1 STATE OF OKLAHOMA
2 1st Session of the 59th Legislature (2023)
3 HOUSE BILL 2853 By: Wallace
4
5
6 AS INTRODUCED
7 An Act relating to health care; creating the Oklahoma
Rebate Pass-Through and PBM Meaningful Transparency
8 Act of 2023; amending 59 O.S. 2021, Sections 357 and
358, which relate to definitions; modifying
9 definitions, procedures, and penalties; creating
duties; creating licensing application requirements;
10 amending 36 O.S. 2021, Section 6960, as amended by
Section 1, Chapter 38, O.S.L. 2022 (36 O.S. Supp.
11 2022, Section 6960), which relates to definitions;
defining terms; creating PBM disclosures; amending 36
12 O.S. 2021, Section 6962, as amended by Section 2,
Chapter 38, O.S.L. 2022 (36 O.S. Supp. 2022, Section
13 6962), which relates to pharmacy benefits manager
compliance; creating duties; amending 36 O.S. 2021,
14 Section 6964, which relates to a formulary for
prescription drugs; creating agency duties; providing
15 cost sharing calculation methodology, limitations,
and requirements; creating penalties; clarifying
16 authority to take certain actions; prohibiting the
disclosure of certain information; declaring that
17 certain information not be considered public record;
providing for noncodification; providing for
18 codification; and providing an effective date.
19
20
21 BE IT ENACTED BY THE PEOPLE OF THE STATE OF OKLAHOMA:
22 SECTION 1. NEW LAW A new section of law not to be
23 codified in the Oklahoma Statutes reads as follows:
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1 This act shall be known and may be cited as the "Oklahoma Rebate
2 Pass-Through and PBM Meaningful Transparency Act of 2023".
3 SECTION 2. AMENDATORY 59 O.S. 2021, Section 357, is
4 amended to read as follows:
5 Section 357. As used in this act:
6 1. "Covered entity" means a nonprofit hospital or medical
7 service organization, insurer, health coverage plan or health
8 maintenance organization; a health program administered by the state
9 in the capacity of provider of health coverage; or an employer,
10 labor union, or other entity organized in the state that provides
11 health coverage to covered individuals who are employed or reside in
12 the state. This term does not include a health plan that provides
13 coverage only for accidental injury, specified disease, hospital
14 indemnity, disability income, or other limited benefit health
15 insurance policies and contracts that do not include prescription
16 drug coverage;
17 2. "Covered individual" means a member, participant, enrollee,
18 contract holder or policy holder or beneficiary of a covered entity
19 who is provided health coverage by the covered entity. A covered
20 individual includes any dependent or other person provided health
21 coverage through a policy, contract or plan for a covered
22 individual;
23 3. "Department" means the Oklahoma Insurance Department;
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1 4. "Maximum allowable cost" or "MAC" means the list of drug
2 products delineating the maximum per-unit reimbursement for
3 multiple-source prescription drugs, medical product or device;
4 5. "Multisource drug product reimbursement" (reimbursement)
5 means the total amount paid to a pharmacy inclusive of any reduction
6 in payment to the pharmacy, excluding prescription dispense fees;
7 6. "Pharmacy benefits management" means a service provided to
8 covered entities to facilitate the provision of prescription drug
9 benefits to covered individuals within the state, including
10 negotiating pricing and other terms with drug manufacturers and
11 providers. Pharmacy benefits management may include any or all of
12 the following services:
13 a. claims processing, performance of drug utilization
14 review, processing of drug prior authorization
15 requests, retail network management and payment of
16 claims to pharmacies for prescription drugs dispensed
17 to covered individuals,
18 b. clinical formulary development and management
19 services,
20 c. rebate contracting and administration,
21 d. certain patient compliance, therapeutic intervention
22 and generic substitution programs, or
23 e. disease management programs,
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1 f. adjudication of appeals and grievances related to the
2 prescription drug benefit, or
3 g. controlling the cost of prescription drugs;
4 7. "Pharmacy benefits manager" or "PBM" means a person,
5 business or other entity that, either directly or through an
6 intermediary, performs pharmacy benefits management. The term
7 includes a person or entity acting for a PBM in a contractual or
8 employment relationship in the performance of pharmacy benefits
9 management for a managed care company, nonprofit hospital, medical
10 service organization, insurance company, third-party payor, or a
11 health program administered by an agency of this state;
12 8. "Plan sponsor" means the employers, insurance companies,
13 unions and health maintenance organizations or any other entity
14 responsible for establishing, maintaining, or administering a health
15 benefit plan on behalf of covered individuals; and
16 9. "Provider" means a pharmacy licensed by the State Board of
17 Pharmacy, or an agent or representative of a pharmacy, including,
18 but not limited to, the pharmacy's contracting agent, which
19 dispenses prescription drugs or devices to covered individuals.
20 SECTION 3. AMENDATORY 59 O.S. 2021, Section 358, is
21 amended to read as follows:
22 Section 358. A. In order to provide pharmacy benefits
23 management or any of the services included under the definition of
24 pharmacy benefits management in this state, a pharmacy benefits
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1 manager or any entity acting as one in a contractual or employment
2 relationship for a covered entity shall first obtain a license from
3 the Oklahoma Insurance Department, and the Department may charge a
4 fee for such licensure.
