OHIO LEGISLATIVE SERVICE COMMISSION
Office of Research Legislative Budget
www.lsc.ohio.gov and Drafting Office
H.B. 505 Bill Analysis
135th General Assembly
Click here for H.B. 505’s Fiscal Note
Version: As Introduced
Primary Sponsors: Reps. Barhorst and Stewart
Effective date:
Logan Briggs, Attorney
Erika Kramer, Attorney
SUMMARY
 Prohibits health plan issuers and the Ohio Department of Medicaid (ODM), from
requiring a pharmacy, as a condition of participating in their pharmacy networks, to
meet accreditation standards or certification requirements different from those
required by the State Board of Pharmacy.
 Requires each pharmacy benefit manager (PBM) to submit to the Superintendent of
Insurance and its contracted insurers and plan sponsors a monthly electronic report of
all drug claims processed by the PBM during the previous month.
 Requires the single state PBM under the Medicaid program to submit its monthly report
to ODM.
 Specifies that the report must include an itemized list of the actual acquisition cost of
each drug product from all drug claims processed by the PBM in the previous month,
with specified information about the drug’s acquisition.
 Prohibits any agreement between a PBM and an insurer from prohibiting the disclosure
of the information required in the itemized list.
 Requires insurers to pay pharmacies the actual acquisition cost plus a minimum
dispensing fee for drug claims.
 Requires the Superintendent of Insurance for insurers, and ODM for the Medicaid
program, to establish minimum dispensing fees to be paid to pharmacies for drug
claims.
 Designates the bill as the Community Pharmacy Protection Act.
May 21, 2024
Office of Research and Drafting LSC Legislative Budget Office
DETAILED ANALYSIS
Pharmacy accreditation standards
The bill prohibits certain actions by health plan issuers – defined by continuing law to
include a broad range of insurers such as health insuring corporations, multiple employer
welfare arrangements, sickness and accident insurers, public employee benefit plans, and
pharmacy benefit managers (PBMs) – and the Medicaid program relative to contracting with
pharmacies. Under the bill, health plan issuers offering health benefit plans that provide
prescription drug coverage and the Ohio Department of Medicaid (ODM) cannot require a
pharmacy, as a condition of participating in the health plan issuer’s or ODM’s pharmacy
network, to meet accreditation standards or certification requirements that are inconsistent
with or in addition to those required for pharmacists by the State Board of Pharmacy. The bill
establishes a civil cause of action, which may be brought by any covered person or pharmacy
affected by a violation of the above prohibition against the health plan issuer, ODM, or an
intermediary for compensatory damages and injunctive or other equitable relief.1
Application to insurance contracts
The above prohibition applies to health benefit plans that are delivered, issued for
delivery, or renewed on or after the bill’s effective date and to contracts between health plan
issuers and pharmacies entered into, modified, or renewed on or after the bill’s effective date.2
Pharmacy benefit managers
The bill also contains provisions specific to PBMs, which are licensed entities that
process prescription drug claims on behalf of insurers. First, the bill requires PBMs to submit
electronic reports regarding drug claims. Second, the bill requires the establishment of
minimum dispensing fee amounts to be paid to pharmacists by insurers and ODM.
Electronic report
The bill requires each PBM, on or before the 15th of each month, to submit to the
Superintendent of Insurance and to its contracted insurers and plan sponsors, an electronic
report in a machine-readable format of all drug claims processed by the PBM during the
previous month. The single state PBM under the Medicaid program must submit its report to
ODM, instead of the Superintendent. For purposes of this requirement, machine-readable
format means a digital representation of information in a file that can be imported or read into
a computer system for further processing, including .XML and .CSV formats.
