Bill Text: IL HB1697 | 2025-2026 | 104th General Assembly | Enrolled

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Bill Title: Provides that the amendatory Act may be referred to as the Prescription Drug Affordability Act. Amends the Department of Commerce and Economic Opportunity Law of the Civil Administrative Code of Illinois. Provides that the Department of Insurance shall use moneys deposited into the DCEO Projects Fund pursuant to specified provisions of the Illinois Insurance Code to make a grant to a statewide retail association representing pharmacies to promote access to pharmacies and pharmacist services. Amends the Illinois Insurance Code. Makes changes to defined terms in provisions concerning pharmacy benefit manager contracts. Provides that a pharmacy benefit manager or an affiliate acting on its behalf shall not conduct spread pricing, steer a covered individual, or limit a covered individual's access to drugs from a pharmacy or pharmacist enrolled with the health benefit plan under the terms offered to all pharmacies in the plan coverage area by designating the covered drug as a specialty drug contrary to the specified definition. Provides that a pharmacy benefit manager or affiliated rebate aggregator must remit no less than 100% of any amounts paid by a pharmaceutical manufacturer, wholesaler, or other distributor of a drug. Provides that the contract between the pharmacy benefit manager and the insurer or health benefit plan sponsor must allow and provide for the pharmacy benefit manager's compliance with an audit at least once per calendar year of the rebate and fee records remitted from a pharmacy benefit manager or its affiliated party to a health benefit plan. Provides that the changes made to provisions concerning pharmacy benefit manager contracts by the Act shall apply with respect to any health benefit plan that provides coverage for drugs that is amended, delivered, issued, or renewed on or after January 1, 2026. Sets forth provisions concerning pharmacy benefit manager reporting requirements. In provisions concerning pharmacy benefit manager licensure requirements, provides that on or before August 1, 2025, the pharmacy benefit manager shall submit a report to the Department that lists the name of each health benefit plan it administers, provides the number of covered individuals for each health benefit plan as of the date of submission, and provides the total covered individuals across all health benefit plans the pharmacy benefit manager administers. Provides that on or before September 1, 2025, a registered pharmacy benefit manager, as a condition of its authority to transact business in the State, must submit to the Department an amount equal to $15 or an alternate amount as determined by the Director by rule per covered individual enrolled by the pharmacy benefit manager in the State. Provides that on or before September 1, 2026 and each September 1 thereafter, payments submitted in provisions concerning pharmacy benefit manager licensure requirements shall be based on the number of covered individuals reported to the Department in specified provisions of the Illinois Insurance Code. Makes changes to provisions concerning examinations of registered pharmacy benefit managers. Amends the Illinois Public Aid Code. Makes changes to provisions concerning critical access care pharmacies. In provisions concerning pharmacy benefits, provides that a pharmacy benefit manager must comply with all provisions of the Pharmacy Benefit Managers Article of the Illinois Insurance Code to the extent that the provisions do not prevent the application of any provision of the Article or applicable federal law. Amends the State Employees Group Insurance Act of 1971 and the School Code to require coverage from specified provisions of the Illinois Insurance Code under the provisions of those Acts. Amends the Juvenile Court Act of 1987, the Unified Code of Corrections, and the County Jail Act to require specified contracts and pharmacy benefit manager activities to be subject to the Pharmacy Benefit Managers Article of the Illinois Insurance Code and the authority of the Director of Insurance to enforce those provisions. Makes other changes. Effective January 1, 2026, except that certain provisions are effective immediately.

Sponsorship: Broadly Bipartisan Bill

Status: (Passed) 2025-07-01 - Public Act . . . . . . . . . 104-0027 [HB1697 Detail]

Download: Illinois-2025-HB1697-Enrolled.html

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AN ACT concerning State government.
Be it enacted by the People of the State of Illinois,
represented in the General Assembly:
Section 1. This Act may be referred to as the Prescription
Drug Affordability Act.
Section 5. The State Employees Group Insurance Act of 1971
is amended by changing Section 6.11 as follows:
(5 ILCS 375/6.11)
Sec. 6.11. Required health benefits; Illinois Insurance
Code requirements. The program of health benefits shall
provide the post-mastectomy care benefits required to be
covered by a policy of accident and health insurance under
Section 356t of the Illinois Insurance Code. The program of
health benefits shall provide the coverage required under
Sections 356g, 356g.5, 356g.5-1, 356m, 356q, 356u, 356u.10,
356w, 356x, 356z.2, 356z.4, 356z.4a, 356z.5, 356z.6, 356z.8,
356z.9, 356z.10, 356z.11, 356z.12, 356z.13, 356z.14, 356z.15,
356z.17, 356z.22, 356z.25, 356z.26, 356z.29, 356z.30, 356z.32,
356z.33, 356z.36, 356z.40, 356z.41, 356z.45, 356z.46, 356z.47,
356z.51, 356z.53, 356z.54, 356z.55, 356z.56, 356z.57, 356z.59,
356z.60, 356z.61, 356z.62, 356z.64, 356z.67, 356z.68, and
356z.70, and 356z.71, 356z.74, 356z.76, and 356z.77 of the

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Illinois Insurance Code. The program of health benefits must
comply with Sections 155.22a, 155.37, 355b, 356z.19, 370c, and
370c.1 and Article XXXIIB of the Illinois Insurance Code. The
program of health benefits shall provide the coverage required
under Section 356m of the Illinois Insurance Code and, for the
employees of the State Employee Group Insurance Program only,
the coverage as also provided in Section 6.11B of this Act. The
Department of Insurance shall enforce the requirements of this
Section with respect to Sections 370c and 370c.1 and Article
XXXIIB of the Illinois Insurance Code; all other requirements
of this Section shall be enforced by the Department of Central
Management Services.
Rulemaking authority to implement Public Act 95-1045, if
any, is conditioned on the rules being adopted in accordance
with all provisions of the Illinois Administrative Procedure
Act and all rules and procedures of the Joint Committee on
Administrative Rules; any purported rule not so adopted, for
whatever reason, is unauthorized.
(Source: P.A. 102-30, eff. 1-1-22; 102-103, eff. 1-1-22;
102-203, eff. 1-1-22; 102-306, eff. 1-1-22; 102-642, eff.
1-1-22; 102-665, eff. 10-8-21; 102-731, eff. 1-1-23; 102-768,
eff. 1-1-24; 102-804, eff. 1-1-23; 102-813, eff. 5-13-22;
102-816, eff. 1-1-23; 102-860, eff. 1-1-23; 102-1093, eff.
1-1-23; 102-1117, eff. 1-13-23; 103-8, eff. 1-1-24; 103-84,
eff. 1-1-24; 103-91, eff. 1-1-24; 103-420, eff. 1-1-24;
103-445, eff. 1-1-24; 103-535, eff. 8-11-23; 103-551, eff.

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8-11-23; 103-605, eff. 7-1-24; 103-718, eff. 7-19-24; 103-751,
eff. 8-2-24; 103-870, eff. 1-1-25; 103-914, eff. 1-1-25;
103-918, eff. 1-1-25; 103-951, eff. 1-1-25; 103-1024, eff.
1-1-25; revised 11-26-24.)
Section 10. The Department of Commerce and Economic
Opportunity Law of the Civil Administrative Code of Illinois
is amended by changing Section 605-60 as follows:
(20 ILCS 605/605-60)
Sec. 605-60. DCEO Projects Fund.
(a) The DCEO Projects Fund is created as a trust fund in
the State treasury. The Department is authorized to accept and
deposit into the Fund moneys received from any gifts, grants,
transfers, or other sources, public or private, unless deposit
into a different fund is otherwise mandated.
(b) Subject to appropriation, the Department shall use
moneys in the Fund to make grants or loans to and enter into
contracts with units of local government, local and regional
economic development corporations, retail associations, and
not-for-profit organizations for municipal development
projects, for the specific purposes established by the terms
and conditions of the gift, grant, or award, and for related
administrative expenses. As used in this Section, the term
"municipal development projects" includes, but is not limited
to, grants for reducing food insecurity in urban and rural

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areas.
(c) In this subsection, "rural tract" and "urban tract"
have the meanings given to those terms in Section 5 of the
Grocery Initiative Act.
Subject to appropriation, the Department shall use moneys
deposited into the Fund pursuant to Section 513b2 of the
Illinois Insurance Code to make a grant to a statewide retail
association representing pharmacies to promote access to
pharmacies and pharmacist services. Grant funds under this
subsection shall be made available to the following
beneficiaries:
(1) critical access care pharmacies as defined in
Section 5-5.12b of the Illinois Public Aid Code;
(2) retail pharmacies with a physical location in
Illinois owned by a person or entity with an ownership or
control interest in fewer than 10 pharmacies;
(3) retail pharmacies with a physical location in a
county in Illinois with fewer than 50,000 residents;
(4) retail pharmacies with a physical location in a
county in Illinois with 50,000 or more residents and in an
area within Illinois that is designated by the United
States Department of Health and Human Services as either:
(A) a Medically Underserved Area, including Governor's
Exceptions; or (B) a Medically Underserved Population,
including Governor's Exceptions;
(5) pharmacies whose claims constitute 65% or greater

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for Medicaid services and at least 80% of their total
claims are for pharmacy services administered in Illinois;
(6) a pharmacy located in an Illinois census tract
that meets both of the following poverty and population
density and pharmacy accessibility standards:
(A) the census tract has either: (i) 20% or more of
its population living below the poverty guidelines
updated periodically in the Federal Register by the
U.S. Department of Health and Human Services under the
authority of 42 U.S.C. 9902(2); or (ii) a median
household income of less than 80% of the median income
of the nearest metropolitan area; and
(B) the census tract has at least 33% of its
population living one mile or more from the pharmacy
for urban tracts or more than 10 miles from the
pharmacy for rural tracts.
At least annually, the Department shall file with the
Governor and the General Assembly a report that includes:
(1) the number of beneficiaries who applied for
funding;
(2) the number of beneficiaries who received funding;
and
(3) the pharmacies that were awarded funding,
including the location, the amount of funding, and the
subsection category or categories under which the pharmacy
qualified.

