3 By Representatives Ledbetter, Sanderford, Crawford, Sorrell,
4 Isbell, Stringer, McMillan, Shiver, Brown (K), Faust, Shaver,
5 Nordgren, Lovvorn, Hanes, Fincher, Hurst, Farley, Rowe,
6 Oliver, Estes, Smith, Sells, McCutcheon and Meadows
7 RFD: Ways and Means Education
8 First Read: 03-MAR-21
1 208556-1:n:02/03/2021:PMG/bm LSA2020-2018
8 SYNOPSIS: Under existing law, pharmacy benefits
9 managers must be licensed by the Department of
10 Insurance. Pharmacy benefits managers provide
11 claims processing services or prescription drug and
12 other pharmacist services, or both, to health
13 benefit plans.
14 This bill would require insureds to receive
15 certain prescription drug rebates and discounts.
16 This bill would prohibit a pharmacy benefits
17 manager from reimbursing a pharmacy in an amount
18 less than the amount the pharmacy benefits manager
19 reimburses an affiliated pharmacy of the pharmacy
20 benefits manager and from paying a pharmacy for
21 prescription drugs an amount different than the
22 amount the pharmacy benefits manager contracted
23 with the health benefit plan to charge the health
24 benefit plan for those same prescription drugs.
25 This bill would prohibit a pharmacy benefits
26 manager from requiring or steering an insured to
1 use a mail-order pharmacy or a pharmacy affiliated
2 with a pharmacy benefits manager.
3 This bill would require a pharmacy benefits
4 manager to act as a fiduciary and annually report
5 drug rebate information to health insurers and
6 health benefit plans.
7 This bill would prohibit a pharmacy benefits
8 manager from imposing conditions to influence an
9 insured in selecting a certain pharmacy or
10 otherwise limiting an insured's ability to select a
11 pharmacy of his or her choice.
12 This bill would prohibit a pharmacy benefits
13 manager from limiting certain powers of a pharmacy
14 or pharmacist to provide pharmacist services to
16 This bill would provide further for the
17 Commissioner of Insurance to enforce laws relating
18 to pharmacy benefits managers and would provide
19 civil penalties for violations.
20 This bill would also provide conforming
21 changes to definitions.
23 A BILL
24 TO BE ENTITLED
25 AN ACT
1 Relating to health care; to amend Sections 3 through
2 5 of Act 2019-457, 2019 Regular Session, now appearing as
3 Sections 27-45A-3, 27-45A-4, and 27-45A-5, Code of Alabama
4 1975; to amend and renumber Section 6 of Act 2019-457, 2019
5 Regular Session, now appearing as Section 27-45A-6, Code of
6 Alabama 1975; and to add Sections 27-45A-6, 27-45A-7,
7 27-45A-8, 27-45A-9, 27-45A-10, 27-45A-11, and 27-45A-13 to the
8 Code of Alabama 1975; to renumber Section 7 of Act 2019-457,
9 2019 Regular Session, now appearing as Section 27-45A-7, Code
10 of Alabama 1975; to require insureds to receive certain
11 prescription drug rebates and discounts; to prohibit a
12 pharmacy benefits manager from reimbursing a pharmacy in an
13 amount less than the amount the pharmacy benefits manager
14 reimburses an affiliated pharmacy of the pharmacy benefits
15 manager and from paying a pharmacy for prescription drugs an
16 amount different than the contracted amount; to prohibit
17 pharmacy benefits managers from steering an insured to use a
18 mail-order pharmacy or a pharmacy benefits manager affiliate;
19 to require a pharmacy benefits manager to act as a fiduciary
20 to its clients and report certain drug rebates; to prohibit
21 pharmacy benefits managers from limiting an insured's ability
22 to select a pharmacy of his or her choice; to prohibit a
23 pharmacy benefits manager from limiting certain powers of a
24 pharmacy or pharmacist; to revise definitions; to provide
25 further for the Commissioner of Insurance to enforce laws
26 relating to pharmacy benefits managers; and to provide civil
1 penalties for certain violations; and to make conforming
2 changes to definitions.
3 BE IT ENACTED BY THE LEGISLATURE OF ALABAMA:
4 Section 1. Sections 3 through 5 of Act 2019-457,
5 2019 Regular Session, now appearing as Sections 27-45A-3,
6 27-45A-4, and 27-45A-5, Code of Alabama 1975, are amended to
7 read as follows:
9 "For purposes of this chapter, the following words
10 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) CLIENT. A health insurer, payor, or health
20 benefit plan.
21 "(3) COVERED INDIVIDUAL. Any individual or family
22 member covered under a health benefit plan.
23 "(4) ENROLLEE. An individual named on a policy or
24 certificate of coverage under a health benefit plan.
25 "(5) HEALTH BENEFIT PLAN. As defined in Section
1 "(2)(6) OTHER PRESCRIPTION DRUG OR DEVICE SERVICES.
