House Study Bill 228 - Introduced
HOUSE FILE _____
BY (PROPOSED COMMITTEE
ON COMMERCE BILL BY
CHAIRPERSON LUNDGREN)
A BILL FOR
1 An Act relating to pharmacy benefits managers, pharmacies, and
2 prescription drug benefits, and including applicability
3 provisions.
4 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
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1 Section 1. Section 505.26, subsection 1, paragraph b, Code
2 2021, is amended to read as follows:
3 b. “Pharmacy benefits manager” means the same as defined in
4 section 510B.1 510C.1.
5 Sec. 2. Section 507B.4, subsection 2, Code 2021, is amended
6 by adding the following new paragraph:
7 NEW PARAGRAPH. t. Pharmacy benefits managers. Any
8 violation of chapter 510B by a pharmacy benefits manager.
9 Sec. 3. Section 510B.1, Code 2021, is amended by striking
10 the section and inserting in lieu thereof the following:
11 510B.1 Definitions.
12 As used in this chapter, unless the context otherwise
13 requires:
14 1. “Clean claim” means a claim that has no defect or
15 impropriety, including a lack of any required substantiating
16 documentation, or other circumstances requiring special
17 treatment, that prevents timely payment from being made on the
18 claim.
19 2. “Commissioner” means the commissioner of insurance.
20 3. “Cost-sharing” means any coverage limit, copayment,
21 coinsurance, deductible, or other out-of-pocket expense
22 obligation imposed by a health benefit plan on a covered
23 person.
24 4. “Covered person” means a policyholder, subscriber, or
25 other person participating in a health benefit plan that has
26 a prescription drug benefit managed by a pharmacy benefits
27 manager.
28 5. “Health benefit plan” means the same as defined in
29 section 514J.102.
30 6. “Health care professional” means the same as defined in
31 section 514J.102.
32 7. “Health carrier” means the same as defined in section
33 514J.102.
34 8. “Maximum allowable cost” means the maximum amount that a
35 pharmacy will be reimbursed by a pharmacy benefits manager or a
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1 health carrier for a generic drug, brand-name drug, biologic
2 product, or other prescription drug, and that may include any
3 of the following:
4 a. Average acquisition cost.
5 b. National average acquisition cost.
6 c. Average manufacturer price.
7 d. Average wholesale price.
8 e. Brand effective rate.
9 f. Generic effective rate.
10 g. Discount indexing.
11 h. Federal upper limits.
12 i. Wholesale acquisition cost.
13 j. Any other term used by a pharmacy benefits manager or a
14 health carrier to establish reimbursement rates for a pharmacy.
15 9. “Maximum allowable cost list” means a list of
16 prescription drugs that includes the maximum allowable cost
17 for each prescription drug and that is used, directly or
18 indirectly, by a pharmacy benefits manager.
19 10. “Pharmacy” means the same as defined in section 155A.3.
20 11. “Pharmacy acquisition cost” means the cost to a pharmacy
21 for a prescription drug as invoiced by a wholesale distributor.
22 12. “Pharmacy benefits manager” means the same as defined
23 in section 510C.1.
24 13. “Pharmacy benefits manager affiliate” means a pharmacy or
25 a pharmacist that directly or indirectly through one or more
26 intermediaries, owns or controls, is owned and controlled by,
27 or is under common ownership or control of, a pharmacy benefits
28 manager.
29 14. “Pharmacy network” or “network” means pharmacies that
30 have contracted with a pharmacy benefits manager to dispense
31 or sell prescription drugs to covered persons of a health
32 benefit plan for which the pharmacy benefits manager manages
33 the prescription drug benefit.
34 15. “Prescription drug” means the same as defined in section
35 155A.3.
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1 16. “Prescription drug benefit” means the same as defined
2 in section 510C.1.
3 17. “Prescription drug order” means the same as defined in
4 section 155A.3.
5 18. “Wholesale distributor” means the same as defined in
6 section 155A.3.
7 Sec. 4. Section 510B.2, Code 2021, is amended to read as
8 follows:
9 510B.2 Certification as a third-party administrator required.
10 A pharmacy benefits manager doing business in this state
11 shall obtain a certificate of registration as a third-party
12 administrator under chapter 510 pursuant to section 510.21, and
13 the provisions relating to a third-party administrator pursuant
14 to chapter 510 shall apply to a pharmacy benefits manager.
15 Sec. 5. Section 510B.4, Code 2021, is amended to read as
16 follows:
17 510B.4 Performance of duties —— good faith —— conflict of
18 interest.
19 1. A pharmacy benefits manager shall perform the pharmacy
20 benefits manager’s duties exercising exercise good faith and
21 fair dealing in the performance of its the pharmacy benefits
22 manager’s contractual obligations toward the covered entity a
23 health carrier.