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(Source: P.A. 103-588, eff. 6-5-24.)
Section 12. The State Finance Act is amended by adding
Section 5.1030 as follows:
(30 ILCS 105/5.1030 new)
Sec. 5.1030. The Prescription Drug Affordability Fund.
Section 15. The School Code is amended by changing Section
10-22.3f as follows:
(105 ILCS 5/10-22.3f)
Sec. 10-22.3f. Required health benefits. Insurance
protection and benefits for employees shall provide the
post-mastectomy care benefits required to be covered by a
policy of accident and health insurance under Section 356t and
the coverage required under Sections 356g, 356g.5, 356g.5-1,
356m, 356q, 356u, 356u.10, 356w, 356x, 356z.4, 356z.4a,
356z.6, 356z.8, 356z.9, 356z.11, 356z.12, 356z.13, 356z.14,
356z.15, 356z.22, 356z.25, 356z.26, 356z.29, 356z.30, 356z.32,
356z.33, 356z.36, 356z.40, 356z.41, 356z.45, 356z.46, 356z.47,
356z.51, 356z.53, 356z.54, 356z.56, 356z.57, 356z.59, 356z.60,
356z.61, 356z.62, 356z.64, 356z.67, 356z.68, and 356z.70, and
356z.71, 356z.74, and 356z.77 of the Illinois Insurance Code.
Insurance policies shall comply with Section 356z.19 of the
Illinois Insurance Code. The coverage shall comply with

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Sections 155.22a, 355b, and 370c and Article XXXIIB of the
Illinois Insurance Code. The Department of Insurance shall
enforce the requirements of this Section.
Rulemaking authority to implement Public Act 95-1045, if
any, is conditioned on the rules being adopted in accordance
with all provisions of the Illinois Administrative Procedure
Act and all rules and procedures of the Joint Committee on
Administrative Rules; any purported rule not so adopted, for
whatever reason, is unauthorized.
(Source: P.A. 102-30, eff. 1-1-22; 102-103, eff. 1-1-22;
102-203, eff. 1-1-22; 102-306, eff. 1-1-22; 102-642, eff.
1-1-22; 102-665, eff. 10-8-21; 102-731, eff. 1-1-23; 102-804,
eff. 1-1-23; 102-813, eff. 5-13-22; 102-816, eff. 1-1-23;
102-860, eff. 1-1-23; 102-1093, eff. 1-1-23; 102-1117, eff.
1-13-23; 103-84, eff. 1-1-24; 103-91, eff. 1-1-24; 103-420,
eff. 1-1-24; 103-445, eff. 1-1-24; 103-535, eff. 8-11-23;
103-551, eff. 8-11-23; 103-605, eff. 7-1-24; 103-718, eff.
7-19-24; 103-751, eff. 8-2-24; 103-914, eff. 1-1-25; 103-918,
eff. 1-1-25; 103-1024, eff. 1-1-25; revised 11-26-24.)
Section 20. The Illinois Insurance Code is amended by
changing Sections 513b1, 513b2, and 513b3 and by adding
Section 513b1.1 as follows:
(215 ILCS 5/513b1)
Sec. 513b1. Pharmacy benefit manager contracts.

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(a) As used in this Section:
"340B drug discount program" means the program established
under Section 340B of the federal Public Health Service Act,
42 U.S.C. 256b.
"340B entity" means a covered entity as defined in 42
U.S.C. 256b(a)(4) authorized to participate in the 340B drug
discount program.
"340B pharmacy" means any pharmacy used to dispense 340B
drugs for a covered entity, whether entity-owned or external.
"Affiliate" means a person or entity that directly or
indirectly through one or more intermediaries controls or is
controlled by, or is under common control with, the person or
entity specified. The location of a person or entity's
domicile, whether in Illinois or a foreign or alien
jurisdiction, does not affect the person or entity's status as
an affiliate.
"Biological product" has the meaning ascribed to that term
in Section 19.5 of the Pharmacy Practice Act.
"Brand name drug" means a drug that has been approved
under 42 U.S.C. 262 or 21 U.S.C. 355(c), as applicable, and is
marketed, sold, or distributed under a proprietary,
trademark-protected name.
"Complex or chronic medical condition" means a physical,
behavioral, or developmental condition that has no known cure,
is progressive, or can be debilitating or fatal if unmanaged
or untreated.

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"Covered individual" means a member, participant,
enrollee, contract holder, policyholder, or beneficiary of a
health benefit plan who is provided a drug benefit by the
health benefit plan.
"Critical access pharmacy" means a critical access care
pharmacy as defined in Section 5-5.12b of the Illinois Public
Aid Code.
"Drugs" has the meaning ascribed to that term in Section 3
of the Pharmacy Practice Act and includes biological products.
"Generic drug" means a drug that has been approved under
42 U.S.C. 262 or 21 U.S.C. 355(c), as applicable, and is
marketed, sold, or distributed directly or indirectly to the
retail class of trade with labeling, packaging (other than
repackaging as the listed drug in blister packs, unit doses,
or similar packaging for use in institutions), product code,
labeler code, trade name, or trademark that differs from that
of the brand name drug.
"Health benefit plan" means a policy, contract,
certificate, or agreement entered into, offered, or issued by
an insurer to provide, deliver, arrange for, pay for, or
reimburse any of the costs of physical, mental, or behavioral
health care services. Notwithstanding Sections 122-1 through
122-4 of this Code, "health benefit plan" includes self-funded
employee welfare benefit plans. Notwithstanding Sections 122-1
through 122-4 of this Code, "health benefit plan" includes
self-funded employee welfare benefit plans except for

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self-funded multiemployer plans that are not nonfederal
government plans.
"Maximum allowable cost" means the maximum amount that a
pharmacy benefit manager will reimburse a pharmacy for the
cost of a drug.
"Maximum allowable cost list" means a list of drugs for
which a maximum allowable cost has been established by a
pharmacy benefit manager.
"Pharmacy benefit manager" means a person, business, or
entity, including a wholly or partially owned or controlled
subsidiary of a pharmacy benefit manager, that provides claims
processing services or other prescription drug or device
services, or both, for health benefit plans.
"Pharmacy" has the meaning given to that term in Section 3
of the Pharmacy Practice Act.
"Pharmacy services" means the provision of any services
listed within the definition of "practice of pharmacy" under
subsection (d) of Section 3 of the Pharmacy Practice Act.
"Rare medical condition" means a physical, behavioral, or
developmental condition that affects fewer than 200,000
individuals in the United States or approximately 1 in 1,500
individuals worldwide.
"Rebate" means a discount or pricing concession based on
drug utilization or administration that is paid by the
manufacturer to a pharmacy benefit manager or its client.
"Rebate aggregator" means a person or entity, including

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group purchasing organizations, that negotiate rebates or
other fees with drug manufacturers on behalf or for the
benefit of a pharmacy benefit manager or its client and may
also be involved in contracts that entitle the rebate
aggregator or its client to receive rebates or other fees from
drug manufacturers based on drug utilization or
administration.
"Retail price" means the price an individual without
prescription drug coverage would pay at a retail pharmacy, not
including a pharmacist dispensing fee.
"Specialty drug" means a drug that:
(1) is prescribed for a person with a complex or
chronic medical condition or a rare medical condition;
(2) has limited or exclusive distribution; and
(3) requires both:
(A) specialized product handling by the dispensing
pharmacy or administration by the dispensing pharmacy;
and
(B) specialized clinical care, including frequent
dosing adjustments, intensive clinical monitoring, or
expanded services for patients, including intensive
patient counseling, education, or ongoing clinical
support beyond traditional dispensing activities, such
as individualized disease and therapy management to
support improved health outcomes.
"Spread pricing" means the model of drug pricing in which

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the pharmacy benefit manager charges a health benefit plan a
contracted price for drugs, and the contracted price for the
drugs differs from the amount the pharmacy benefit manager
directly or indirectly pays the pharmacist or pharmacy for the
drugs, pharmacist services, or drug and dispensing fees.
"Steer" includes, but is not limited to:
(1) requiring a covered individual to only use a
pharmacy, including a mail-order or specialty pharmacy, in
which the pharmacy benefit manager or its affiliate
maintains an ownership interest or control;
(2) offering or implementing a plan design that
encourages a covered individual to only use a pharmacy in
which the pharmacy benefit manager or an affiliate
maintains an ownership interest or control, if the plan
design increases costs for the covered individual. This
includes a plan design that requires a covered individual
to pay higher costs or an increased share of costs for a
drug or drug-related service if the covered individual
uses a pharmacy that is not owned or controlled by the
pharmacy benefit manager or its affiliate.
(3) reimbursing a pharmacy or pharmacist for a drug
and pharmacist service in an amount less than the amount
that the pharmacy benefit manager reimburses itself or an
affiliate, including affiliated manufacturers or joint
ventures for providing the same drug or service.
"Third-party payer" means any entity that pays for

