1 SB227
2 212711-4
3 By Senators Butler, Beasley, Allen, Scofield, Barfoot, Holley,
4 Orr, Stutts, Livingston, Smitherman, Marsh, Roberts and Gudger
5 RFD: Banking and Insurance
6 First Read: 11-FEB-21
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1 SB227
2
3
4 ENROLLED, An Act,
5 Relating to health care; to amend Sections 3 through
6 7 of Act 2019-457, 2019 Regular Session, now appearing as
7 Sections 27-45A-3, 27-45A-4, 27-45A-5, 27-45A-6, and 27-45A-7,
8 Code of Alabama 1975; and to add Sections 27-45A-8, 27-45A-9,
9 27-45A-10, 27-45A-11, and 27-45A-12 to the Code of Alabama
10 1975; to prohibit a pharmacy benefits manager from limiting or
11 incentivizing a patient's choice in pharmacies; to prohibit a
12 pharmacy benefits manager from denying a pharmacy from
13 participating as a contract provider of pharmacy services for
14 a health benefit plan if the pharmacy meets the terms and
15 conditions of the pharmacy benefits manager's contract; to
16 prohibit pharmacy benefits managers from steering an insured
17 to use a mail-order pharmacy or a pharmacy benefits manager
18 affiliate, with certain exceptions; to prohibit a pharmacy
19 benefits manager from limiting certain powers of a pharmacy or
20 pharmacist; to require certain annual reporting; to revise
21 definitions; to provide further for the Commissioner of
22 Insurance to administer and enforce laws relating to pharmacy
23 benefits managers; to provide further for the licensure of
24 pharmacy benefits managers; to require rulemaking; to provide
25 civil penalties for certain violations; and to amend Sections
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1 10A-20-6.16 and 27-21A-23, Code of Alabama 1975, to subject
2 certain health insurers to the pharmacy benefits manager laws.
3 BE IT ENACTED BY THE LEGISLATURE OF ALABAMA:
4 Section 1. Sections 3 through 7 of Act 2019-457,
5 2019 Regular Session, now appearing as Sections 27-45A-3,
6 27-45A-4, 27-45A-5, 27-45A-6, and 27-45A-7, Code of Alabama
7 1975, are amended to read as follows:
8 "27-45A-3.
9 "(a) For purposes of this chapter, the following
10 words shall have the following meanings:
11 "(1) CLAIMS PROCESSING SERVICES. The administrative
12 services performed in connection with the processing and
13 adjudicating of claims relating to pharmacist services that
14 include any of the following:
15 "a. Receiving payments for pharmacist services.
16 "b. Making payments to pharmacists or pharmacies for
17 pharmacist services.
18 "c. Both paragraphs a. and b.
19 "(2) COVERED INDIVIDUAL. A member, policyholder,
20 subscriber, enrollee, beneficiary, dependent, or other
21 individual participating in a health benefit plan.
22 "(3) HEALTH BENEFIT PLAN. A policy, contract,
23 certificate, or agreement entered into, offered, or issued by
24 a health insurer to provide, deliver, arrange for, pay for, or
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1 reimburse any of the costs of physical, mental, or behavioral
2 health care services.
3 "(4) HEALTH INSURER. An entity subject to the
4 insurance laws of this state and rules of the department, or
5 subject to the jurisdiction of the department, that contracts
6 or offers to contract to provide, deliver, arrange for, pay
7 for, or reimburse any of the costs of health care services,
8 including, but not limited to, a sickness and accident
9 insurance company, a health maintenance organization operating
10 pursuant to Chapter 21A, a nonprofit hospital or health
11 service corporation, a health care service plan organized
12 pursuant to Article 6, Chapter 20 of Title 10A, or any other
13 entity providing a plan of health insurance, health benefits,
14 or health services.
15 "(2)(5) OTHER PRESCRIPTION DRUG OR DEVICE SERVICES.
16 Services, other than claims processing services, provided
17 directly or indirectly, whether in connection with or separate
18 from claims processing services, including without limitation,
19 but not limited to, any of the following:
20 "a. Negotiating rebates, discounts, or other
21 financial incentives and arrangements with drug companies.
22 "b. Disbursing or distributing rebates.
23 "c. Managing or participating in incentive programs
24 or arrangements for pharmacist services.
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1 "d. Negotiating or entering into contractual
2 arrangements with pharmacists or pharmacies, or both.
3 "e. Developing formularies.
4 "f. Designing prescription benefit programs.
5 "g. Advertising or promoting services.
6 "(3)(6) PHARMACIST. An individual licensed as a
7 pharmacist by the State Board of Pharmacy As defined in
8 Section 34-23-1.
9 "(4)(7) PHARMACIST SERVICES. Products, goods, and
10 services, or any combination of products, goods, and services,
11 provided as a part of the practice of pharmacy.
12 "(5)(8) PHARMACY. The place licensed by the State
13 Board of Pharmacy in which drugs, chemicals, medicines,
14 prescriptions, and poisons are compounded, dispensed, or sold
15 at retail As defined in Section 34-23-1.
