Brief Description: Establishing requirements for state agency contracts with pharmaceutical benefit management companies.

Sponsors: Representatives Schual-Berke, Campbell, Cody, Morrell, Benson, Edwards and Chase.

Hearing Date: 2/25/03

Staff: Dave Knutson (786-7146).

Background:

Pharmacy benefit managers are organizations that provide a broad array of services related to the management and administration of prescription drug services. Services can include claims processing, development of preferred drug lists, prescription drug utilization review activities, and the negotiation of rebates or discounts from prescription drug manufacturers.

On February 14, 2003, the Health Care Authority, acting on behalf of state purchased health care programs, issued a Request For Proposal (RFP) to obtain proposals to provide PBM services for eligible Medicaid clients through the Department of Social and Health Services, public employees and retirees under the Uniform Medical Plan through the Health Care Authority, and the Workers' Compensation Program for injured workers through the Department of Labor and Industries. The period of the contract is from January 1, 2004 to December 31, 2006. Implementation activities will commence on July 1, 2003, and end on December 31, 2003.

The RFP requires the successful bidder to remit 100% of the manufacturer's rebates generated by the participating agencies claims. It also requires the successful bidder to allow the participating agencies to review and audit all rebate contracts with manufacturers. In addition, detailed rebate payment reports must be provided to participating state agencies on a monthly basis. Also, the successful bidder must administer and support the state-sponsored preferred drug list for participating state agencies in its rebate invoicing and management functions.

Summary of Bill:

Any contract between the Administrator of the Health Care Authority or any other state agency administering a state purchased health care program and a Pharmacy Benefit Manager must disclose any agreements between the PBM and the pharmaceutical manufacturer. The contract must also include a statement that the PBM is capable of administering and agrees to abide by a preferred drug list developed for use by state purchased health care programs.

Appropriation: None.

Fiscal Note: Not Requested.

Effective Date: The bill takes effect ninety days after adjournment of session in which bill is passed.