1 R.C. 3902.75, 3902.76, 5167.127, and 5167.128.
2 Sections 3 and 4.
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As Introduced
Office of Research and Drafting LSC Legislative Budget Office
Report contents
The report to an insurer, plan sponsor, or ODM must include an itemized list of the
actual acquisition cost of each drug product from all drug claims processed by the PBM in the
previous month for that insurer, sponsor, or ODM. The report to the Superintendent must
include that information for all insurers and plan sponsors. The actual acquisition cost is the
amount actually expended to procure the drug after manufacturer price concessions or
rebates.3
The itemized list must notate the following for each drug product:
 If the drug was procured through the PBM, insurer, or ODM’s drug formulary or list of
covered drugs or outside of the formulary or list;
 If the drug is brand name or generic;
 If the drug is a specialty drug, including a biological product.4
Despite this reporting requirement, a PBM is not required to disclose information that is
deemed proprietary or confidential by a service agreement between the PBM and an insurer,
existing on the bill’s effective date and in effect on the date the information would otherwise
be submitted in the itemized list.5
Agreements
The bill prohibits any agreement between a PBM and an insurer entered into on or after
the bill’s effective date from prohibiting disclosure of the information required in the itemized
list.6
Rulemaking authority
The Superintendent of Insurance must adopt rules, in accordance with the
Administrative Procedure Act, to implement the above requirements.7
Minimum payment amount for drug claims
The bill also imposes requirements for minimum payment amounts made by PBMs to
pharmacies for drug claims under insurance policies. This requirement does not apply to the
state PBM under the Medicaid program. For drugs dispensed beginning 91 days after the bill’s
3 R.C. 3959.151(B)(1) and (2).
4 R.C. 3959.151(B)(3).
5 R.C. 3959.151(C)(2).
6 R.C. 3959.151(C)(1).
7 R.C. 3959.151(D).
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As Introduced
Office of Research and Drafting LSC Legislative Budget Office
effective date, the bill requires PBMs to pay contracted pharmacies both of the following for
the dispensed drug:
 A reimbursement amount no less than the pharmacy’s actual acquisition cost for the
drug;
 A dispensing fee not less than the minimum dispensing fee established pursuant to the
bill (see “Minimum dispensing fee” below).8
This minimum payment requirement does not apply to the extent it conflicts with a
contract or agreement entered into before the bill’s effective date. If the contract or agreement
is amended or renewed after the effective date, however, it must conform to the above
requirements.9
Minimum dispensing fee
Within 90 days of the bill’s effective date, the Superintendent of Insurance must
calculate a minimum dispensing fee to be paid by an insurer for each drug product dispensed by
a pharmacist. The fee must be equal to the average acquisition cost in Ohio to dispense the
drug product, based on data collected by ODM under current law (see “Updating
minimum dispensing fees” below). The Superintendent must publish the amount of the
minimum dispensing fee and the dates it applies on a publicly accessible website maintained by
the Department of Insurance.10 For drug claims under the Medicaid program, ODM must
similarly calculate a minimum dispensing fee using the same data and publish the dispensing
fee amount and dates it applies on a public website maintained by ODM.11
Updating minimum dispensing fees
The bill requires the Superintendent of Insurance and ODM to recalculate and publish
their minimum dispensing fees each time ODM publishes its biennial drug cost survey. 12 Under
current law, ODM must initiate a confidential survey of the cost of dispensing drugs incurred by
pharmacies in Ohio, to be used as the basis for establishing dispensing fees for pharmacies
under the Medicaid program. The survey must be initiated in July of every even-numbered
year.13
8 R.C. 3959.21(A) and (D).
9 R.C. 3959.21(C).
10 R.C. 3959.21(B)(1).
11 R.C. 5164.753(B)(1).
12 R.C. 3959.21(B)(2) and 5164.753(B)(2).
13 R.C. 5164.752, not in the bill.
P a g e |4 H.B. 505
As Introduced
Office of Research and Drafting LSC Legislative Budget Office
HISTORY
Action Date
Introduced 04-24-24
ANHB0505IN-135/sb
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As Introduced


Statutes affected:
As Introduced: 3902.50, 5164.753, 5167.243