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prescription drugs on behalf of a patient other than a health
care provider or sponsor of a plan subject to regulation under
Medicare Part D, 42 U.S.C. 1395w-101 et seq.
(a-5) In this Article, references to an "insurer" or
"health insurer" shall include commercial private health
insurance issuers, managed care organizations, managed care
community networks, and any other third-party payer that
contracts with pharmacy benefit managers or with the
Department of Healthcare and Family Services to provide
benefits or services under the Medicaid program or to
otherwise engage in the administration or payment of pharmacy
benefits. However, the terms do not refer to the plan sponsor
of a self-funded, single-employer employee welfare benefit
plan or self-funded multiemployer plan subject to 29 U.S.C.
1144.
(b) A contract between a health insurer and a pharmacy
benefit manager must require that the pharmacy benefit
manager:
(1) Update maximum allowable cost pricing information
at least every 7 calendar days.
(2) Maintain a process that will, in a timely manner,
eliminate drugs from maximum allowable cost lists or
modify drug prices to remain consistent with changes in
pricing data used in formulating maximum allowable cost
prices and product availability.
(3) Provide access to its maximum allowable cost list

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to each pharmacy or pharmacy services administrative
organization subject to the maximum allowable cost list.
Access may include a real-time pharmacy website portal to
be able to view the maximum allowable cost list. As used in
this Section, "pharmacy services administrative
organization" means an entity operating within the State
that contracts with independent pharmacies to conduct
business on their behalf with third-party payers. A
pharmacy services administrative organization may provide
administrative services to pharmacies and negotiate and
enter into contracts with third-party payers or pharmacy
benefit managers on behalf of pharmacies.
(4) Provide a process by which a contracted pharmacy
can appeal the provider's reimbursement for a drug subject
to maximum allowable cost pricing. The appeals process
must, at a minimum, include the following:
(A) A requirement that a contracted pharmacy has
14 calendar days after the applicable fill date to
appeal a maximum allowable cost if the reimbursement
for the drug is less than the net amount that the
network provider paid to the supplier of the drug.
(B) A requirement that a pharmacy benefit manager
must respond to a challenge within 14 calendar days of
the contracted pharmacy making the claim for which the
appeal has been submitted.
(C) A telephone number and e-mail address or

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website to network providers, at which the provider
can contact the pharmacy benefit manager to process
and submit an appeal.
(D) A requirement that, if an appeal is denied,
the pharmacy benefit manager must provide the reason
for the denial and the name and the national drug code
number from national or regional wholesalers.
(E) A requirement that, if an appeal is sustained,
the pharmacy benefit manager must make an adjustment
in the drug price effective the date the challenge is
resolved and make the adjustment applicable to all
similarly situated network pharmacy providers, as
determined by the managed care organization or
pharmacy benefit manager.
(5) Allow a plan sponsor or insurer whose coverage is
administered by the contracting with a pharmacy benefit
manager an annual right to audit compliance with the terms
of the contract by the pharmacy benefit manager,
including, but not limited to, full disclosure of any and
all rebate amounts secured, whether product specific or
generalized rebates, that were provided to the pharmacy
benefit manager by a pharmaceutical manufacturer. The cost
of the audit shall be borne exclusively by the pharmacy
benefit manager.
(6) Allow a plan sponsor or insurer whose coverage is
administered by the contracting with a pharmacy benefit

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manager to request that the pharmacy benefit manager
disclose the actual amounts paid by the pharmacy benefit
manager to the pharmacy.
(7) Provide notice to the plan sponsor or the insurer
party contracting with the pharmacy benefit manager of any
consideration that the pharmacy benefit manager receives
from the manufacturer for dispense as written
prescriptions once a generic or biologically similar
product becomes available.
(c) In order to place a particular prescription drug on a
maximum allowable cost list, the pharmacy benefit manager
must, at a minimum, ensure that:
(1) if the drug is a generically equivalent drug, it
is listed as therapeutically equivalent and
pharmaceutically equivalent "A" or "B" rated in the United
States Food and Drug Administration's most recent version
of the "Orange Book" or have an NR or NA rating by
Medi-Span, Gold Standard, or a similar rating by a
nationally recognized reference;
(2) the drug is available for purchase by each
pharmacy in the State from national or regional
wholesalers operating in Illinois; and
(3) the drug is not obsolete.
(d) A pharmacy benefit manager is prohibited from limiting
a pharmacist's ability to disclose whether the cost-sharing
obligation exceeds the retail price for a covered prescription

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drug, and the availability of a more affordable alternative
drug, if one is available in accordance with Section 42 of the
Pharmacy Practice Act.
(e) A health insurer or pharmacy benefit manager shall not
require a covered individual an insured to make a payment for a
prescription drug at the point of sale in an amount that
exceeds the lesser of:
(1) the applicable cost-sharing amount; or
(2) the retail price of the drug in the absence of
prescription drug coverage;
(3) the discounted price presented by the covered
individual through a no-cost drug program or drug
manufacturer voucher provided by or for the covered
individual at the point of sale; or
(4) the discounted price presented by the covered
individual through a discounted health care services plan
provided by or for the covered individual at the point of
sale.
(f) Unless required by law, a contract between a pharmacy
benefit manager or third-party payer and a 340B entity or 340B
pharmacy shall not contain any provision that:
(1) distinguishes between drugs purchased through the
340B drug discount program and other drugs when
determining reimbursement or reimbursement methodologies,
or contains otherwise less favorable payment terms or
reimbursement methodologies for 340B entities or 340B

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pharmacies when compared to similarly situated non-340B
entities;
(2) imposes any fee, chargeback, or rate adjustment
that is not similarly imposed on similarly situated
pharmacies that are not 340B entities or 340B pharmacies;
(3) imposes any fee, chargeback, or rate adjustment
that exceeds the fee, chargeback, or rate adjustment that
is not similarly imposed on similarly situated pharmacies
that are not 340B entities or 340B pharmacies;
(4) prevents or interferes with an individual's choice
to receive a covered prescription drug from a 340B entity
or 340B pharmacy through any legally permissible means,
except that nothing in this paragraph shall prohibit the
establishment of differing copayments or other
cost-sharing amounts within the health benefit plan for
covered individuals persons who acquire covered
prescription drugs from a nonpreferred or nonparticipating
provider;
(5) excludes a 340B entity or 340B pharmacy from a
pharmacy network on any basis that includes consideration
of whether the 340B entity or 340B pharmacy participates
in the 340B drug discount program;
(6) prevents a 340B entity or 340B pharmacy from using
a drug purchased under the 340B drug discount program; or
(7) any other provision that discriminates against a
340B entity or 340B pharmacy by treating the 340B entity

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or 340B pharmacy differently than non-340B entities or
non-340B pharmacies for any reason relating to the
entity's participation in the 340B drug discount program.
As used in this subsection, "pharmacy benefit manager" and
"third-party payer" do not include pharmacy benefit managers
and third-party payers acting on behalf of a Medicaid program.
(f-5) A pharmacy benefit manager or an affiliate acting on
its behalf shall not conduct spread pricing.
(f-10) A pharmacy benefit manager or an affiliate acting
on its behalf shall not steer a covered individual. Existing
agreements entered into before the effective date of this
amendatory Act of the 104th General Assembly shall supersede
this subsection until the termination of the current term of
such agreement.
(f-15) A pharmacy benefit manager or affiliated rebate
aggregator must remit no less than 100% of any amounts paid by
a pharmaceutical manufacturer, wholesaler, or other
distributor of a drug, including, but not limited to, rebates,
group purchasing fees, and other fees, to the health benefit
plan sponsor, covered individual, or employer. Records of
rebates and fees remitted from the pharmacy benefit manager or
rebate aggregator must be disclosed to the Department annually
in a format to be specified by the Department. The records
received by the Department shall be considered confidential
and privileged for all purposes, including for purposes of the
Freedom of Information Act, shall not be subject to subpoena

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from any private party, and shall not be admissible as
evidence in a civil action.
(f-20) A pharmacy benefit manager or an affiliate acting
on its behalf is prohibited from limiting a covered
individual's access to drugs from a pharmacy or pharmacist
enrolled with the health benefit plan under the terms offered
to all pharmacies in the plan coverage area by designating the
covered drug as a specialty drug contrary to the definition in
this Section.
(f-25) The contract between the pharmacy benefit manager
and the insurer or health benefit plan sponsor must allow and
provide for the pharmacy benefit manager's compliance with an
audit at least once per calendar year of the rebate and fee
records remitted from a pharmacy benefit manager or its
affiliated party to a health benefit plan. This audit may be
incorporated into the audit under paragraph (5) of subsection
(b) of this Section. Contracts with rebate aggregators,
pharmacy services administrative organizations, pharmacies, or
drug manufacturers must be available for audit by health
benefit plan sponsors, insurers, or their designees at least
once per plan year. Audits shall be performed by an auditor
selected by the health benefit plan sponsor, insurer, or its
designee. Health benefit plan sponsors and insurers shall give
the pharmacy benefit manager a complete copy of the audit and
the pharmacy benefit manager shall provide a complete copy of
those findings to the Department within 60 days of initial

