Senate Study Bill 3087 




                                 SENATE FILE       
                                 BY  (PROPOSED COMMITTEE ON
                                     COMMERCE BILL BY
                                     CHAIRPERSON McCOY)

                                      A BILL FOR

  1 An Act relating to the regulation of pharmacy benefit managers.
  2 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
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PAG LIN



  1  1    Section 1.  Section 510B.1, Code 2014, is amended by adding
  1  2 the following new subsection:
  1  3    NEW SUBSECTION.  5A.  "Maximum reimbursement amount" means
  1  4 the maximum reimbursement amount for a therapeutically and
  1  5 pharmaceutically equivalent multiple=source prescription drug
  1  6 that is listed in the most recent edition of the publication
  1  7 entitled approved drug products with therapeutic equivalence
  1  8 evaluations, published by the United States food and drug
  1  9 administration, otherwise known as the orange book.
  1 10    Sec. 2.  NEW SECTION.  510B.8  Proof of financial solvency.
  1 11    1.  The commissioner may require a pharmacy benefits manager
  1 12 to submit information to the commissioner related to the
  1 13 pharmacy benefits manager's financial solvency in accordance
  1 14 with chapter 507, including but not limited to disclosure of
  1 15 pricing methodology and rebate information.
  1 16    2.  For purposes of the disclosure of pricing methodology,
  1 17 maximum reimbursement amounts shall be implemented as follows:
  1 18    a.  Established for multiple source prescription drugs
  1 19 prescribed after the expiration of any generic exclusivity
  1 20 period.
  1 21    b.  Established for any prescription drug with at least two
  1 22 or more A=rated therapeutically equivalent, multiple source
  1 23 prescription drugs with a significant cost difference.
  1 24    c.  Determined using comparable prescription drug prices
  1 25 obtained from multiple nationally recognized comprehensive data
  1 26 sources including wholesalers, prescription drug file vendors,
  1 27 and pharmaceutical manufacturers for prescription drugs that
  1 28 are nationally available and available for purchase locally by
  1 29 multiple pharmacies in the state.
  1 30    3.  For those prescription drugs to which maximum
  1 31 reimbursement amount pricing applies, a pharmacy benefits
  1 32 manager shall include in a contract with a pharmacy information
  1 33 regarding which of the national compendia is used to
  1 34 obtain pricing data used in the calculation of the maximum
  1 35 reimbursement amount pricing and shall provide a process to
  2  1 allow a pharmacy to comment on, contest, or appeal the maximum
  2  2 reimbursement amount rates or maximum reimbursement amount
  2  3 list.  The right to comment on, contest, or appeal the maximum
  2  4 reimbursement amount rates or maximum reimbursement amount list
  2  5 shall be limited in duration and allow for retroactive payment
  2  6 in the event that it is determined that maximum reimbursement
  2  7 amount pricing has been applied incorrectly.
  2  8    4.  For purposes of the disclosure of rebate information,
  2  9 the commissioner, in conjunction with an examination authorized
  2 10 under this chapter or chapter 507, 507B, or 510, may request,
  2 11 and a pharmacy benefits manager shall disclose to the
  2 12 commissioner, the amount of all rebate revenues and the nature,
  2 13 type, and amounts of all other revenues that the pharmacy
  2 14 benefits manager receives from each pharmaceutical manufacturer
  2 15 or labeler with whom the pharmacy benefits manager has a
  2 16 contract.  The pharmacy benefits manager shall disclose to the
  2 17 commissioner, including but not limited to all of the following
  2 18 information:
  2 19    a.  Both the aggregate amount, and the specific amounts for
  2 20 each prescription drug, of all rebates and other retrospective
  2 21 utilization discounts received by the pharmacy benefits
  2 22 manager, directly or indirectly, from each pharmaceutical
  2 23 manufacturer or labeler that are earned in connection with the
  2 24 dispensing of prescription drugs to covered individuals of
  2 25 the health benefit plans issued by a pharmacy or for which a
  2 26 pharmacy is the designated administrator.
  2 27    b.  The nature, type, and amount of all other revenue
  2 28 received by the pharmacy benefits manager directly or
  2 29 indirectly from each pharmaceutical manufacturer or labeler for
  2 30 any other products or services provided to the pharmaceutical
  2 31 manufacturer or labeler by the pharmacy benefits manager with
  2 32 respect to programs that a pharmacy offers or provides to
  2 33 covered individuals.
  2 34    c.  Any prescription drug utilization information requested
  2 35 by a pharmacy relating to covered individuals.
  3  1                           EXPLANATION
  3  2 The inclusion of this explanation does not constitute agreement with
  3  3 the explanation's substance by the members of the general assembly.
  3  4    This bill relates to the regulation of pharmacy benefit
  3  5 managers.  The bill authorizes the commissioner of insurance
  3  6 to require a pharmacy benefits manager to submit information
  3  7 to the commissioner related to the pharmacy benefit manager's
  3  8 financial solvency, including information disclosing
  3  9 pricing methodology and rebates received, pursuant to the
  3 10 commissioner's power to examine insurance companies under Code
  3 11 chapter 507.
  3 12    The bill provides that for purposes of the disclosure of
  3 13 pricing methodology, a pharmacy benefits manager must use
  3 14 maximum reimbursement amounts that meet specified criteria.
  3 15 "Maximum reimbursement amount" is defined as the maximum
  3 16 reimbursement amount for a therapeutically and pharmaceutically
  3 17 equivalent multiple=source prescription drug that is listed in
  3 18 the United States food and drug administration's publication
  3 19 entitled approved drug products with therapeutic equivalence
  3 20 evaluations, otherwise known as the orange book.
  3 21    For those prescription drugs to which maximum reimbursement
  3 22 amount pricing applies, a pharmacy benefits manager must
  3 23 include information in a contract with a pharmacy showing how
  3 24 maximum reimbursement amount pricing is calculated and allowing
  3 25 the pharmacy the opportunity to comment on, contest, or appeal
  3 26 the maximum reimbursement amount rates and list.  The contract
  3 27 must also allow for retroactive payment if it is determined
  3 28 that maximum reimbursement amount pricing has been applied
  3 29 incorrectly.
  3 30    The bill also provides that for purposes of disclosure of
  3 31 rebate information, the commissioner in conjunction with an
  3 32 examination authorized under Code chapter 507 (examination
  3 33 of insurance companies), 507B (regulation of insurance trade
  3 34 practices), 510 (regulation of managing general agents and
  3 35 third=party administrators), or 510B (regulation of pharmacy
  4  1 benefits managers), can request information from a pharmacy
  4  2 benefits manager concerning the amount of all rebate revenues,
  4  3 and the nature, type, and amounts of all other revenues that
  4  4 the pharmacy benefits manager receives from each pharmaceutical
  4  5 manufacturer or labeler with whom the pharmacy benefits
  4  6 manager has a contract.  The bill specifies information which
  4  7 a pharmacy benefits manager must disclose pursuant to such a
  4  8 request by the commissioner.
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