1 STATE OF OKLAHOMA
2 2nd Session of the 58th Legislature (2022)
3 HOUSE BILL 3492 By: McEntire
4
5
6 AS INTRODUCED
7 An Act relating to healthcare; creating the Oklahoma
Rebate Pass Through and PBM Meaningful Transparency
8 Act of 2022; amending 59 O.S. 2021, Sections 357 and
358, which relate to definitions; modifying
9 definitions; creating duties; creating licensing
application requirements; amending 36 O.S. 2021,
10 Section 6960, which relates to definitions; defining
terms; creating PBM disclosures; amending 36 O.S.
11 2021, Section 6962, which relates to pharmacy
benefits manager compliance; creating duties;
12 amending 36 O.S. 2021, Section 6964, which relates to
a formulary for prescription drugs; creating agency
13 duties; creating PBM fairness in cost sharing;
creating penalties; creating insurer fairness in cost
14 sharing; providing for noncodification; providing for
codification; and providing an effective date.
15
16
17 BE IT ENACTED BY THE PEOPLE OF THE STATE OF OKLAHOMA:
18 SECTION 1. NEW LAW A new section of law not to be
19 codified in the Oklahoma Statutes reads as follows:
20 This act shall be known and may be cited as the "Oklahoma Rebate
21 Pass Through and PBM Meaningful Transparency Act of 2022".
22 SECTION 2. AMENDATORY 59 O.S. 2021, Section 357, is
23 amended to read as follows:
24 Section 357. As used in this act:
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1 1. "Covered entity" means a nonprofit hospital or medical
2 service organization, insurer, health coverage plan or health
3 maintenance organization; a health program administered by the state
4 in the capacity of provider of health coverage; or an employer,
5 labor union, or other entity organized in the state that provides
6 health coverage to covered individuals who are employed or reside in
7 the state. This term does not include a health plan that provides
8 coverage only for accidental injury, specified disease, hospital
9 indemnity, disability income, or other limited benefit health
10 insurance policies and contracts that do not include prescription
11 drug coverage;
12 2. "Covered individual" means a member, participant, enrollee,
13 contract holder or policy holder or beneficiary of a covered entity
14 who is provided health coverage by the covered entity. A covered
15 individual includes any dependent or other person provided health
16 coverage through a policy, contract or plan for a covered
17 individual;
18 3. "Department" means the Oklahoma Insurance Department;
19 4. "Maximum allowable cost" or "MAC" means the list of drug
20 products delineating the maximum per-unit reimbursement for
21 multiple-source prescription drugs, medical product or device;
22 5. "Multisource drug product reimbursement" (reimbursement)
23 means the total amount paid to a pharmacy inclusive of any reduction
24 in payment to the pharmacy, excluding prescription dispense fees;
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1 6. "Pharmacy benefits management" means a service provided to
2 covered entities to facilitate the provision of prescription drug
3 benefits to covered individuals within the state, including
4 negotiating pricing and other terms with drug manufacturers and
5 providers. Pharmacy benefits management may include any or all of
6 the following services:
7 a. claims processing, performance of drug-utilization
8 review, processing of drug prior authorization
9 requests, retail network management and payment of
10 claims to pharmacies for prescription drugs dispensed
11 to covered individuals,
12 b. clinical formulary development and management
13 services,
14 c. rebate contracting and administration,
15 d. certain patient compliance, therapeutic intervention
16 and generic substitution programs, or
17 e. disease management programs,
18 f. adjudication of appeals and grievances related to the
19 prescription drug benefit, and/or
20 g. controlling the cost of prescription drugs;
21 7. "Pharmacy benefits manager" or "PBM" means a person,
22 business or other entity that, either directly or through an
23 intermediary, performs pharmacy benefits management. The term
24 includes a person or entity acting for a PBM in a contractual or
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1 employment relationship in the performance of pharmacy benefits
2 management for a managed care company, nonprofit hospital, medical
3 service organization, insurance company, third-party payor, or a
4 health program administered by an agency of this state;
5 8. "Plan sponsor" means the employers, insurance companies,
6 unions and health maintenance organizations or any other entity
7 responsible for establishing, maintaining, or administering a health
8 benefit plan on behalf of covered individuals; and
9 9. "Provider" means a pharmacy licensed by the State Board of
10 Pharmacy, or an agent or representative of a pharmacy, including,
11 but not limited to, the pharmacy's contracting agent, which
12 dispenses prescription drugs or devices to covered individuals.