16 "(6)(9) PHARMACY BENEFITS MANAGER. a. A person,
17 business, or entity, including a wholly or partially owned or
18 controlled subsidiary of a pharmacy benefits manager, that
19 provides claims processing services or other prescription drug
20 or device services, or both, to covered individuals who are
21 employed in or are residents of this state, for health benefit
22 plans.
23 "b. Pharmacy benefits manager does not include any
24 of the following:
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1 "1. A healthcare facility licensed in Alabama this
2 state.
3 "2. A healthcare professional licensed in Alabama
4 this state.
5 "3. A consultant who only provides advice as to the
6 selection or performance of a pharmacy benefits manager.
7 "(10) PBM AFFILIATE. A pharmacy or pharmacist that,
8 directly or indirectly, through one or more intermediaries, is
9 owned or controlled by, or is under common control by, a
10 pharmacy benefits manager.
11 "(11) PRESCRIPTION DRUGS. Includes, but is not
12 limited to, certain infusion, compounded, and long-term care
13 prescription drugs. The term does not include specialty drugs.
14 "(12) SPECIALTY DRUGS. Prescription medications that
15 require special handling, administration, or monitoring and
16 are used for the treatment of patients with serious health
17 conditions requiring complex therapies, and that are eligible
18 for specialty tier placement by the Centers for Medicare and
19 Medicaid Services pursuant to 42 C.F.R. 423.560.
20 "27-45A-4.
21 "(a) (1) Effective January 1, 2020, to conduct
22 business in this state, A person may not establish or operate
23 as a pharmacy benefits manager must be licensed by in this
24 state without first obtaining a license from the commissioner.
25 To
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1 "(b) Effective through December 31, 2021, to
2 initially obtain a license or renew a license, a pharmacy
3 benefits manager shall submit all of the following:
4 "a.(1) A nonrefundable fee not to exceed five
5 hundred dollars ($500).
6 "b.(2) A copy of the licensee's corporate charter,
7 articles of incorporation, or other charter document.
8 "c.(3) A completed licensure form adopted by the
9 commissioner containing:
10 "1.a. The name and address of the licensee.
11 "2.b. The name, address, and official position of an
12 employee who will serve as the primary contact for the
13 Department of Insurance.
14 "3.c. Any additional contact information deemed
15 appropriate by the commissioner or reasonably necessary to
16 verify the information contained in the application.
17 "(2) The licensee shall inform the commissioner by
18 any means acceptable to the commissioner of any change in the
19 information required by this subsection within 30 days of the
20 change. Failure to timely inform the commissioner of a change
21 shall result in a penalty against the licensee in the amount
22 of fifty dollars ($50).
23 "(c) Not later than January 1, 2022, the
24 commissioner shall adopt rules for licensure of pharmacy
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1 benefits managers to operate in this state. The rules shall
2 establish all of the following:
3 "(1) The licensing procedure and application form.
4 "(2) Requirements for licensure.
5 "(3) Reporting requirements.
6 "(4) A fee schedule for a non-refundable application
7 fee and a nonrefundable license renewal fee, set to allow the
8 regulation and oversight activities of the department to be
9 self-supporting.
10 "(d) On and after January 1, 2022, a person applying
11 for a pharmacy benefits manager license shall submit an
12 application for licensure in the form and manner prescribed by
13 the commissioner by rule, along with the application fee.
14 "(e) The commissioner may refuse to issue or renew a
15 license if the commissioner determines that the applicant has
16 been found to have violated this chapter or the insurance laws
17 of this state or any other jurisdiction, or has had an
18 insurance or other certificate of authority or license denied
19 or revoked for cause by any jurisdiction.
20 "(3)(f) Upon receipt of a completed licensure form
21 and the licensure fee, the commissioner shall issue a Unless
22 denied licensure pursuant to subsection (e), a person who
23 meets the requirements of this chapter and rules adopted by
24 the commissioner shall be issued a pharmacy benefits manager
25 license. The license may be in paper or electronic form and
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1 shall clearly indicate the expiration date of the licensure
2 license. Licenses are nontransferable. Notwithstanding any
3 provision of law to the contrary, the licensure form
4 application and license shall be public records.
5 "(4) (g) The license shall be initially renewed in
6 accordance with a schedule prescribed by the commissioner and
7 shall thereafter be subject to renewal on a biennial an annual
8 basis along with the nonrefundable license renewal fee. The
9 commissioner shall adopt by rule an initial licensure fee not
10 to exceed five hundred dollars ($500) and a renewal fee not to
11 exceed five hundred dollars ($500), both of which shall be
12 nonrefundable.
13 "(h) A licensee shall inform the commissioner by any
14 means acceptable to the commissioner of any material change in
15 the information required by this section or rules adopted
16 pursuant to this section within 30 days of the change. Failure
17 to timely inform the commissioner of a change shall result in
18 a penalty against the licensee in the amount of fifty dollars
19 ($50).