24 2. A pharmacy benefits manager shall notify the covered
25 entity a health carrier in writing of any activity, policy,
26 practice ownership interest, or affiliation of the pharmacy
27 benefits manager that presents any conflict of interest.
28 Sec. 6. Section 510B.5, Code 2021, is amended to read as
29 follows:
30 510B.5 Contacting covered individual persons —— requirements.
31 A pharmacy benefits manager, unless authorized pursuant to
32 the terms of its contract with a covered entity health carrier,
33 shall not contact any covered individual person without
34 the express written permission of the covered entity health
35 carrier.
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1 Sec. 7. Section 510B.6, Code 2021, is amended to read as
2 follows:
3 510B.6 Dispensing of substitute Substitute prescription drug
4 for prescribed drug drugs.
5 1. The following provisions shall apply when if a pharmacy
6 benefits manager requests the dispensing of a substitute
7 prescription drug for a prescribed drug to prescribed for a
8 covered individual person by the covered person’s health care
9 professional:
10 a. The pharmacy benefits manager may request the
11 substitution of a lower priced generic and therapeutically
12 equivalent prescription drug for a higher priced prescribed
13 prescription drug.
14 b. If the substitute prescription drug’s net cost to the
15 covered individual person or covered entity to the health
16 carrier exceeds the cost of the prescribed prescription drug
17 originally prescribed for the covered person, the substitution
18 shall be made only for medical reasons that benefit the
19 covered individual person as determined by the covered person’s
20 prescribing health care professional.
21 2. A pharmacy benefits manager shall obtain the approval of
22 the prescribing practitioner health care professional prior to
23 requesting any substitution under this section.
24 3. A pharmacy benefits manager shall not substitute an
25 equivalent prescription drug contrary to a prescription drug
26 order that prohibits a substitution.
27 Sec. 8. Section 510B.7, Code 2021, is amended by striking
28 the section and inserting in lieu thereof the following:
29 510B.7 Pharmacy networks.
30 1. A pharmacy located in the state shall not be prohibited
31 from participating in a pharmacy network provided that the
32 pharmacy accepts the same terms and conditions as the pharmacy
33 benefits manager imposes on the pharmacies in the network.
34 2. A pharmacy benefits manager shall not assess, charge, or
35 collect any form of remuneration that passes from a pharmacy
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1 or a pharmacist in a pharmacy network to the pharmacy benefits
2 manager including but not limited to claim processing fees,
3 performance-based fees, network participation fees, or
4 accreditation fees.
5 Sec. 9. Section 510B.8, Code 2021, is amended by striking
6 the section and inserting in lieu thereof the following:
7 510B.8 Prescription drugs —— point of sale.
8 1. A covered person shall not be required to make a
9 cost-sharing payment at the point of sale for a prescription
10 drug in an amount that exceeds the maximum allowable cost for
11 that drug at the pharmacy at which the covered person fills the
12 covered person’s prescription drug order.
13 2. A pharmacy benefits manager shall not prohibit a pharmacy
14 from disclosing the availability of a lower-cost prescription
15 drug option to a covered person, or from selling a lower-cost
16 prescription drug option to a covered person.
17 3. Any amount paid by a covered person for a prescription
18 drug purchased pursuant to this section shall be applied to any
19 deductible imposed by the covered person’s health benefit plan
20 in accordance with the health benefit plan coverage documents.
21 4. A covered person shall not be prohibited from filling
22 a prescription drug order at any pharmacy located in the
23 state provided that the pharmacy accepts the same terms and
24 conditions as the pharmacy benefits manager imposes on at least
25 one of the pharmacy networks that the pharmacy benefits manager
26 has established in the state.
27 5. A pharmacy benefits manager shall not impose different
28 cost-sharing or additional fees on a covered person based on
29 the pharmacy at which the covered person fills the covered
30 person’s prescription drug order.
31 6. A pharmacy may decline to dispense a prescription drug to
32 a covered person if, as a result of the maximum allowable cost
33 list to which the pharmacy is subject, the pharmacy will be
34 reimbursed less for the prescription drug than the pharmacy’s
35 acquisition cost.
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1 Sec. 10. NEW SECTION. 510B.8A Maximum allowable cost lists.
2 1. Prior to placement of a particular prescription drug on a
3 maximum allowable cost list, a pharmacy benefits manager shall
4 ensure that all of the following requirements are met:
5 a. The particular prescription drug must be listed as
6 therapeutically and pharmaceutically equivalent in the most
7 recent edition of the publication entitled “Approved Drug
8 Products with Therapeutic Equivalence Evaluations”, published
9 by the United States food and drug administration, otherwise
10 known as the orange book.
11 b. The particular prescription drug must not be obsolete or
12 temporarily unavailable.
13 c. The particular prescription drug must be available for
14 purchase, without limitations, by all pharmacies in the state
15 from a national or regional wholesale distributor that is
16 licensed in the state.