13 SECTION 3. AMENDATORY 59 O.S. 2021, Section 358, is
14 amended to read as follows:
15 Section 358. A. In order to provide pharmacy benefits
16 management or any of the services included under the definition of
17 pharmacy benefits management in this state, a pharmacy benefits
18 manager or any entity acting as one in a contractual or employment
19 relationship for a covered entity shall first obtain a license from
20 the Oklahoma Insurance Department, and the Department may charge a
21 fee for such licensure.
22 B. The Department shall establish, by regulation, licensure
23 procedures, required disclosures for pharmacy benefits managers
24 (PBMs) and other rules as may be necessary for carrying out and
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1 enforcing the provisions of this act. The licensure procedures
2 shall, at a minimum, include the completion of an application form
3 that shall include the name and address of an agent for service of
4 process, the payment of a requisite fee, and evidence of the
5 procurement of a surety bond the following:
6 1. The name, address, and telephone contact number of the PBM;
7 2. The name and address of the PBM's agent for service of
8 process in the state;
9 3. The name and address of each person with management or
10 control over the PBM;
11 4. Evidence of the procurement of a surety bond;
12 5. The name and address of each person with a beneficial
13 ownership interest in the PBMs;
14 6. In the case of a PBM applicant that is a partnership or
15 other unincorporated association, limited liability corporation or
16 corporation, and has five or more partners, members, or
17 stockholders:
18 a. the applicant shall specify its legal structure and
19 the total number of partners, members, or
20 stockholders,
21 b. the applicant shall specify the name, address, usual
22 occupation, and professional qualifications of the
23 five partners, members, or stockholders with the five
24 largest ownership interests in the PBM, and
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1 c. the applicant shall agree that, upon request by the
2 Department, it shall furnish the Department with
3 information regarding the name, address, usual
4 occupation, and professional qualifications of any
5 other partners, members, or stockholders; and
6 7. A signed statement indicating that the PBM has not been
7 convicted of a felony and has not violated any of the requirements
8 of the Oklahoma Pharmacy Act and the Patient's Right to Pharmacy
9 Choice Act, or, if the applicant cannot provide such a statement, a
10 signed statement describing the relevant conviction(s) or
11 violation(s).
12 C. The Department may subpoena witnesses and information. Its
13 compliance officers may take and copy records for investigative use
14 and prosecutions. Nothing in this subsection shall limit the Office
15 of the Attorney General from using its investigative demand
16 authority to investigate and prosecute violations of the law.
17 D. The Department may suspend, revoke or refuse to issue or
18 renew a license for noncompliance with any of the provisions hereby
19 established or with the rules promulgated by the Department; for
20 conduct likely to mislead, deceive or defraud the public or the
21 Department; for unfair or deceptive business practices or for
22 nonpayment of a renewal fee or fine. The Department may also levy
23 administrative fines for each count of which a PBM has been
24 convicted in a Department hearing.
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1 SECTION 4. AMENDATORY 36 O.S. 2021, Section 6960, is
2 amended to read as follows:
3 Section 6960. For purposes of the Patient's Right to Pharmacy
4 Choice Act:
5 1. "Administrative fees" means fees or payments from
6 pharmaceutical manufacturers to, or otherwise retained by, a
7 pharmacy benefits manager (PBM) or its designee pursuant to a
8 contract between a PBM or affiliate and the manufacturer in
9 connection with the PBM's administering, invoicing, allocating and
10 collecting the rebates;
11 2. "Aggregate-retained rebate percentage" means the percentage
12 of all rebates received by a PBM from all pharmaceutical
13 manufacturers which is not passed on to the PBM's health plan or
14 health insurer clients. Aggregate-retained rebate percentage shall
15 be expressed without disclosing any identifying information
16 regarding any health plan, prescription drug, or therapeutic class,
17 and shall be calculated by dividing:
18 a. the aggregate dollar amount of all rebates that the
19 PBM received during the prior calendar year from all
20 pharmaceutical manufacturers and did not pass through
21 to the PBM's health plan or health insurer clients, by
22 b. the aggregate dollar amount of all rebates that the
23 pharmacy benefits manager received during the prior
24 calendar year from all pharmaceutical manufacturers;
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1 3. "Defined cost sharing" means a deductible payment or
2 coinsurance amount imposed on an enrollee for a covered prescription
3 drug under the enrollee's health plan;
4 4. "Formulary" means a list of prescription drugs, as well as
5 accompanying tiering and other coverage information, that has been
6 developed by an issuer, a health plan, or the designee of a health
7 insurer or health plan, which the health insurer, health plan, or
8 designee of the health insurer or health plan references in
