AN ACT Relating to pharmacy benefit manager regulation; amending RCW 19.340.010; adding new sections to chapter 19.340 RCW; and prescribing penalties.

The definitions in this section apply throughout this chapter unless the context clearly requires otherwise.

(1) "Claim" means a request from a pharmacy or pharmacist to be reimbursed for the cost of filling or refilling a prescription for a drug or for providing a medical supply or service.

(6)(a) "Pharmacy benefit manager" means a person that contracts with pharmacies on behalf of an insurer, a third-party payor, or the prescription drug purchasing consortium established under RCW 70.14.060 to:

(i) Process claims for prescription drugs or medical supplies or provide retail network management for pharmacies or pharmacists;

(iii) Negotiate rebates with manufacturers for drugs paid for or procured as described in this subsection.

(b) "Pharmacy benefit manager" does not include a health care service contractor as defined in RCW 48.44.010.

(8) "Aggregate retained rebate" means the rebates received by the pharmacy benefit manager from pharmaceutical manufacturers that are not passed through to the health carrier.

(9) "Conflict of interest" includes any professional or financial affiliation between a pharmacy benefit manager or an officer, director, or management employee of a pharmacy benefit manager and a third party that could influence the pharmacy benefit manager's ability to fulfill its fiduciary, contractual, or other duty owed to its health carrier client.

(13) "Network pharmacy" means a licensed pharmacy provider that contracts with a pharmacy benefit manager.

(16) "Rebates" means all price concessions paid by a manufacturer to a pharmacy benefit manager or health carrier, including rebates, discounts, and other price concessions that are based on actual or estimated utilization of a prescription drug. Rebates also include price concessions based on the effectiveness a drug as in a value-based or performance-based contract.

(17) "Retail pharmacy" means a pharmacy licensed under chapter 18.64 RCW, that is open to the public, dispenses prescription drugs to the general public, and makes available face-to-face consultations between licensed pharmacists and the general public to whom prescription drugs are dispensed.

(1) A pharmacy benefit manager has a fiduciary duty to a health carrier client and shall discharge that duty in accordance with the provisions of state and federal law.

(2) A pharmacy benefit manager must perform its duties with care, skill, prudence, diligence, and professionalism.

(3) A pharmacy benefit manager must notify a health carrier client in writing of any activity, policy, or practice of the pharmacy benefit manager that directly or indirectly presents any conflict of interest with the duties imposed in this section.

(4) A pharmacy benefit manager or health carrier shall not enter into a contract with a pharmacy or pharmacist that restricts, directly or indirectly, the pharmacy or pharmacist from informing, or penalize the pharmacy or pharmacist for informing, an enrollee of:

(b) Any differential between the enrollee's out-of-pocket cost under the plan or coverage with respect to acquisition of the drug and the amount an individual would pay for acquisition of the drug without using any health plan or health insurance coverage.

(5) A health carrier or pharmacy benefit manager may not require an enrollee to make a payment at the point of sale for a covered prescription medication in an amount greater than the lesser of:

(c) The amount an individual would pay for the prescription medication if the individual purchased the prescription medication without using a health benefit plan or any other source of prescription medication benefits or discounts; or

(d) The amount the pharmacy benefit manager or health carrier will reimburse the pharmacy for the drug.

(6) For acceptance into its pharmacy network, a pharmacy benefit manager shall not require a pharmacy to meet accreditation standards or certification requirements inconsistent with, more stringent than, or in addition to requirements of the pharmacy quality assurance commission or other state or federal entity.

(7) A health carrier or pharmacy benefit manager is prohibited from penalizing, requiring, or providing financial incentives, including variations in premiums, deductibles, copayments, or coinsurance, to enrollees as incentives to use specific retail pharmacy, nonresident pharmacy, or other network pharmacy provider in which a pharmacy benefit manager has an ownership interest or that has an ownership interest in a pharmacy benefit manager.

(1) Beginning June 1, 2020, and annually thereafter, each pharmacy benefit manager operating in Washington state shall submit a transparency report containing data from the prior calendar year to the office. The report must contain the following information:

(a) The aggregate amount of all rebates that the pharmacy benefit manager received from all pharmaceutical manufacturers for all health carrier clients and for each health carrier client;

(b) The aggregate administrative fees that the pharmacy benefit manager received from all manufacturers for all health carrier clients and for each health carrier client; and

(ii) Expressed as a percentage of the total rebates received by the pharmacy benefit manager for that carrier.

(2) A pharmacy benefit manager providing information under this section may designate material as a trade secret. Disclosure; however, may be ordered by a court of Washington state for good cause shown or made in a court filing.

(3) Within sixty days of receipt, the office shall publish the transparency report of each pharmacy benefit manager on the office's web site in a way that does not violate state trade secrets law.

(4) The office may assess a fine of up to one thousand dollars per day for failure to comply with the requirements of this section. The assessment of a fine under this section is subject to review under the administrative procedure act, chapter 34.05 RCW. Fines collected under this section must be deposited in the medicaid fraud penalty account created in RCW 74.09.215.