Bill Text: IA SF347 | 2019-2020 | 88th General Assembly | Introduced


Bill Title: A bill for an act relating to pharmacy benefit managers and health carriers and management of prescription drug benefits, and including applicability provisions. (See SF 563.)

Spectrum: Partisan Bill (Republican 1-0)

Status: (Introduced - Dead) 2019-03-11 - Committee report approving bill, renumbered as SF 563. S.J. 524. [SF347 Detail]

Download: Iowa-2019-SF347-Introduced.html
Senate File 347 - Introduced SENATE FILE 347 BY MILLER-MEEKS A BILL FOR An Act relating to pharmacy benefit managers and health 1 carriers and management of prescription drug benefits, and 2 including applicability provisions. 3 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 4 TLSB 2106XS (3) 88 ko/lh
S.F. 347 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- LSB 2106XS (3) 88 ko/lh 1/ 12
S.F. 347 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- LSB 2106XS (3) 88 ko/lh 2/ 12
S.F. 347 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 Formulary —— public access. 33 If a pharmacy benefit manager is contracted to manage the 34 prescription drug benefit for a health carrier’s health benefit 35 -3- LSB 2106XS (3) 88 ko/lh 3/ 12
S.F. 347 plan, the pharmacy benefit manager shall post all of the 1 following for each health benefit plan on an internet site that 2 is easily accessible to the public: 3 1. The health carrier’s formulary. 4 2. Notice, at least ninety calendar days prior to 5 implementation, of any of the following: 6 a. Any change to the health carrier’s formulary. 7 b. The exclusion of a prescription drug from coverage by 8 the health carrier, the health benefit plan, or the pharmacy 9 benefit manager. 10 Sec. 4. NEW SECTION . 510C.4 Pharmacy and therapeutics 11 committee. 12 1. A pharmacy benefit manager that manages a health 13 carrier’s prescription drug benefit shall review the health 14 carrier’s formulary at least annually, utilizing an independent 15 pharmacy and therapeutics committee that meets all of the 16 following requirements: 17 a. Committee members must be practicing physicians, 18 practicing pharmacists, or both, and must be licensed in this 19 state. 20 b. Committee members must practice in various clinical 21 specialty areas, and include high-volume specialists and 22 specialists treating rare and orphan diseases, that represent 23 the needs of the health carrier’s covered persons. 24 c. The committee must meet at least quarterly. 25 d. Formulary development must be conducted in a transparent 26 process and formulary decisions and rationale must be 27 documented in writing. Any records and documents relating 28 to the process shall be made available by the committee to 29 the health carrier upon request, subject to the conditions in 30 subsection 2. 31 e. One or more specialists with current clinical expertise 32 who actively treat patients in a specific therapeutic area, 33 including patients with the specific conditions within the 34 therapeutic area, must participate in all formulary decisions 35 -4- LSB 2106XS (3) 88 ko/lh 4/ 12
S.F. 347 regarding each such therapeutic area and the specific 1 conditions. 2 f. The committee shall base the committee’s clinical 3 decisions on the strength of scientific evidence, standards of 4 practice, and nationally accepted treatment guidelines. 5 g. The committee shall consider whether a particular 6 prescription drug has a clinically meaningful therapeutic 7 advantage over other prescription drugs in terms of safety, 8 effectiveness, or clinical outcome for patient populations who 9 may be treated with the prescription drug. 10 h. The committee shall evaluate and analyze treatment 11 protocols and procedures related to the health carrier’s 12 formulary. 13 i. The committee shall review formulary management 14 activities, such as prior authorization, step therapy, quantity 15 limits, generic substitutions, therapeutic interchange, and 16 other prescription drug utilization management activities for 17 all of the following: 18 (1) Clinical appropriateness. 19 (2) Consistency with industry standards. 20 (3) Consistency with patient and provider organization 21 guidelines. 22 j. The committee shall review and provide a written report 23 to the pharmacy benefit manager that addresses all of the 24 following: 25 (1) The percentage of prescription drugs on the formulary 26 that are subject to each of the types of utilization management 27 described in paragraph “i” . 28 (2) Rates of adherence and nonadherence to medicines by 29 therapeutic area. 30 (3) Rates of abandonment of medicines by therapeutic area. 31 (4) Recommendations for improved adherence and reduced 32 abandonment. 33 (5) Recommendations for improvement in formulary management 34 practices consistent with patient and provider organization 35 -5- LSB 2106XS (3) 88 ko/lh 5/ 12