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receipt. Rebate contracts with rebate aggregators, pharmacy
services administrative organizations, pharmacies, or drug
manufacturers shall be available for audit by health benefit
plan sponsor, insurer, or designee. Nothing in this Section
shall limit the Department's ability to access the books and
records and any and all copies thereof of pharmacy benefit
managers, their affiliates, or affiliated rebate aggregators.
The records received by the Department shall be considered
confidential and privileged for all purposes, including for
purposes of the Freedom of Information Act, shall not be
subject to subpoena from any private party, and shall not be
admissible as evidence in a civil action.
(g) A violation of this Section by a pharmacy benefit
manager constitutes an unfair or deceptive act or practice in
the business of insurance under Section 424.
(h) A provision that violates subsection (f) in a contract
between a pharmacy benefit manager or a third-party payer and
a 340B entity that is entered into, amended, or renewed after
July 1, 2022 shall be void and unenforceable. This subsection
and subsection (f) do not apply to a contract directly between
a 340B entity and the plan sponsor of a self-funded,
single-employer or multiemployer employee welfare benefit plan
subject to 29 U.S.C. 1144.
(i)(1) A pharmacy benefit manager may not retaliate
against a pharmacist or pharmacy for disclosing information in
a court, in an administrative hearing, before a legislative

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commission or committee, or in any other proceeding, if the
pharmacist or pharmacy has reasonable cause to believe that
the disclosed information is evidence of a violation of a
State or federal law, rule, or regulation.
(2) A pharmacy benefit manager may not retaliate against a
pharmacist or pharmacy for disclosing information to a
government or law enforcement agency, if the pharmacist or
pharmacy has reasonable cause to believe that the disclosed
information is evidence of a violation of a State or federal
law, rule, or regulation.
(3) A pharmacist or pharmacy shall make commercially
reasonable efforts to limit the disclosure of confidential and
proprietary information.
(4) Retaliatory actions against a pharmacy or pharmacist
include cancellation of, restriction of, or refusal to renew
or offer a contract to a pharmacy solely because the pharmacy
or pharmacist has:
(A) made disclosures of information that the
pharmacist or pharmacy has reasonable cause to believe is
evidence of a violation of a State or federal law, rule, or
regulation;
(B) filed complaints with the plan or pharmacy benefit
manager; or
(C) filed complaints against the plan or pharmacy
benefit manager with the Department.
(j) This Section applies to contracts entered into or

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renewed on or after July 1, 2022 and, unless provided
otherwise in this Section or in the Illinois Public Aid Code,
applies to pharmacy benefit managers that are contracted with
a Medicaid managed care entity on or after January 1, 2026.
(k) This Section applies to any health benefit group or
individual policy of accident and health insurance or managed
care plan that provides coverage for prescription drugs and
that is amended, delivered, issued, or renewed on or after
July 1, 2020. The changes made to this Section by this
amendatory Act of the 104th General Assembly shall apply with
respect to any health benefit plan that provides coverage for
drugs that is amended, delivered, issued, or renewed on or
after January 1, 2026.
(l) A pharmacy benefit manager is responsible for
compliance with all State requirements applicable to pharmacy
benefit managers even if an action or responsibility of a
pharmacy benefit manager is delegated to or completed by an
affiliate.
(Source: P.A. 102-778, eff. 7-1-22; 103-154, eff. 6-30-23;
103-453, eff. 8-4-23.)
(215 ILCS 5/513b1.1 new)
Sec. 513b1.1. Pharmacy benefit manager reporting
requirements.
(a) A pharmacy benefit manager that provides services for
a health benefit plan must submit an annual report no later

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than September 1, to the Department, each health benefit plan
sponsor, and each insurer that includes the following:
(1) data on the health benefit plan including:
(A) a list of drugs including corresponding
information on therapeutic class, brand name, generic
name, or specialty drug name;
(B) number of covered individuals;
(C) number of drug-related claims;
(D) dosage units;
(E) dispensing channel used;
(F) average wholesale acquisition cost per drug;
and
(G) total out-of-pocket spending by deidentified
covered individual per drug, per transaction;
(2) amount received by the health benefit plan in
rebates, fees, or discounts related to drug utilization or
spending;
(3) total gross spending on drugs by the health
benefit plan;
(4) total net spending, gross spending less
administrative portion of the medical loss ratio, on drugs
by the health benefit plan;
(5) the amount paid by the health benefit plan to the
pharmacy benefit manager for reimbursement cost of a drug
and service per transaction;
(6) the amount a pharmacy benefit manager paid for

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pharmacists' services and drugs rendered related to the
health benefit plan per transaction, including, but not
limited to, any dispensing fee;
(7) the specific rebate amount received by the
pharmacy benefit manager per transaction, the amount of
the rebates passed through to the health benefit plan per
transaction, and the amount of the rebates passed on to
covered individuals at the point of sale that reduced the
covered individuals' applicable deductible, copayment,
coinsurance, or other cost-sharing amount per transaction;
(8) any information collected from drug manufacturers
pertaining to copayment assistance to the extent such
information is collected;
(9) any compensation paid to brokers, consultants,
advisors, or any other individual or firm for referrals,
consideration, or retention by the health benefit plan;
(10) explanation of benefit design parameters
encouraging or requiring covered individuals to use
affiliated pharmacies, percentage of drugs charged by
these pharmacies, and a list of drugs dispensed by
affiliated pharmacies with their associated costs; and
(11) a complete copy of each unredacted contract the
pharmacy benefit manager has with the health benefit plan
sponsor or insurer.
(b) Annual reports pursuant to subsection (a):
(1) must be written in plain language to ensure ease

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of reading and accessibility;
(2) must only contain summary health information to
ensure plan, coverage, or covered individual information
remains private and confidential;
(3) upon request by a covered individual, must be
available in summary format and provide aggregated
information to help covered individuals understand their
health benefit plan's drug coverage; and
(4) must be filed with the Department no later than
September 1 of each year via the Systems for Electronic
Rates & Forms Filing (SERFF). The filing shall include the
summary version of the report described in paragraph (3)
of this subsection, which shall be marked for public
access.
The Department may share all reports with an established
institution of higher education in this State for the creation
of a pharmacist dispensing cost report to be produced
annually. This annual pharmacist dispensing cost report shall
provide a survey of the average cost of dispensing a
prescription for pharmacists in Illinois. The institution of
higher education shall have the ability to request additional
information from pharmacists for its analysis. The institution
of higher education shall issue the report to the General
Assembly no later than December 31, 2026 and annually
thereafter.
(c) A pharmacy benefit manager may petition the Department

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for a filing submission extension. The Director may grant or
deny the extension within 5 business days.
(d) Failure by a pharmacy benefit manager to submit all
required elements in an annual report to the Department may
result in a fine levied by the Director not to exceed $10,000
per day, per offense. Funds derived from fines levied shall be
deposited into the Insurance Producer Administration Fund.
Fine information shall be posted on the Department's website.
(e) A pharmacy benefit manager found in violation of
subsection (a) or paragraph (4) of subsection (b) may request
a hearing from the Director within 10 days of receipt of the
Director's order, or, if the violation is found in a market
conduct examination, as provided in Section 132 of this Code.
(f) Except for the summary version, the annual reports
submitted by pharmacy benefit managers shall be considered
confidential and privileged for all purposes, including for
purposes of the Freedom of Information Act, shall not be
subject to subpoena from any private party, and shall not be
admissible as evidence in a civil action.
(g) A copy of an adverse decision against a pharmacy
benefit manager for failing to submit an annual report to the
Department must be posted to the Department's website.
(h) Nothing in this Section shall be construed as
permitting a pharmacy benefit manager to avoid or otherwise
fail to comply with the reporting requirements set forth in
Section 5-36 of the Illinois Public Aid Code.

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(215 ILCS 5/513b2)
Sec. 513b2. Licensure requirements.
(a) Beginning on July 1, 2020, to conduct business in this
State, a pharmacy benefit manager must register with the
Director. To initially register or renew a registration, a
pharmacy benefit manager shall submit:
(1) A nonrefundable fee not to exceed $500.
(2) A copy of the registrant's corporate charter,
articles of incorporation, or other charter document.
(3) A completed registration form adopted by the
Director containing:
(A) The name and address of the registrant.
(B) The name, address, and official position of
each officer and director of the registrant.
(b) The registrant shall report any change in information
required under this Section to the Director in writing within
60 days after the change occurs.
(c) Upon receipt of a completed registration form, the
required documents, and the registration fee, the Director
shall issue a registration certificate. The certificate may be
in paper or electronic form, and shall clearly indicate the
expiration date of the registration. Registration certificates
are nontransferable.
(d) A registration certificate is valid for 2 years after
its date of issue. The Director shall adopt by rule an initial

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registration fee not to exceed $500 and a registration renewal
fee not to exceed $500, both of which shall be nonrefundable.
Total fees may not exceed the cost of administering this
Section.
(e) The Department shall adopt any rules necessary to
implement this Section.
(f) On or before August 1, 2025, the pharmacy benefit
manager shall submit a report to the Department that lists the
name of each health benefit plan it administers, provides the
number of covered individuals for each health benefit plan as
of the date of submission, and provides the total number of
covered individuals across all health benefit plans the
pharmacy benefit manager administers. On or before September
1, 2025, a registered pharmacy benefit manager, as a condition
of its authority to transact business in this State, must
submit to the Department an amount equal to $15 or an alternate
amount as determined by the Director by rule per covered
individual enrolled by the pharmacy benefit manager in this
State, as detailed in the report submitted to the Department
under this subsection, during the preceding calendar year. On
or before September 1, 2026 and each September 1 thereafter,
payments submitted under this subsection shall be based on the
number of covered individuals reported to the Department in
Section 513b1.1.
(g) All amounts collected under this Section shall be
deposited into the Prescription Drug Affordability Fund, which

