracted
price
for
a
prescription
drug,
and
10
the
contracted
price
for
the
prescription
drug
differs
from
the
11
amount
the
PBM
directly
or
indirectly
pays
a
pharmacy
for
the
12
prescription
drug.
13
The
bill
prohibits
a
PBM
from
terminating
a
contracted
14
pharmacy
for
providing
direct
delivery
or
delivery
by
mail
for
15
prescriptions
to
covered
persons.
16
After
the
date
of
receipt
of
a
clean
claim
for
payment
17
from
a
contracted
pharmacy,
the
bill
prohibits
a
PBM
from
18
retroactively
reducing
payment
on
the
claim,
either
directly
19
or
indirectly,
through
an
aggregated
effective
rate,
direct
20
or
indirect
remuneration,
a
quality
assurance
program,
or
any
21
other
means
unless
the
claim
is
found
not
to
be
a
clean
claim
22
during
the
course
of
a
routine
audit
performed
by
the
PBM.
The
23
bill
provides
that
if
a
contracted
pharmacy
adjudicates
a
claim
24
at
the
point
of
sale,
the
reimbursement
amount
provided
to
the
25
pharmacy
by
the
PBM
is
the
final
reimbursement
amount.
A
PBM
26
cannot
recoup
funds
from
a
contracted
pharmacy
in
connection
27
with
claims
for
which
the
pharmacy
has
already
been
paid
except
28
in
circumstances
outlined
in
the
bill.
29
The
bill
authorizes
the
commissioner
of
insurance
to
review
30
and
approve
the
compensation
program
of
a
PBM
for
a
health
31
carrier
to
ensure
that
the
reimbursement
for
services
provided
32
by
a
contracted
pharmacy
is
fair,
reasonable,
and
appropriate
33
to
provide
an
adequate
PBM
network
for
the
health
carrier.
34
The
bill
requires
the
commissioner
to
adopt
rules
to
35
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administer
the
provisions
of
the
bill
and
to
take
any
1
enforcement
action
under
the
commissioner’s
authority
to
2
enforce
compliance
with
the
provisions
of
the
bill.
3
The
bill
provides
that
if
any
provision
of
the
bill
is
held
4
invalid,
the
invalidity
shall
not
affect
other
provisions
or
5
applications
of
the
bill
which
can
be
given
effect
without
the
6
invalid
provisions.
7
The
bill
repeals
Code
section
510B.3,
relating
to
current
8
enforcement
and
rulemaking
authority,
and
makes
conforming
9
changes
throughout
Code
chapter
510B.
10
The
bill
applies
to
a
PBM
providing
pharmacy
benefits
11
management
services
in
this
state
on
or
after
the
effective
12
date
of
the
bill.
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