S.F. 347 guidelines, as well as other clinical guidelines, provided that 1 the report shall be subject to the conditions in subsection 2. 2 k. The committee shall review and make a formulary decision 3 on a prescription drug that is newly approved by the United 4 States food and drug administration within ninety calendar 5 days of the United States food and drug administration’s 6 approval of the prescription drug, or shall provide a 7 clinical justification to the pharmacy benefit manager if the 8 ninety-calendar-day time frame is not met. 9 l. The committee shall review procedures for the medical 10 review and transitioning of a covered person who is new to 11 a health benefit plan to appropriate formulary alternatives. 12 The review must ensure that the procedures appropriately 13 address situations involving a covered person who is stabilized 14 on a prescription drug that is not on the health carrier’s 15 formulary, or that is on the health carrier’s formulary but 16 is subject to prior authorization, step therapy, or other 17 utilization management requirements. 18 2. A pharmacy benefit manager, a pharmacy, or a therapeutic 19 committee shall not publish or otherwise directly or indirectly 20 disclose any confidential or proprietary information including 21 but not limited to any information that reveals any of the 22 following: 23 a. The identity of a specific health carrier. 24 b. The price charged by a specific pharmaceutical 25 manufacturer for a specific prescription drug or class of 26 prescription drugs. 27 c. The amount of rebates provided for a specific 28 prescription drug or class of prescription drugs. 29 3. Information provided to or utilized by a pharmacy benefit 30 manager and a pharmacy and therapeutics committee pursuant to 31 subsection 1 shall be protected from disclosure as confidential 32 and proprietary and shall not be a public record subject to 33 disclosure under chapter 22. 34 Sec. 5. NEW SECTION . 510C.5 Rules. 35 -6- LSB 2106XS (3) 88 ko/lh 6/ 12
S.F. 347 The commissioner of insurance shall adopt rules pursuant to 1 chapter 17A as necessary to administer this chapter. 2 Sec. 6. NEW SECTION . 510C.6 Enforcement. 3 The commissioner may take any action within the 4 commissioner’s authority to enforce compliance with this 5 chapter. 6 Sec. 7. NEW SECTION . 510C.7 Applicability. 7 This chapter is applicable to a health benefit plan that is 8 delivered, issued for delivery, continued, or renewed in this 9 state on or after January 1, 2020. 10 Sec. 8. NEW SECTION . 514M.1 Definitions. 11 As used in this chapter, unless the context otherwise 12 requires: 13 1. “Commissioner” means the commissioner of insurance. 14 2. “Cost sharing” means any copayment, coinsurance, 15 deductible, or other out-of-pocket expense requirement. 16 3. “Covered person” means the same as defined in section 17 514J.102. 18 4. “Health benefit plan” means the same as defined in 19 section 514J.102. 20 5. “Health carrier” means the same as defined in section 21 514J.102. 22 6. “Health carrier cost” means the amount that a health 23 carrier has contracted with a dispensing pharmacy to pay the 24 dispensing pharmacy for a covered prescription drug, after 25 accounting for rebates, and excluding a covered person’s cost 26 sharing. 27 7. “Pharmacy benefits manager” means the same as defined in 28 510C.1. 29 8. “Prescription drug benefit” means the same as defined in 30 section 510C.1. 31 9. “Rebate” means any of the following: 32 a. A negotiated price concession for a prescription 33 drug that may accrue directly or indirectly to a health 34 carrier during a health benefit plan coverage year from a 35 -7- LSB 2106XS (3) 88 ko/lh 7/ 12