17 2. For each maximum allowable cost list that a pharmacy
18 benefits manager uses in the state, the pharmacy benefits
19 manager shall do all of the following:
20 a. Provide each pharmacy in a pharmacy network reasonable
21 access to the maximum allowable cost list to which the pharmacy
22 is subject.
23 b. Update the maximum allowable cost list within seven
24 calendar days from the date of an increase of ten percent or
25 more in the pharmacy acquisition cost of a prescription drug on
26 the list by one or more wholesale distributors doing business
27 in the state.
28 c. Update the maximum allowable cost list within seven
29 calendar days from the date of a change in the methodology, or
30 a change in the value of a variable applied in the methodology,
31 on which the maximum allowable cost list is based.
32 d. Provide a reasonable process for each pharmacy in a
33 pharmacy network to receive prompt notice of all changes to the
34 maximum allowable cost list to which the pharmacy is subject.
35 Sec. 11. NEW SECTION. 510B.8B Pharmacy benefits manager
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1 affiliates —— reimbursement.
2 A pharmacy benefits manager shall not reimburse any pharmacy
3 located in the state in an amount less than the amount that
4 the pharmacy benefits manager reimburses a pharmacy benefits
5 manager affiliate for dispensing the same prescription drug
6 as dispensed by the pharmacy. The reimbursement amount shall
7 be calculated on a per unit basis based on the same generic
8 product identifier or generic code number.
9 Sec. 12. NEW SECTION. 510B.8C Clean claims.
10 After the date of receipt of a clean claim submitted by a
11 pharmacy in a pharmacy network, a pharmacy benefits manager
12 shall not retroactively reduce payment on the claim, either
13 directly or indirectly, except if the claim is found not to be
14 a clean claim during the course of a routine audit.
15 Sec. 13. NEW SECTION. 510B.8D Appeals and disputes.
16 1. A pharmacy benefits manager shall provide a reasonable
17 process to allow a pharmacy to appeal a maximum allowable cost,
18 or a reimbursement made under a maximum allowable cost list,
19 for a specific prescription drug for any of the following
20 reasons:
21 a. The pharmacy benefits manager violated section 510B.8A.
22 b. The maximum allowable cost is below the pharmacy
23 acquisition cost.
24 2. The appeal process must include all of the following:
25 a. A dedicated telephone number at which a pharmacy may
26 contact the pharmacy benefits manager and speak directly with
27 an individual involved in the appeal process.
28 b. A dedicated electronic mail address or internet site for
29 the purpose of submitting an appeal directly to the pharmacy
30 benefits manager.
31 c. A period of at least seven business days after the date
32 of a pharmacy’s initial submission of a clean claim during
33 which the pharmacy may initiate an appeal.
34 3. A pharmacy benefits manager shall respond to an appeal
35 within seven business days after the date on which the pharmacy
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1 benefits manager receives the appeal.
2 a. If the pharmacy benefits manager grants a pharmacy’s
3 appeal, the pharmacy benefits manager shall do all of the
4 following:
5 (1) Adjust the maximum allowable cost of the prescription
6 drug that is the subject of the appeal and provide the national
7 drug code number that the adjustment is based on to the
8 appealing pharmacy.
9 (2) Permit the appealing pharmacy to reverse and rebill the
10 claim that is the subject of the appeal.
11 (3) Make the adjustment pursuant to subparagraph (1)
12 applicable to each pharmacy in the state subject to the same
13 maximum allowable cost list as the appealing pharmacy.
14 b. If the pharmacy benefits manager denies a pharmacy’s
15 appeal, the pharmacy benefits manager shall do all of the
16 following:
17 (1) Provide the appealing pharmacy the national drug
18 code number and the name of a wholesale distributor licensed
19 pursuant to section 155A.17 from which the pharmacy can obtain
20 the prescription drug at or below the maximum allowable cost.
21 (2) If the national drug code number provided by the
22 pharmacy benefits manager pursuant to subparagraph (1) is
23 not available below the pharmacy acquisition cost from the
24 wholesale distributor from whom the pharmacy purchases the
25 majority of its prescription drugs for resale, the pharmacy
26 benefits manager shall adjust the maximum allowable cost list
27 above the appealing pharmacy’s pharmacy acquisition cost, and
28 permit the pharmacy to reverse and rebill each claim affected
29 by the pharmacy’s inability to procure the prescription drug
30 at a cost that is equal to or less than the previously appealed
31 maximum allowable cost.
32 Sec. 14. Section 510B.9, Code 2021, is amended to read as
33 follows:
34 510B.9 Submission, approval, and use of prior Prior
35 authorization form.
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1 A pharmacy benefits manager shall file with and have
2 approved by the commissioner a single prior authorization
3 form as provided in secti