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is hereby created as a special fund in the State treasury. Of
the amounts collected under this Section each fiscal year, the
Department shall transfer the first $25,000,000 into the DCEO
Projects Fund for grants to pharmacies under Section 605-60 of
the Department of Commerce and Economic Opportunity Law.
(Source: P.A. 101-452, eff. 1-1-20.)
(215 ILCS 5/513b3)
Sec. 513b3. Examination.
(a) The Director, or his or her designee, may examine a
registered pharmacy benefit manager related to all of its
lines of business, including government programs, under the
Director's jurisdiction in accordance with Sections 132-132.7.
If the Director or the examiners find that the pharmacy
benefit manager has violated this Article or any other
insurance-related or health benefits-related laws, rules, or
regulations under the Director's jurisdiction because of the
manner in which the pharmacy benefit manager has conducted
business on behalf of a health insurer or plan sponsor, then,
unless the health insurer or plan sponsor is included in the
examination and has been afforded the same opportunity to
request or participate in a hearing on the examination report,
the examination report shall not allege a violation by the
health insurer or plan sponsor and the Director's order based
on the report shall not impose any requirements, prohibitions,
or penalties on the health insurer or plan sponsor. Nothing in

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this Section shall prevent the Director from using any
information obtained during the examination of an
administrator to examine, investigate, or take other
appropriate regulatory or legal action with respect to a
health insurer or plan sponsor.
(b) The examination requirement for the pharmacy benefit
manager to provide convenient and free access to all books and
records under Sections 132 and 132.4 of this Code includes, at
the Director's discretion, unredacted copies furnished
electronically to the Director's market conduct surveillance
personnel or examiners. Access must include information
related to third-party entities affiliated or contracted with
the pharmacy benefit manager, including, but not limited to,
rebate aggregators and pharmacy services administrative
organizations.
(c) The Department may examine any pharmacy benefit
manager as often as the Department deems appropriate, but
shall, at a minimum, conduct an examination of the 3 largest
pharmacy benefit managers with the most covered individuals
not less frequently than once every 5 years beginning in 2026,
or following the conclusion of any market conduct exams
already in progress for the 3 largest pharmacy benefit
managers. In determining pharmacy benefit plan market share,
the Department may consider, but is not limited to, the
following:
(1) the number of covered individuals;

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(2) the Illinois Market share;
(3) the number of drug-related claims;
(4) the total gross spending on drugs;
(5) the aggregate amounts of rebates, fees, and
discounts remitted by the pharmacy benefit manager or
rebate aggregator;
(6) the dispensing channel used;
(7) the previous violations; and
(8) the complaints received.
(Source: P.A. 103-897, eff. 1-1-25.)
Section 25. The Illinois Public Aid Code is amended by
changing Sections 5-5.12b and 5-36 as follows:
(305 ILCS 5/5-5.12b)
Sec. 5-5.12b. Critical access care pharmacy program.
(a) As used in this Section:
"Critical access care pharmacy" means an Illinois-based
brick and mortar retail pharmacy that is located in Illinois
that is owned by a person or entity with an ownership or
control interest in a county with fewer than 50,000 residents
and that owns fewer than 10 pharmacies, is either located in a
county with fewer than 50,000 residents or in a county with
50,000 or more residents and in an area within Illinois that is
designated as a Medically Underserved Area by the Health
Resources and Services Administration, an agency of the U.S.

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Department of Health and Human Services and has attested and
been approved by the Department for participation in the
critical access care pharmacy program.
"Critical access care pharmacy program payment" means the
number of individual prescriptions a critical access care
pharmacy fills during that quarter multiplied by the lesser of
the individual payment amount or the dispensing reimbursement
rate made by the Department under the medical assistance
program as of April 1, 2018.
"Individual payment amount" means the dividend of 1/4 of
the annual amount appropriated for the critical access care
pharmacy program by the number of prescriptions filled by all
critical access care pharmacies reimbursed by Medicaid managed
care organizations that quarter.
"Ownership or control interest" has the meaning given to
"person with an ownership or control interest" in 42 CFR
455.101.
(b) Subject to appropriations and federal approval, the
Department shall establish a critical access care pharmacy
program to ensure the sustainability of critical access
pharmacies throughout the State of Illinois.
(c) The critical access care pharmacy program disbursed by
the managed care plans shall not exceed $45,000,000
$10,000,000 annually and individual payment amounts per
prescription shall not exceed the brand name dispensing rate
that the Department would have reimbursed to a critical access

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care pharmacy under the Medical Assistance Program as of July
1, 2024 April 1, 2018.
(c-5) 340B pharmacies that are participants in the
critical access care pharmacy program shall only be reimbursed
for the actual acquisition costs of the 340B covered drugs
dispensed to participants in the State's medical assistance
program as defined in the Illinois Public Aid Code.
(d) Annually, beginning January 1, 2026 Quarterly, the
Department shall determine the number of prescriptions filled
by critical access care pharmacies reimbursed by Medicaid
managed care organizations utilizing encounter data available
to the Department. The Department shall determine the
individual payment amount per prescription by dividing 1/4 of
the annual amount appropriated for the critical access care
pharmacy program by the number of prescriptions filled by all
critical access care pharmacies reimbursed by Medicaid managed
care organizations that quarter. If the individual payment
amount per prescription as calculated using quarterly
prescription amounts exceeds the reimbursement rate under the
medical assistance program as of April 1, 2018, then the
individual payment amount per prescription shall be the
dispensing reimbursement rate under the medical assistance
program as of April 1, 2018.
(e) Quarterly, the Department shall distribute to critical
access care pharmacies a critical access care pharmacy program
payment. The first payment shall be calculated utilizing the

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encounter data from the last quarter of State fiscal year
2018. This payment shall sunset on December 31, 2025.
(f) Effective January 1, 2026, the Department shall issue
a quarterly directed critical access care pharmacy program
payment to critical access care pharmacies for any
prescription drug dispensed to a managed care client.
(g) (f) The Department may adopt rules necessary to
implement this Section. The rules may include, but are not
limited to, permitting an Illinois-based brick and mortar
pharmacy that owns fewer than 10 pharmacies to receive
critical access care pharmacy program payments in the same
manner as a critical access care pharmacy, regardless of
whether the pharmacy meets the other requirements of a
critical access care pharmacy in subsection (a) is located in
a county with a population of less than 50,000.
(Source: P.A. 100-587, eff. 6-4-18.)
(305 ILCS 5/5-36)
Sec. 5-36. Pharmacy benefits.
(a)(1) The Department may enter into a contract with a
third party on a fee-for-service reimbursement model for the
purpose of administering pharmacy benefits as provided in this
Section for members not enrolled in a Medicaid managed care
organization; however, these services shall be approved by the
Department. The Department shall ensure coordination of care
between the third-party administrator and managed care

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organizations as a consideration in any contracts established
in accordance with this Section. Any managed care techniques,
principles, or administration of benefits utilized in
accordance with this subsection shall comply with State law.
(2) The following shall apply to contracts between
entities contracting relating to the Department's third-party
administrators and pharmacies:
(A) the Department shall approve any contract between
a third-party administrator and a pharmacy;
(B) the Department's third-party administrator shall
not change the terms of a contract between a third-party
administrator and a pharmacy without written approval by
the Department; and
(C) the Department's third-party administrator shall
not create, modify, implement, or indirectly establish any
fee on a pharmacy, pharmacist, or a recipient of medical
assistance without written approval by the Department.
(b) The provisions of this Section shall not apply to
outpatient pharmacy services provided by a health care
facility registered as a covered entity pursuant to 42 U.S.C.
256b or any pharmacy owned by or contracted with the covered
entity. A Medicaid managed care organization shall, either
directly or through a pharmacy benefit manager, administer and
reimburse outpatient pharmacy claims submitted by a health
care facility registered as a covered entity pursuant to 42
U.S.C. 256b, its owned pharmacies, and contracted pharmacies

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in accordance with the contractual agreements the Medicaid
managed care organization or its pharmacy benefit manager has
with such facilities and pharmacies and in accordance with
subsection (h-5).
(b-5) Any pharmacy benefit manager that contracts with a
Medicaid managed care organization to administer and reimburse
pharmacy claims as provided in this Section must be registered
with the Director of Insurance in accordance with Section
513b2 of the Illinois Insurance Code. A pharmacy benefit
manager must comply with all provisions of Article XXXIIB of
the Illinois Insurance Code to the extent that the provisions
do not prevent the application of any provision of this
Article or applicable federal law. Nothing in this Section
shall be construed to limit the authority of the Illinois
Department or the Inspector General to administer or enforce
any provisions of this Section or any other Section in the
Illinois Public Aid Code related to pharmacy benefit managers
or Medicaid managed care entity.
(c) On at least an annual basis, the Director of the
Department of Healthcare and Family Services shall submit a
report beginning no later than one year after January 1, 2020
(the effective date of Public Act 101-452) that provides an
update on any contract, contract issues, formulary, dispensing
fees, and maximum allowable cost concerns regarding a
third-party administrator and managed care. The requirement
for reporting to the General Assembly shall be satisfied by