S.F. 347 pharmaceutical manufacturer, a dispensing pharmacy, or from 1 another entity in the prescription drug supply chain taking 2 part in a transaction involving a pharmaceutical manufacturer’s 3 prescription drug and which may be based on any of the 4 following: 5 (1) A pharmaceutical manufacturer’s list price for a 6 prescription drug. 7 (2) Patient outcomes. 8 (3) A reasonable estimate of price concessions necessary 9 to maintain the net price of a prescription drug for the 10 health carrier for a specified period of time in the event the 11 pharmaceutical manufacturer’s list price increases. 12 b. A reasonable estimate of fees and other administrative 13 costs that are passed through to the health carrier by the 14 pharmaceutical manufacturer. 15 10. “Trade secret” means the same as defined in section 16 550.2. 17 Sec. 9. NEW SECTION . 514M.2 Cost sharing —— prescription 18 drug benefit. 19 1. If a health carrier provides prescription drug benefits 20 to a covered person under a health benefit plan, the health 21 carrier shall reduce any cost sharing requirement for a 22 prescription drug for the covered person by an amount equal to 23 the greater of the following: 24 a. A dollar amount that equals not less than fifty-one 25 percent of the aggregate rebates received by the health 26 carrier. 27 b. An amount that ensures that the covered person’s cost 28 sharing for the prescription drug does not exceed fifty-one 29 percent of the health carrier’s cost for the prescription drug. 30 2. A health carrier or health benefit plan may reduce a 31 covered person’s cost sharing by an amount greater than the 32 amount required pursuant to subsection 1. 33 3. In complying with this section, a health carrier and 34 the health carrier’s agents shall not publish or otherwise 35 -8- LSB 2106XS (3) 88 ko/lh 8/ 12
S.F. 347 disclose, directly or indirectly, any information regarding 1 the actual amount of rebates the health carrier receives for 2 a specific prescription drug, from a specific pharmaceutical 3 manufacturer, or from a specific pharmacy. Rebate information 4 is a trade secret under chapter 550 and is a confidential 5 record under section 22.7, subsection 3. 6 4. A health carrier shall have a written agreement with 7 any third-party vendor or downstream entity requiring the 8 third-party vendor or downstream entity to comply with 9 subsection 3 if the third-party vendor or downstream entity 10 receives or has access to the health carrier’s rebate 11 information in the course of performing any health care or 12 administrative services on behalf of the health carrier. 13 Sec. 10. NEW SECTION . 514M.3 Rules. 14 The commissioner of insurance shall adopt rules pursuant to 15 chapter 17A as necessary to administer this chapter. 16 Sec. 11. NEW SECTION . 514M.4 Enforcement. 17 The commissioner may take any action within the 18 commissioner’s authority to enforce compliance with this 19 chapter. 20 Sec. 12. NEW SECTION . 514M.5 Applicability. 21 This chapter is applicable to a health benefit plan that is 22 delivered, issued for delivery, continued, or renewed in this 23 state on or after January 1, 2020. 24 EXPLANATION 25 The inclusion of this explanation does not constitute agreement with 26 the explanation’s substance by the members of the general assembly. 27 This bill relates to pharmacy benefit managers, health 28 carriers, and the management of prescription drug benefits. 29 The bill requires a pharmacy benefit manager to submit 30 an annual report to the insurance commissioner that provides 31 information on prescription drug prices and rebates received by 32 the pharmacy benefit manager. The information is required to 33 cover the prior calendar year and encompass prescription drug 34 benefits provided to covered persons of each health carrier 35 -9- LSB 2106XS (3) 88 ko/lh 9/ 12