20 "(i) The commissioner may suspend or revoke a
21 license or may impose civil penalties for a violation of this
22 chapter or the insurance laws of this state or any other
23 jurisdiction, as determined by the commissioner in accordance
24 with rules adopted by the commissioner, provided a pharmacy
25 benefits manager shall have the same rights as insurers to
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1 request a hearing in accordance with Sections 27-2-28, et seq.
2 and to appeal as provided in Section 27-2-32.
3 "(j) Unless surrendered, suspended, or revoked by
4 the commissioner, a license issued under this section shall
5 remain valid as long as the pharmacy benefits manager
6 continues to do business in this state and remains in
7 compliance with this chapter and applicable rules, including
8 the payment of an annual license renewal fee as set forth in
9 subsection (g).
10 "(5)(k) All documents, materials, or other
11 information, and copies thereof, in the possession or control
12 of the department that are obtained by or disclosed to the
13 commissioner or any other person in the course of an
14 application, examination, or investigation made pursuant to
15 this chapter shall be confidential by law and privileged,
16 shall not be subject to any open records, freedom of
17 information, sunshine, or other public record disclosure laws,
18 and shall not be subject to subpoena or discovery. This
19 subdivision only applies to disclosure of confidential
20 documents by the department and does not create any privilege
21 in favor of any other party.
22 "(l)(1) Fees collected pursuant to this section
23 shall be deposited in the State Treasury to the credit of the
24 Insurance Department Fund.
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1 "(2) Civil penalties collected pursuant to this
2 chapter shall be deposited in the State Treasury to the credit
3 of the state General Fund.
4 "27-45A-5.
5 "(a) A pharmacy or pharmacist may provide a covered
6 person with information regarding the amount of the covered
7 person's cost share for a prescription drug. Neither a
8 pharmacy nor a pharmacist shall be proscribed by a pharmacy
9 benefits manager from discussing any such information or for
10 selling a more affordable alternative to the covered person if
11 such an alternative is available.
12 "(b) A health benefit plan that covers prescription
13 drugs may not include a provision that requires an enrollee to
14 make a payment for a prescription drug at the point of sale in
15 an amount that exceeds the lessor of: (1) the contracted
16 co-payment amount; or (2) the amount an individual would pay
17 for a prescription if that individual were paying with cash.
18 "(c) For purposes of this section, the following
19 words have the following meanings:
20 "(1) COVERED PERSON. Any individual, family, or
21 family member on whose behalf third-party payment or
22 prepayment of health or medical expenses is provided under a
23 health benefit plan.
24 "(2) ENROLLEE. A person named on a policy or
25 certificate of coverage under a health benefit plan.
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1 "(3) HEALTH BENEFIT PLAN. As defined in Section
2 27-54A-2.
3 "(a) The commissioner may adopt rules necessary to
4 implement this chapter.
5 "(b) The powers and duties set forth in this chapter
6 shall be in addition to all other authority of the
7 commissioner.
8 "(c) The commissioner shall enforce compliance with
9 the requirements of this chapter and rules adopted thereunder.
10 "(d)(1) The commissioner may examine or audit any
11 books and records of a pharmacy benefits manager providing
12 claims processing services or other prescription drug or
13 device services for a health benefit plan as may be deemed
14 relevant and necessary by the commissioner to determine
15 compliance with this chapter.
16 "(2) Examinations conducted by the commissioner
17 shall be pursuant to the same examination authority of the
18 commissioner relative to insurers as provided in Chapter 2,
19 including, but not limited to, the confidentiality of
20 documents and information submitted as provided in Section
21 27-2-24; examination expenses shall be processed in accordance
22 with Section 27-2-25; and pharmacy benefits managers shall
23 have the same rights as insurers to request a hearing in
24 accordance with Sections 27-2-28, et seq., and to appeal as
25 provided in Section 27-2-32.
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1 "(e) The commissioner's examination expenses shall
2 be collected from pharmacy benefits managers in the same
3 manner as those collected from insurers.
4 "27-45A-6.
5 "(a) The commissioner may adopt reasonable rules
6 necessary to implement Sections 27-45A-4 and 27-45A-5.
7 "(b) The rules adopted under this chapter shall set
8 penalties or civil fines for violations of Sections 27-45A-4
9 and 27-45A-5 and the rules implementing this chapter
10 including, without limitation, monetary fines and the
11 suspension or revocation of a license.
12 "(c) The fees collected pursuant to this chapter
13 shall be deposited in the State Treasury to the credit of the
14 Insurance Department Fund. Any civil fine or penalty collected
15 shall be deposited in the State Treasury to the credit of the
16 State General Fund.
17 "(a) Nothing in this chapter is intended or shall be
18 construed to do any of the following:
19 "(1) Be in conflict with existing relevant federal
20 law.
21 "(2) Apply to any specialty drug.
22 "(3) Impact the ability of a hospital to mandate its
23 employees use of a hos