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filing copies of the report with the Speaker, the Minority
Leader, and the Clerk of the House of Representatives and with
the President, the Minority Leader, and the Secretary of the
Senate. The Department shall take care that no proprietary
information is included in the report required under this
Section.
(d) (Blank). A pharmacy benefit manager shall notify the
Department 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 a managed
care organization to exercise its contractual duties.
"Conflict of interest" shall be defined by rule by the
Department.
(e) A pharmacy benefit manager shall, upon request,
disclose to the Department the following information:
(1) whether the pharmacy benefit manager has a
contract, agreement, or other arrangement with a
pharmaceutical manufacturer to exclusively dispense or
provide a drug to a managed care organization's enrollees,
and the aggregate amounts of consideration of economic
benefits collected or received pursuant to that
arrangement;
(2) the percentage of claims payments made by the
pharmacy benefit manager to pharmacies owned, managed, or
controlled by the pharmacy benefit manager or any of the

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pharmacy benefit manager's management companies, parent
companies, subsidiary companies, or jointly held
companies;
(3) the aggregate amount of the fees or assessments
imposed on, or collected from, pharmacy providers;
(4) the average annualized percentage of revenue
collected by the pharmacy benefit manager as a result of
each contract it has executed with a managed care
organization contracted by the Department to provide
medical assistance benefits which is not paid by the
pharmacy benefit manager to pharmacy providers and
pharmaceutical manufacturers or labelers or in order to
perform administrative functions pursuant to its contracts
with managed care organizations;
(5) the total number of prescriptions dispensed under
each contract the pharmacy benefit manager has with a
managed care organization (MCO) contracted by the
Department to provide medical assistance benefits;
(6) the aggregate wholesale acquisition cost for drugs
that were dispensed to enrollees in each MCO with which
the pharmacy benefit manager has a contract by any
pharmacy owned, managed, or controlled by the pharmacy
benefit manager or any of the pharmacy benefit manager's
management companies, parent companies, subsidiary
companies, or jointly-held companies;
(7) the aggregate amount of administrative fees that

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the pharmacy benefit manager received from all
pharmaceutical manufacturers for prescriptions dispensed
to MCO enrollees;
(8) for each MCO with which the pharmacy benefit
manager has a contract, the aggregate amount of payments
received by the pharmacy benefit manager from the MCO;
(9) for each MCO with which the pharmacy benefit
manager has a contract, the aggregate amount of
reimbursements the pharmacy benefit manager paid to
contracting pharmacies; and
(10) any other information considered necessary by the
Department.
(f) The information disclosed under subsection (e) shall
include all retail, mail order, specialty, and compounded
prescription products. All information made available to the
Department under subsection (e) is confidential and not
subject to disclosure under the Freedom of Information Act.
All information made available to the Department under
subsection (e) shall not be reported or distributed in any way
that compromises its competitive, proprietary, or financial
value. The information shall only be used by the Department to
assess the contract, agreement, or other arrangements made
between a pharmacy benefit manager and a pharmacy provider,
pharmaceutical manufacturer or labeler, managed care
organization, or other entity, as applicable.
(g) A pharmacy benefit manager shall disclose directly in

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writing to a pharmacy provider or pharmacy services
administrative organization contracting with the pharmacy
benefit manager of any material change to a contract provision
that affects the terms of the reimbursement, the process for
verifying benefits and eligibility, dispute resolution,
procedures for verifying drugs included on the formulary, and
contract termination at least 30 days prior to the date of the
change to the provision. The terms of this subsection shall be
deemed met if the pharmacy benefit manager posts the
information on a website, viewable by the public. A pharmacy
service administration organization shall notify all contract
pharmacies of any material change, as described in this
subsection, within 2 days of notification. As used in this
Section, "pharmacy services administrative organization" means
an entity operating within the State that contracts with
independent pharmacies to conduct business on their behalf
with third-party payers. A pharmacy services administrative
organization may provide administrative services to pharmacies
and negotiate and enter into contracts with third-party payers
or pharmacy benefit managers on behalf of pharmacies.
(h) A pharmacy benefit manager shall not include the
following in a contract with a pharmacy provider:
(1) a provision prohibiting the provider from
informing a patient of a less costly alternative to a
prescribed medication; or
(2) a provision that prohibits the provider from

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dispensing a particular amount of a prescribed medication,
if the pharmacy benefit manager allows that amount to be
dispensed through a pharmacy owned or controlled by the
pharmacy benefit manager, unless the prescription drug is
subject to restricted distribution by the United States
Food and Drug Administration or requires special handling,
provider coordination, or patient education that cannot be
provided by a retail pharmacy.
(h-5) Unless required by law, a Medicaid managed care
organization or pharmacy benefit manager administering or
managing benefits on behalf of a Medicaid managed care
organization shall not refuse to contract with a 340B entity
or 340B pharmacy for refusing to accept less favorable payment
terms or reimbursement methodologies when compared to
similarly situated non-340B entities and shall not include in
a contract with a 340B entity or 340B pharmacy a provision
that:
(1) imposes any fee, chargeback, or rate adjustment
that is not similarly imposed on similarly situated
pharmacies that are not 340B entities or 340B pharmacies;
(2) imposes any fee, chargeback, or rate adjustment
that exceeds the fee, chargeback, or rate adjustment that
is not similarly imposed on similarly situated pharmacies
that are not 340B entities or 340B pharmacies;
(3) prevents or interferes with an individual's choice
to receive a prescription drug from a 340B entity or 340B

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pharmacy through any legally permissible means;
(4) excludes a 340B entity or 340B pharmacy from a
pharmacy network on the basis of whether the 340B entity
or 340B pharmacy participates in the 340B drug discount
program;
(5) prevents a 340B entity or 340B pharmacy from using
a drug purchased under the 340B drug discount program so
long as the drug recipient is a patient of the 340B entity;
nothing in this Section exempts a 340B pharmacy from
following the Department's preferred drug list or from any
prior approval requirements of the Department or the
Medicaid managed care organization that are imposed on the
drug for all pharmacies; or
(6) any other provision that discriminates against a
340B entity or 340B pharmacy by treating a 340B entity or
340B pharmacy differently than non-340B entities or
non-340B pharmacies for any reason relating to the
entity's participation in the 340B drug discount program.
A provision that violates this subsection in any contract
between a Medicaid managed care organization or its pharmacy
benefit manager and a 340B entity entered into, amended, or
renewed after July 1, 2022 shall be void and unenforceable.
In this subsection (h-5):
"340B entity" means a covered entity as defined in 42
U.S.C. 256b(a)(4) authorized to participate in the 340B drug
discount program.

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"340B pharmacy" means any pharmacy used to dispense 340B
drugs for a covered entity, whether entity-owned or external.
(i) Nothing in this Section shall be construed to prohibit
a pharmacy benefit manager from requiring the same
reimbursement and terms and conditions for a pharmacy provider
as for a pharmacy owned, controlled, or otherwise associated
with the pharmacy benefit manager.
(j) A pharmacy benefit manager shall establish and
implement a process for the resolution of disputes arising out
of this Section, which shall be approved by the Department.
(k) The Department shall adopt rules establishing
reasonable dispensing fees for fee-for-service payments in
accordance with guidance or guidelines from the federal
Centers for Medicare and Medicaid Services.
(Source: P.A. 102-558, eff. 8-20-21; 102-778, eff. 7-1-22;
103-593, eff. 6-7-24.)
Section 30. The Juvenile Court Act of 1987 is amended by
changing Section 5-515 as follows:
(705 ILCS 405/5-515)
Sec. 5-515. Medical, and dental, and pharmaceutical
treatment and care.
(a) At all times during temporary custody, detention or
shelter care, the court may authorize a physician, a hospital
or any other appropriate health care provider to provide

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medical, dental or surgical procedures or pharmaceuticals if
those procedures or pharmaceuticals are necessary to safeguard
the minor's life or health. If the minor is covered under an
existing medical or dental plan, the county shall be
reimbursed for the expenses incurred for such services as if
the minor were not held in temporary custody, detention, or
shelter care.
(b) If a provider of temporary custody, detention, or
shelter care has a contract with a pharmacy benefit manager or
a contract with an insurance company, health maintenance
organization, limited health service organization,
administrative services organization, or any other managed
care organization or health insurance issuer where a pharmacy
benefit manager administers the provider's coverage of,
payment for, or formulary design for drugs necessary to
safeguard the minor's life or health, the contract with the
pharmacy benefit manager and the pharmacy benefit manager's
activities shall be subject to Article XXXIIB of the Illinois
Insurance Code and the authority of the Director of Insurance
to enforce those provisions. The provider shall have all the
rights of a plan sponsor under those provisions.
(Source: P.A. 90-590, eff. 1-1-99.)
Section 35. The Unified Code of Corrections is amended by
changing Section 3-2-2 as follows:

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(730 ILCS 5/3-2-2) (from Ch. 38, par. 1003-2-2)
Sec. 3-2-2. Powers and duties of the Department.
(1) In addition to the powers, duties, and
responsibilities which are otherwise provided by law, the
Department shall have the following powers:
(a) To accept persons committed to it by the courts of
this State for care, custody, treatment, and
rehabilitation, and to accept federal prisoners and
noncitizens over whom the Office of the Federal Detention
Trustee is authorized to exercise the federal detention
function for limited purposes and periods of time.
(b) To develop and maintain reception and evaluation
units for purposes of analyzing the custody and
rehabilitation needs of persons committed to it and to
assign such persons to institutions and programs under its
control or transfer them to other appropriate agencies. In
consultation with the Department of Alcoholism and
Substance Abuse (now the Department of Human Services),
the Department of Corrections shall develop a master plan
for the screening and evaluation of persons committed to
its custody who have alcohol or drug abuse problems, and
for making appropriate treatment available to such
persons; the Department shall report to the General
Assembly on such plan not later than April 1, 1987. The
maintenance and implementation of such plan shall be
contingent upon the availability of funds.