2 Services, other than claims processing services, provided
3 directly or indirectly, whether in connection with or separate
4 from claims processing services, including without limitation,
5 but not limited to, any of the following:
6 "a. Negotiating rebates, discounts, or other
7 financial incentives and arrangements with drug companies.
8 "b. Disbursing or distributing rebates.
9 "c. Managing or participating in incentive programs
10 or arrangements for pharmacist services.
11 "d. Negotiating or entering into contractual
12 arrangements with pharmacists or pharmacies, or both.
13 "e. Developing formularies.
14 "f. Designing prescription benefit programs.
15 "g. Advertising or promoting services.
16 "(3)(7) PHARMACIST. An individual licensed as a
17 pharmacist by the State Board of Pharmacy As defined in
18 Section 34-23-1.
19 "(4)(8) PHARMACIST SERVICES. Products, goods, and
20 services, or any combination of products, goods, and services,
21 provided as a part of the practice of pharmacy.
22 "(5)(9) PHARMACY. The place licensed by the State
23 Board of Pharmacy in which drugs, chemicals, medicines,
24 prescriptions, and poisons are compounded, dispensed, or sold
25 at retail As defined in Section 34-23-1.
26 "(6)(10) PHARMACY BENEFITS MANAGER. a. A person,
27 business, or entity, including a wholly or partially owned or
1 controlled subsidiary of a pharmacy benefits manager, that
2 provides claims processing services or other prescription drug
3 or device services, or both, to covered individuals who are
4 employed in or are residents of this state, for health benefit
6 "b. Pharmacy benefits manager does not include any
7 of the following:
8 "1. A healthcare facility licensed in Alabama this
10 "2. A healthcare professional licensed in Alabama
11 this state.
12 "3. A consultant who only provides advice as to the
13 selection or performance of a pharmacy benefits manager.
14 "(11) PHARMACY BENEFITS MANAGER AFFILIATE. A
15 pharmacy or pharmacist that, directly or indirectly, through
16 one or more intermediaries, is owned or controlled by, or is
17 under common ownership or control with a pharmacy benefits
20 "(a) (1) Effective January 1, 2020, to conduct
21 business in this state, a pharmacy benefits manager must be
22 licensed by the commissioner. To initially obtain a license or
23 renew a license, a pharmacy benefits manager shall submit all
24 of the following:
25 "a.(1) A nonrefundable fee not to exceed $500 five
26 hundred dollars ($500).
1 "b.(2) A copy of the licensee's corporate charter,
2 articles of incorporation, or other charter document.
3 "c.(3) A completed licensure form adopted by the
4 commissioner containing:
5 "1.a. The name and address of the licensee.
6 "2.b. The name, address, and official position of an
7 employee who will serve as the primary contact for the
8 Department of Insurance.
9 "3.c. Any additional contact information deemed
10 appropriate by the commissioner or reasonably necessary to
11 verify the information contained in the application.
12 "(2) The licensee shall inform the commissioner by
13 any means acceptable to the commissioner of any change in the
14 information required by this subsection within 30 days of the
15 change. Failure to timely inform the commissioner of a change
16 shall result in a penalty against the licensee in the amount
17 of fifty dollars ($50).
18 "(3)(b) Upon receipt of a completed licensure form
19 and the licensure fee, the commissioner shall issue a license.
20 The license may be in paper or electronic form and shall
21 clearly indicate the expiration date of the licensure.
22 Licenses are nontransferable. Notwithstanding any provision of
23 law to the contrary, the licensure form and license shall be
24 public records.
25 "(4)(c) The license shall be initially renewed in
26 accordance with a schedule prescribed by the commissioner and
27 shall thereafter be subject to renewal on a biennial basis.
1 The commissioner shall adopt by rule an initial licensure fee
2 not to exceed five hundred dollars ($500) and a renewal fee
3 not to exceed five hundred dollars ($500), both of which shall
4 be nonrefundable.
5 "(d) The licensee shall inform the commissioner by
6 any means acceptable to the commissioner of any change in the
7 information required under subsection (a) within 30 days of
8 the change. Failure to timely inform the commissioner of a
9 change shall result in a civil penalty against the licensee in
10 the amount of fifty dollars ($50).
11 "(e) The commissioner may revoke or suspend a
12 license or may impose civil penalties for a violation of this
13 chapter, as determined by the commissioner in accordance with
14 rules adopted by the commissioner.
15 "(5)(f) All documents, materials, or other
16 information, and copies thereof, in the possession or control
17 of the department that are obtained by or disclosed to the
18 commissioner or any other person in the course of an
19 application, examination, or investigation made pursuant to
20 this chapter shall be confidential by law and privileged,
21 shall not be subject to any open records, freedom of
22 information, sunshine, or other public record disclosure laws,
23 and shall not be subject to subpoena or discovery. This
24 subdivision only applies to disclosure of confidential
25 documents by the department and does not create any privilege
26 in favor of any other party.