9 determining applicable coverage and benefit levels;
10 5. "Generic equivalent" means a drug that is designated to be
11 therapeutically equivalent, as indicated by the United States Food
12 and Drug Administration's "Approved Drug Products with Therapeutic
13 Equivalence Evaluations"; provided, however, that a drug shall not
14 be considered a generic equivalent until the drug becomes nationally
15 available;
16 6. "Health insurer" means any corporation, association, benefit
17 society, exchange, partnership or individual licensed by the
18 Oklahoma Insurance Code;
19 7. "Health insurer administrative service fees" means fees or
20 payments from a health insurer or a designee of the health insurer
21 to, or otherwise retained by, a PBM or its designee pursuant to a
22 contract between a PBM or affiliate, and the health insurer or
23 designee of the health insurer in connection with the PBM managing
24
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1 or administering the pharmacy benefit and administering, invoicing,
2 allocating and collecting rebates;
3 8. "Health plan" means a policy, contract, certification, or
4 agreement offered or issued by a health insurer to provide, deliver,
5 arrange for, pay for, or reimburse any of the costs of health
6 services;
7 2. 9. "Mail-order pharmacy" means a pharmacy licensed by this
8 state that primarily dispenses and delivers covered drugs via common
9 carrier;
10 3. 10. "Pharmacy benefits manager" or "PBM" means a person
11 that, either directly or through an intermediary, performs pharmacy
12 benefits management, as defined in paragraph 6 of Section 357 of
13 Title 59 of the Oklahoma Statutes and any other person acting for
14 such person under a contractual or employment relationship in the
15 performance of pharmacy benefits management for a managed-care
16 company, nonprofit hospital, medical service organization, insurance
17 company, third-party payor or a health program administered by a
18 department of this state;
19 4. 11. "Pharmacy and therapeutics committee" or "P&T committee"
20 means a committee at a hospital or a health insurance plan that
21 decides which drugs will appear on that entity's drug formulary;
22 12. "Price-protection rebate" means a negotiated-price
23 concession that accrues directly or indirectly to the health
24 insurer, or other party on behalf of the health insurer, in the
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1 event of an increase in the wholesale acquisition of a drug above a
2 specified threshold;
3 13. "Rebates" means:
4 a. negotiated-price concessions including, but not
5 limited to, base-price concessions (whether described
6 as a rebate or otherwise) and reasonable estimates of
7 any price-protection rebates and performance-based
8 price concessions that may accrue directly or
9 indirectly to the PBM during the coverage year from a
10 manufacturer, dispensing pharmacy, or other party in
11 connection with the dispensing or administration of a
12 prescription drug, and
13 b. reasonable estimates of any price concessions, fees,
14 and other administrative costs that are passed
15 through, or are reasonably anticipated to be passed
16 through, to the PBM and serve to reduce the PBM's
17 liabilities for a prescription drug;
18 5. 14. "Retail pharmacy network" means retail pharmacy
19 providers contracted with a PBM in which the pharmacy primarily
20 fills and sells prescriptions via a retail, storefront location;
21 6. 15. "Rural service area" means a five-digit ZIP code in
22 which the population density is less than one thousand (1,000)
23 individuals per square mile;
24
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1 7. 16. "Suburban service area" means a five-digit ZIP code in
2 which the population density is between one thousand (1,000) and
3 three thousand (3,000) individuals per square mile; and
4 8. 17. "Urban service area" means a five-digit ZIP code in
5 which the population density is greater than three thousand (3,000)
6 individuals per square mile.
7 SECTION 5. NEW LAW A new section of law to be codified
8 in the Oklahoma Statutes as Section 6962.1 of Title 36, unless there
9 is created a duplication in numbering, reads as follows:
10 A. Beginning on January 1, 2022, and on an annual basis
11 thereafter, a pharmacy benefits manager (PBM) shall provide the
12 Insurance Department with a report containing the following
13 information from the prior calendar year as it pertains to pharmacy
14 benefits provided by health insurers to enrollees in the state:
15 1. The aggregate dollar amount of all rebates that the PBM
16 received from all pharmaceutical manufacturers;
17 2. The aggregate dollar amount of all administrative fees that
18 the PBM received;
19 3. The aggregate dollar amount of all issuer administrative
20 service fees that the PBM received;
21 4. The aggregate dollar amount of all rebates that the PBM
22 received from all pharmaceutical manufacturers and did not pass
23 through to health plans or health insurers;
24
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1 5. The aggregate dollar amount of all administrative fees that
2 the PBM received from all pharmaceutical manufacturers and did not
3 pass through to health plans or health insurers;
4 6. The aggregate-retained rebate percentage; and
5 7. Across all of the PBM's contractual or other relationships
6 with all health plans or health insurers, the highest aggregate-
7 retained reba