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(b-1) To create and implement, on January 1, 2002, a
pilot program to establish the effectiveness of
pupillometer technology (the measurement of the pupil's
reaction to light) as an alternative to a urine test for
purposes of screening and evaluating persons committed to
its custody who have alcohol or drug problems. The pilot
program shall require the pupillometer technology to be
used in at least one Department of Corrections facility.
The Director may expand the pilot program to include an
additional facility or facilities as he or she deems
appropriate. A minimum of 4,000 tests shall be included in
the pilot program. The Department must report to the
General Assembly on the effectiveness of the program by
January 1, 2003.
(b-5) To develop, in consultation with the Illinois
State Police, a program for tracking and evaluating each
inmate from commitment through release for recording his
or her gang affiliations, activities, or ranks.
(c) To maintain and administer all State correctional
institutions and facilities under its control and to
establish new ones as needed. Pursuant to its power to
establish new institutions and facilities, the Department
may, with the written approval of the Governor, authorize
the Department of Central Management Services to enter
into an agreement of the type described in subsection (d)
of Section 405-300 of the Department of Central Management

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Services Law. The Department shall designate those
institutions which shall constitute the State Penitentiary
System. The Department of Juvenile Justice shall maintain
and administer all State youth centers pursuant to
subsection (d) of Section 3-2.5-20.
Pursuant to its power to establish new institutions
and facilities, the Department may authorize the
Department of Central Management Services to accept bids
from counties and municipalities for the construction,
remodeling, or conversion of a structure to be leased to
the Department of Corrections for the purposes of its
serving as a correctional institution or facility. Such
construction, remodeling, or conversion may be financed
with revenue bonds issued pursuant to the Industrial
Building Revenue Bond Act by the municipality or county.
The lease specified in a bid shall be for a term of not
less than the time needed to retire any revenue bonds used
to finance the project, but not to exceed 40 years. The
lease may grant to the State the option to purchase the
structure outright.
Upon receipt of the bids, the Department may certify
one or more of the bids and shall submit any such bids to
the General Assembly for approval. Upon approval of a bid
by a constitutional majority of both houses of the General
Assembly, pursuant to joint resolution, the Department of
Central Management Services may enter into an agreement

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with the county or municipality pursuant to such bid.
(c-5) To build and maintain regional juvenile
detention centers and to charge a per diem to the counties
as established by the Department to defray the costs of
housing each minor in a center. In this subsection (c-5),
"juvenile detention center" means a facility to house
minors during pendency of trial who have been transferred
from proceedings under the Juvenile Court Act of 1987 to
prosecutions under the criminal laws of this State in
accordance with Section 5-805 of the Juvenile Court Act of
1987, whether the transfer was by operation of law or
permissive under that Section. The Department shall
designate the counties to be served by each regional
juvenile detention center.
(d) To develop and maintain programs of control,
rehabilitation, and employment of committed persons within
its institutions.
(d-5) To provide a pre-release job preparation program
for inmates at Illinois adult correctional centers.
(d-10) To provide educational and visitation
opportunities to committed persons within its institutions
through temporary access to content-controlled tablets
that may be provided as a privilege to committed persons
to induce or reward compliance.
(e) To establish a system of supervision and guidance
of committed persons in the community.

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(f) To establish in cooperation with the Department of
Transportation to supply a sufficient number of prisoners
for use by the Department of Transportation to clean up
the trash and garbage along State, county, township, or
municipal highways as designated by the Department of
Transportation. The Department of Corrections, at the
request of the Department of Transportation, shall furnish
such prisoners at least annually for a period to be agreed
upon between the Director of Corrections and the Secretary
of Transportation. The prisoners used on this program
shall be selected by the Director of Corrections on
whatever basis he deems proper in consideration of their
term, behavior and earned eligibility to participate in
such program - where they will be outside of the prison
facility but still in the custody of the Department of
Corrections. Prisoners convicted of first degree murder,
or a Class X felony, or armed violence, or aggravated
kidnapping, or criminal sexual assault, aggravated
criminal sexual abuse or a subsequent conviction for
criminal sexual abuse, or forcible detention, or arson, or
a prisoner adjudged a Habitual Criminal shall not be
eligible for selection to participate in such program. The
prisoners shall remain as prisoners in the custody of the
Department of Corrections and such Department shall
furnish whatever security is necessary. The Department of
Transportation shall furnish trucks and equipment for the

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highway cleanup program and personnel to supervise and
direct the program. Neither the Department of Corrections
nor the Department of Transportation shall replace any
regular employee with a prisoner.
(g) To maintain records of persons committed to it and
to establish programs of research, statistics, and
planning.
(h) To investigate the grievances of any person
committed to the Department and to inquire into any
alleged misconduct by employees or committed persons; and
for these purposes it may issue subpoenas and compel the
attendance of witnesses and the production of writings and
papers, and may examine under oath any witnesses who may
appear before it; to also investigate alleged violations
of a parolee's or releasee's conditions of parole or
release; and for this purpose it may issue subpoenas and
compel the attendance of witnesses and the production of
documents only if there is reason to believe that such
procedures would provide evidence that such violations
have occurred.
If any person fails to obey a subpoena issued under
this subsection, the Director may apply to any circuit
court to secure compliance with the subpoena. The failure
to comply with the order of the court issued in response
thereto shall be punishable as contempt of court.
(i) To appoint and remove the chief administrative

HB1697 Enrolled - 52 - LRB104 03541 RTM 13564 b
officers, and administer programs of training and
development of personnel of the Department. Personnel
assigned by the Department to be responsible for the
custody and control of committed persons or to investigate
the alleged misconduct of committed persons or employees
or alleged violations of a parolee's or releasee's
conditions of parole shall be conservators of the peace
for those purposes, and shall have the full power of peace
officers outside of the facilities of the Department in
the protection, arrest, retaking, and reconfining of
committed persons or where the exercise of such power is
necessary to the investigation of such misconduct or
violations. This subsection shall not apply to persons
committed to the Department of Juvenile Justice under the
Juvenile Court Act of 1987 on aftercare release.
(j) To cooperate with other departments and agencies
and with local communities for the development of
standards and programs for better correctional services in
this State.
(k) To administer all moneys and properties of the
Department.
(l) To report annually to the Governor on the
committed persons, institutions, and programs of the
Department.
(l-5) (Blank).
(m) To make all rules and regulations and exercise all

HB1697 Enrolled - 53 - LRB104 03541 RTM 13564 b
powers and duties vested by law in the Department.
(n) To establish rules and regulations for
administering a system of sentence credits, established in
accordance with Section 3-6-3, subject to review by the
Prisoner Review Board.
(o) To administer the distribution of funds from the
State Treasury to reimburse counties where State penal
institutions are located for the payment of assistant
state's attorneys' salaries under Section 4-2001 of the
Counties Code.
(p) To exchange information with the Department of
Human Services and the Department of Healthcare and Family
Services for the purpose of verifying living arrangements
and for other purposes directly connected with the
administration of this Code and the Illinois Public Aid
Code.
(q) To establish a diversion program.
The program shall provide a structured environment for
selected technical parole or mandatory supervised release
violators and committed persons who have violated the
rules governing their conduct while in work release. This
program shall not apply to those persons who have
committed a new offense while serving on parole or
mandatory supervised release or while committed to work
release.
Elements of the program shall include, but shall not

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be limited to, the following:
(1) The staff of a diversion facility shall
provide supervision in accordance with required
objectives set by the facility.
(2) Participants shall be required to maintain
employment.
(3) Each participant shall pay for room and board
at the facility on a sliding-scale basis according to
the participant's income.
(4) Each participant shall:
(A) provide restitution to victims in
accordance with any court order;
(B) provide financial support to his
dependents; and
(C) make appropriate payments toward any other
court-ordered obligations.
(5) Each participant shall complete community
service in addition to employment.
(6) Participants shall take part in such
counseling, educational, and other programs as the
Department may deem appropriate.
(7) Participants shall submit to drug and alcohol
screening.
(8) The Department shall promulgate rules
governing the administration of the program.
(r) To enter into intergovernmental cooperation

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agreements under which persons in the custody of the
Department may participate in a county impact
incarceration program established under Section 3-6038 or
3-15003.5 of the Counties Code.
(r-5) (Blank).
(r-10) To systematically and routinely identify with
respect to each streetgang active within the correctional
system: (1) each active gang; (2) every existing
inter-gang affiliation or alliance; and (3) the current
leaders in each gang. The Department shall promptly
segregate leaders from inmates who belong to their gangs
and allied gangs. "Segregate" means no physical contact
and, to the extent possible under the conditions and space
available at the correctional facility, prohibition of
visual and sound communication. For the purposes of this
paragraph (r-10), "leaders" means persons who:
(i) are members of a criminal streetgang;
(ii) with respect to other individuals within the
streetgang, occupy a position of organizer,
supervisor, or other position of management or
leadership; and
(iii) are actively and personally engaged in
directing, ordering, authorizing, or requesting
commission of criminal acts by others, which are
punishable as a felony, in furtherance of streetgang
related activity both within and outside of the

