Health Care Benefit Managers.  All health care benefit managers (HCBMs), including pharmacy benefit managers (PBMs), must be registered by the Office of the Insurance Commissioner (OIC).  Applications for registration must include the identity of the HCBM and the individuals and entities with a controlling interest in the HCBM, and whether the HCBM does business as a PBM or a different type of benefit manager, in addition to other required information.  Registered HCBMs must pay licensing and renewal fees.  The fees must be set at an amount that ensures the registration, renewal, and oversight activities of the OIC are self-supporting.
 
Prior to approving an application, the OIC must find that the HCBM has not committed any act that resulted in the denial, suspension, or revocation of a registration, has the capacity to comply with state and federal laws, and has designated a person responsible for such compliance.
 
A HCBM may not provide services to a health carrier or an employee benefits program without a written agreement describing the rights and responsibilities of the parties.  The HCBM must file with the OIC every benefit management contract and contract amendment between the HCBM and a provider, pharmacy, pharmacy services administration organization, or other HCBM. 

Pharmacy Benefit Manager Regulation.  A PBM is a person that contracts with pharmacies on behalf of an insurer, third party payer, or the prescription drug purchasing consortium to: 

•  process claims;
•  provide retail network management;
•  pay pharmacies or pharmacists;
•  negotiate rebates;
•  manage pharmacy networks; or
•  make credentialing determinations.

 
A PBM may not:

• cause or knowingly permit to be used any advertisement, promotion, solicitation, representation, proposal, or offer that is untrue, deceptive, or misleading;
• charge a pharmacist or pharmacy a fee related to the adjudication of a claim, credentialing, participation, certification, accreditation, or enrollment in a network, including a fee for the receipt and processing of a pharmacy claim, for the development or management of claims processing services in a PBM network, or for participating in a PBM network;
• require accreditation standards inconsistent with or more stringent than accreditation standards established by a national accreditation organization;
• reimburse a pharmacy or pharmacist an amount less than the amount the PBM reimburses an affiliate for providing the same services; or
• retroactively deny or reduce a claim or aggregate of claims after the claim or aggregate of claims has been adjudicated, unless the original claim was submitted fraudulently or the denial or reduction is the result of a pharmacy audit.

A PBM must receive affirmative authorization before filling a prescription for a covered person through a nonresident pharmacy. If a covered person uses a nonresident pharmacy, the PBM must allow for dispensing at a local network pharmacy if the mail-order is delayed by more than one day, or if the order arrives in a unusable condition. The PBM must also ensure that covered persons using a nonresident pharmacy have easy and timely access to prescription counseling by a pharmacist.

• Removes the bill original language and requires that PBMs receive affirmative authorization to fill a prescription through a nonresident pharmacy, provide access to pharmacy counseling for those using a nonresident pharmacy, and allow for a prescription to be filled at a local pharmacy if the nonresident pharmacy order is more than one day late or arrives in unusable condition.
• Changes the title.

The committee recommended a different version of the bill than what was heard.  PRO:  Prohibiting spread pricing has the potential to save millions of dollars. PBMs control all aspects of obtaining drugs including price, who fills the prescription, and what drugs are available to patients. This bill builds on existing regulations and adds additional accountability and transparency. PBMs continue to charge fees to pharmacy because the currently law only applies to state regulated plans. PBM practices are forcing community pharmacies to close. State laws should apply to all PBMs regardless of who they contract with. Patients should have the ability to choose where and when they obtain their prescriptions. Mail order pharmacies do not offer the same services that community pharmacies do.

CON: PBMs are essential to keeping drug prices affordable. Independent pharmacies make more money from higher drug costs.  Requiring an opt-in for mail order pharmacy services is confusing for current customers. Plans must be able to manage costs for provider-administered drugs. This bill limits the ability for plans to design affordable networks.

OTHER:  Under the bill, pharmacies can refuse to fill a prescription if the reimbursement is too low. This puts consumer in the middle of dispute between the pharmacy and the PBM.