S.F. 347 with whom the pharmacy benefit manager was contracted during 1 that calendar year. “Pharmacy benefits manager” is defined 2 in the bill as a person who, pursuant to a contract or an 3 employment relationship with a health carrier, either directly 4 or through an affiliate or intermediary, manages a prescription 5 drug benefit provided by the health carrier. The bill defines 6 a “health carrier” as an entity subject to the insurance laws 7 and regulations of this state, or subject to the jurisdiction 8 of the commissioner, including an insurance company offering 9 sickness and accident plans, a health maintenance organization, 10 a nonprofit health service corporation, a plan established 11 pursuant to Code chapter 509A for public employees, or any 12 other entity providing a plan of health insurance, health care 13 benefits, or health care services. 14 The commissioner is required to make the information 15 provided by the pharmacy benefit managers available on a 16 publicly accessible internet site. The bill prohibits the 17 pharmacy benefits manager or the commissioner from providing 18 the information in a manner that identifies a specific 19 health carrier, a specific price charged by a pharmaceutical 20 manufacturer, or the amount of rebates received by a pharmacy 21 benefit manager for a specific drug or class of drug. If 22 information submitted to the commissioner by the pharmacy 23 benefits manager does contain any of these details, the 24 information is deemed confidential and proprietary and is a 25 confidential record pursuant to Code chapter 22. 26 For each health carrier’s health benefit plan for which 27 a pharmacy benefit manager is contracted to manage the 28 prescription drug benefit, the bill requires the pharmacy 29 benefit manager to publish the formulary on an internet site 30 that is easily accessible to the public. The pharmacy benefit 31 manager is also required to post any formulary changes, and a 32 notification of any prescription drug that the health carrier, 33 the health benefit plan, or the pharmacy benefit manager 34 excludes from coverage, a minimum of 90 calendar days prior to 35 -10- LSB 2106XS (3) 88 ko/lh 10/ 12
S.F. 347 implementation of the formulary changes or prescription drug 1 exclusions. 2 The bill requires a pharmacy benefit manager that manages a 3 health carrier’s prescription drug benefit to review the health 4 carrier’s formulary at least annually, utilizing an independent 5 pharmacy and therapeutics committee. The requirements 6 for the membership of the committee and the duties of the 7 committee are detailed in the bill. Information provided to 8 or utilized by the committee is confidential and proprietary 9 and is a confidential record under Code chapter 22 and shall 10 be recognized and protected as a trade secret pursuant to Code 11 section 22.7, subsection 3. 12 The bill prohibits a health carrier from imposing a cost 13 sharing requirement on a covered person for a prescription 14 drug that exceeds an amount equal to the greater of either the 15 dollar amount of 51 percent or more of the aggregate rebates 16 received by the health carrier, or an amount that ensures that 17 the covered person’s cost sharing for the prescription drug 18 shall not exceed 51 percent of the health carrier’s cost for 19 the prescription drug. “Covered person” is defined in the bill 20 as a policyholder, subscriber, enrollee, or other individual 21 participating in a health benefit plan. 22 A health carrier is prohibited from disclosing any 23 information regarding the actual amount of rebates the health 24 carrier received for a specific drug, or from a specific 25 pharmaceutical manufacturer, or from a specific pharmacy 26 in order to comply with the cost sharing requirement. 27 Rebate information is protected as a trade secret and is a 28 confidential record. A health carrier is also required to have 29 an agreement with the health carrier’s third-party vendors and 30 downstream entities as necessary to ensure the information is 31 protected as a trade secret. 32 The bill requires the commissioner of insurance to adopt 33 rules as necessary to administer the provisions of the bill. 34 The bill also allows the commissioner to take any action within 35 -11- LSB 2106XS (3) 88 ko/lh 11/ 12
S.F. 347 the commissioner’s authority to enforce compliance with the 1 provisions of the bill. 2 The bill is applicable to health benefit plans that are 3 delivered, issued for delivery, continued, or renewed in this 4 state on or after January 1, 2020. 5 -12- LSB 2106XS (3) 88 ko/lh 12/ 12
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