HB1697 Enrolled - 56 - LRB104 03541 RTM 13564 b
Department of Corrections.
"Streetgang", "gang", and "streetgang related" have the
meanings ascribed to them in Section 10 of the Illinois
Streetgang Terrorism Omnibus Prevention Act.
(s) To operate a super-maximum security institution,
in order to manage and supervise inmates who are
disruptive or dangerous and provide for the safety and
security of the staff and the other inmates.
(t) To monitor any unprivileged conversation or any
unprivileged communication, whether in person or by mail,
telephone, or other means, between an inmate who, before
commitment to the Department, was a member of an organized
gang and any other person without the need to show cause or
satisfy any other requirement of law before beginning the
monitoring, except as constitutionally required. The
monitoring may be by video, voice, or other method of
recording or by any other means. As used in this
subdivision (1)(t), "organized gang" has the meaning
ascribed to it in Section 10 of the Illinois Streetgang
Terrorism Omnibus Prevention Act.
As used in this subdivision (1)(t), "unprivileged
conversation" or "unprivileged communication" means a
conversation or communication that is not protected by any
privilege recognized by law or by decision, rule, or order
of the Illinois Supreme Court.
(u) To establish a Women's and Children's Pre-release

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Community Supervision Program for the purpose of providing
housing and services to eligible female inmates, as
determined by the Department, and their newborn and young
children.
(u-5) To issue an order, whenever a person committed
to the Department absconds or absents himself or herself,
without authority to do so, from any facility or program
to which he or she is assigned. The order shall be
certified by the Director, the Supervisor of the
Apprehension Unit, or any person duly designated by the
Director, with the seal of the Department affixed. The
order shall be directed to all sheriffs, coroners, and
police officers, or to any particular person named in the
order. Any order issued pursuant to this subdivision
(1)(u-5) shall be sufficient warrant for the officer or
person named in the order to arrest and deliver the
committed person to the proper correctional officials and
shall be executed the same as criminal process.
(u-6) To appoint a point of contact person who shall
receive suggestions, complaints, or other requests to the
Department from visitors to Department institutions or
facilities and from other members of the public.
(v) To do all other acts necessary to carry out the
provisions of this Chapter.
(2) The Department of Corrections shall by January 1,
1998, consider building and operating a correctional facility

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within 100 miles of a county of over 2,000,000 inhabitants,
especially a facility designed to house juvenile participants
in the impact incarceration program.
(3) When the Department lets bids for contracts for
medical services to be provided to persons committed to
Department facilities by a health maintenance organization,
medical service corporation, or other health care provider,
the bid may only be let to a health care provider that has
obtained an irrevocable letter of credit or performance bond
issued by a company whose bonds have an investment grade or
higher rating by a bond rating organization.
(3.5) If the Department has a contract with a pharmacy
benefit manager or a contract with an insurance company,
health maintenance organization, limited health service
organization, administrative services organization, or any
other managed care entity or health insurance issuer where a
pharmacy benefit manager administers the provider's coverage
of, payment for, or formulary design for drugs necessary to
safeguard the minor's life or health, the contract with the
pharmacy benefit manager and the pharmacy benefit manager's
activities shall be subject to Article XXXIIB of the Illinois
Insurance Code and the authority of the Director of Insurance
to enforce those provisions. The provider shall have all the
rights of a plan sponsor under those provisions.
(4) When the Department lets bids for contracts for food
or commissary services to be provided to Department

HB1697 Enrolled - 59 - LRB104 03541 RTM 13564 b
facilities, the bid may only be let to a food or commissary
services provider that has obtained an irrevocable letter of
credit or performance bond issued by a company whose bonds
have an investment grade or higher rating by a bond rating
organization.
(5) On and after the date 6 months after August 16, 2013
(the effective date of Public Act 98-488), as provided in the
Executive Order 1 (2012) Implementation Act, all of the
powers, duties, rights, and responsibilities related to State
healthcare purchasing under this Code that were transferred
from the Department of Corrections to the Department of
Healthcare and Family Services by Executive Order 3 (2005) are
transferred back to the Department of Corrections; however,
powers, duties, rights, and responsibilities related to State
healthcare purchasing under this Code that were exercised by
the Department of Corrections before the effective date of
Executive Order 3 (2005) but that pertain to individuals
resident in facilities operated by the Department of Juvenile
Justice are transferred to the Department of Juvenile Justice.
(6) The Department of Corrections shall provide lactation
or nursing mothers rooms for personnel of the Department. The
rooms shall be provided in each facility of the Department
that employs nursing mothers. Each individual lactation room
must:
(i) contain doors that lock;
(ii) have an "Occupied" sign for each door;

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(iii) contain electrical outlets for plugging in
breast pumps;
(iv) have sufficient lighting and ventilation;
(v) contain comfortable chairs;
(vi) contain a countertop or table for all necessary
supplies for lactation;
(vii) contain a wastebasket and chemical cleaners to
wash one's hands and to clean the surfaces of the
countertop or table;
(viii) have a functional sink;
(ix) have a minimum of one refrigerator for storage of
the breast milk; and
(x) receive routine daily maintenance.
(Source: P.A. 102-350, eff. 8-13-21; 102-535, eff. 1-1-22;
102-538, eff. 8-20-21; 102-813, eff. 5-13-22; 102-1030, eff.
5-27-22; 103-834, eff. 1-1-25.)
Section 40. The County Jail Act is amended by changing
Section 17 as follows:
(730 ILCS 125/17) (from Ch. 75, par. 117)
Sec. 17. Bedding, clothing, fuel, and medical aid;
reimbursement for medical expenses. The Warden of the jail
shall furnish necessary bedding, clothing, fuel, and medical
services for all committed persons under his charge, and keep
an accurate account of the same. When services that result in

HB1697 Enrolled - 61 - LRB104 03541 RTM 13564 b
qualified medical expenses are required by any person held in
custody, the county, private hospital, physician or any public
agency which provides such services shall be entitled to
obtain reimbursement from the county for the cost of such
services. The county board of a county may adopt an ordinance
or resolution providing for reimbursement for the cost of
those services at the Department of Healthcare and Family
Services' rates for medical assistance. To the extent that
such person is reasonably able to pay for such care, including
reimbursement from any insurance program or from other medical
benefit programs available to such person, he or she shall
reimburse the county or arresting authority. If such person
has already been determined eligible for medical assistance
under the Illinois Public Aid Code at the time the person is
detained, the cost of such services, to the extent such cost
exceeds $500, shall be reimbursed by the Department of
Healthcare and Family Services under that Code. A
reimbursement under any public or private program authorized
by this Section shall be paid to the county or arresting
authority to the same extent as would have been obtained had
the services been rendered in a non-custodial environment.
The sheriff or his or her designee may cause an
application for medical assistance under the Illinois Public
Aid Code to be completed for an arrestee who is a hospital
inpatient. If such arrestee is determined eligible, he or she
shall receive medical assistance under the Code for hospital

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inpatient services only. An arresting authority shall be
responsible for any qualified medical expenses relating to the
arrestee until such time as the arrestee is placed in the
custody of the sheriff. However, the arresting authority shall
not be so responsible if the arrest was made pursuant to a
request by the sheriff. When medical expenses are required by
any person held in custody, the county shall be entitled to
obtain reimbursement from the County Jail Medical Costs Fund
to the extent moneys are available from the Fund. To the extent
that the person is reasonably able to pay for that care,
including reimbursement from any insurance program or from
other medical benefit programs available to the person, he or
she shall reimburse the county.
For the purposes of this Section, "arresting authority"
means a unit of local government, other than a county, which
employs peace officers and whose peace officers have made the
arrest of a person. For the purposes of this Section,
"qualified medical expenses" include medical and hospital
services but do not include (i) expenses incurred for medical
care or treatment provided to a person on account of a
self-inflicted injury incurred prior to or in the course of an
arrest, (ii) expenses incurred for medical care or treatment
provided to a person on account of a health condition of that
person which existed prior to the time of his or her arrest, or
(iii) expenses for hospital inpatient services for arrestees
enrolled for medical assistance under the Illinois Public Aid

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Code.
If a jail or a unit of local government operating the jail
has a contract with a pharmacy benefit manager or a contract
with an insurance company, health maintenance organization,
limited health service organization, administrative services
organization, or any other managed care organization or health
insurance issuer where a pharmacy benefit manager administers
coverage of, payment for, or formulary design for drugs
necessary to safeguard the life or health of any person in
custody, that contract and the pharmacy benefit manager's
activities shall be subject to Article XXXIIB of the Illinois
Insurance Code and the authority of the Director of Insurance
to enforce those provisions. The jail or unit of local
government shall have all the rights of a plan sponsor under
those provisions.
(Source: P.A. 103-745, eff. 1-1-25.)
Section 99. Effective date. This Act takes effect on
January 1, 2026, except that this Section, Section 10, and the
changes to Sections 513b2 and 513b3 of the Illinois Insurance
Code take effect upon becoming law.