1 "(g)(1) Fees collected pursuant to this section
2 shall be deposited in the State Treasury to the credit of the
3 Insurance Department Fund.
4 "(2) Civil penalties collected pursuant to this
5 chapter shall be deposited in the State Treasury to the credit
6 of the State General Fund.
8 " (a) A pharmacy or pharmacist may provide a covered
9 person with information regarding the amount of the covered
10 person's cost share for a prescription drug. Neither a
11 pharmacy nor a pharmacist shall be proscribed by a pharmacy
12 benefits manager from discussing any such information or for
13 selling a more affordable alternative to the covered person if
14 such an alternative is available.
15 "(b) A health benefit plan that covers prescription
16 drugs may not include a provision that requires an enrollee to
17 make a payment for a prescription drug at the point of sale in
18 an amount that exceeds the lessor of the following:
19 "(1) the The contracted co-payment copayment amount;
21 "(2) the The amount an individual would pay for a
22 prescription if that individual were paying with cash.
23 "(c) For purposes of this section, the following
24 words have the following meanings:
25 "(1) COVERED PERSON. Any individual, family, or
26 family member on whose behalf third-party payment or
1 prepayment of health or medical expenses is provided under a
2 health benefit plan.
3 "(2) ENROLLEE. A person named on a policy or
4 certificate of coverage under a health benefit plan.
5 "(3) HEALTH BENEFIT PLAN. As defined in Section
7 Section 2. Sections 27-45A-6, 27-45A-7, 27-45A-8,
8 27-45A-9, 27-45A-10, and 27-45A-11, are added to the Code of
9 Alabama 1975, to read as follows:
11 (a) A pharmacy or pharmacist may provide a covered
12 individual with information regarding the amount of the
13 covered individual's cost share for a prescription drug.
14 (b)(1) When calculating an enrollees contribution
15 to any applicable cost sharing requirement, a pharmacy benefit
16 manager shall include any cost sharing amounts paid by the
17 enrollee or on behalf of the enrollee by another person.
18 (2) If the requirement in subdivision (1) is invalid
19 or incapable of being enforced against a pharmacy benefit
20 manager due to a conflict with federal law requirements, the
21 requirement in subdivision (1) shall remain in full force and
22 effect with respect to all pharmacy benefit managers and in
23 all situations where no such conflict exists. If the
24 application of this requirement would be the sole cause of a
25 state-regulated high deductible health benefit plans failure
26 to qualify as such a plan under 223, Internal Revenue Code,
1 this requirement shall not apply to such a plan to the extent
2 necessary to avoid that result.
3 (c) Enrollees shall directly receive at the pharmacy
4 counter at least 80 percent of the benefit of rebates and
5 discounts for prescription drugs that accrue directly or
6 indirectly to health benefit plans.
8 A pharmacy benefits manager may not do either of the
10 (1) Reimburse a pharmacy or pharmacist in the state
11 an amount less than the amount that the pharmacy benefits
12 manager reimburses a pharmacy benefits manager affiliate for
13 providing the same pharmacist services.
14 (2) Conduct spread pricing in this state. For
15 purposes of this subdivision, "spread pricing" means the model
16 of prescription drug pricing in which a pharmacy benefits
17 manager charges a health benefit plan a contracted price for
18 prescription drugs, and the contract price for the
19 prescription drugs differs from the amount the pharmacy
20 benefits manager, directly or indirectly, pays the pharmacy or
21 pharmacist for pharmacist services.
23 (1) Require a covered individual, as a condition of
24 payment or reimbursement, to purchase pharmacist services,
25 including, but not limited to, prescription drugs, exclusively
26 through a mail-order pharmacy or pharmacy benefits manager
1 (2) Use a covered individual's pharmacy services
2 data collected pursuant to the provision of claims processing
3 services for the purpose of soliciting, marketing, or
4 referring the covered individual to a mail-order pharmacy or
5 pharmacy benefits manager affiliate.
6 (3) Order a covered individual, orally or in
7 writing, including through online messaging, to a mail-order
8 pharmacy or pharmacy benefits manager affiliate.
9 (4) Offer or implement plan designs that require a
10 covered individual to use a mail-order pharmacy or pharmacy
11 benefits manager affiliate.
12 (5) Offer or implement plan designs that increase
13 plan or patient costs if the covered individual chooses not to
14 use a mail-order pharmacy or pharmacy benefits manager
15 affiliate. The prohibition in this subdivision includes
16 requiring a covered individual to pay the full cost for a
17 prescription drug when the covered individual chooses not to
18 use a mail-order pharmacy or pharmacy benefits manager
21 (a) A pharmacy benefits manager is a fiduciary to
22 its clients and shall do all