5 B. The Department shall establish, by regulation, licensure
6 procedures, required disclosures for pharmacy benefits managers
7 (PBMs) and other rules as may be necessary for carrying out and
8 enforcing the provisions of this act. The licensure procedures
9 shall, at a minimum, include the completion of an application form
10 that shall include the name and address of an agent for service of
11 process, the payment of a requisite fee, and evidence of the
12 procurement of a surety bond the following:
13 1. The name, address, and telephone contact number of the PBM;
14 2. The name and address of the PBM's agent for service of
15 process in the state;
16 3. The name and address of each person with management or
17 control over the PBM;
18 4. Evidence of the procurement of a surety bond;
19 5. The name and address of each person with a beneficial
20 ownership interest in the PBMs;
21 6. In the case of a PBM applicant that is a partnership or
22 other unincorporated association, limited liability corporation, or
23 corporation, and has five or more partners, members, or
24 stockholders:
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1 a. the applicant shall specify its legal structure and
2 the total number of partners, members, or
3 stockholders,
4 b. the applicant shall specify the name, address, usual
5 occupation, and professional qualifications of the
6 five partners, members, or stockholders with the five
7 largest ownership interests in the PBM, and
8 c. the applicant shall agree that, upon request by the
9 Department, it shall furnish the Department with
10 information regarding the name, address, usual
11 occupation, and professional qualifications of any
12 other partners, members, or stockholders; and
13 7. A signed statement indicating that the PBM has not been
14 convicted of a felony and has not violated any of the requirements
15 of the Oklahoma Pharmacy Act and the Patient's Right to Pharmacy
16 Choice Act, or, if the applicant cannot provide such a statement, a
17 signed statement describing all relevant convictions or violations.
18 C. The Department may subpoena witnesses and information. Its
19 compliance officers may take and copy records for investigative use
20 and prosecutions. Nothing in this subsection shall limit the Office
21 of the Attorney General from using its investigative demand
22 authority to investigate and prosecute violations of the law.
23 D. The Department may suspend, revoke or refuse to issue or
24 renew a license for noncompliance with any of the provisions hereby
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1 established or with the rules promulgated by the Department; for
2 conduct likely to mislead, deceive or defraud the public or the
3 Department; for unfair or deceptive business practices or for
4 nonpayment of a renewal fee or fine. The Department may also levy
5 administrative fines for each count of which a PBM has been
6 convicted in a Department hearing.
7 SECTION 4. AMENDATORY 36 O.S. 2021, Section 6960, as
8 amended by Section 1, Chapter 38, O.S.L. 2022 (36 O.S. Supp. 2022,
9 Section 6960), is amended to read as follows:
10 Section 6960. For purposes of the Patient's Right to Pharmacy
11 Choice Act:
12 1. "Administrative fees" means fees or payments from
13 pharmaceutical manufacturers to, or otherwise retained by, a
14 pharmacy benefits manager (PBM) or its designee pursuant to a
15 contract between a PBM or affiliate and the manufacturer in
16 connection with the PBM's administering, invoicing, allocating, and
17 collecting the rebates;
18 2. "Aggregate retained rebate percentage" means the percentage
19 of all rebates received by a PBM from all pharmaceutical
20 manufacturers which is not passed on to the PBM's health plan or
21 health insurer clients. Aggregate retained rebate percentage shall
22 be expressed without disclosing any identifying information
23 regarding any health plan, prescription drug, or therapeutic class,
24 and shall be calculated by dividing:
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1 a. the aggregate dollar amount of all rebates that the
2 PBM received during the prior calendar year from all
3 pharmaceutical manufacturers and did not pass through
4 to the PBM's health plan or health insurer clients, by
5 b. the aggregate dollar amount of all rebates that the
6 pharmacy benefits manager received during the prior
7 calendar year from all pharmaceutical manufacturers;
8 3. "Defined cost sharing" means a deductible payment or
9 coinsurance amount imposed on an enrollee for a covered prescription
10 drug under the enrollee's health plan;
11 4. "Formulary" means a list of prescription drugs, as well as
12 accompanying tiering and other coverage information, that has been
13 developed by an issuer, a health plan, or the designee of a health
14 insurer or health plan, which the health insurer, health plan, or
15 designee of the health insurer or health plan references in
16 determining applicable coverage and benefit levels;
17 5. "Generic equivalent" means a drug that is designated to be
18 therapeutically equivalent, as indicated by the United States Food
19 and Drug Administration's "Approved Drug Products with Therapeutic
20 Equivalence Evaluations"; provided, however, that a drug shall not
21 be considered a generic equivalent until the drug becomes nationally
22 available;
23
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1 6. "Health insurer" means any corporation, association, benefit
2 society, exchange, partnership or individual licensed by the
3 Oklahoma Insurance Code;
4 7. "Health insurer administrative service fees" means fees or
5 payments from a health insurer or a designee of the health insurer
6 to, or otherwise retained by, a PBM or its designee pursuant to a
7 contract between a PBM or affiliate, and the health insurer or
8 designee of the health insurer in connection with the PBM managing
9 or administering the pharmacy benefit and administering, invoicing,
10 allocating, and collecting rebates;
11 2. 8. "Health insurer payor" means a health insurance company,
12 health maintenance organization, union, hospital and medical
13 services organization or any entity providing or administering a
14 self-funded health benefit plan;
15 9. "Health plan" means a policy, contract, certification, or
16 agreement offered or issued by a health insurer to provide, deliver,
17 arrange for, pay for, or reimburse any of the costs of health
18 services;
19 3. 10. "Mail-order pharmacy" means a pharmacy licensed by this
20 state that primarily dispenses and delivers covered drugs via common
21 carrier;
22 4. 11. "Pharmacy benefits manager" or "PBM" means a person
23 that, either directly or through an intermediary, performs pharmacy
24 benefits management, as defined in paragraph 6 of Section 357 of
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1 Title 59 of the Oklahoma Statutes, and any other person acting for
2 such person under a contractual or employment relationship in the
3 performance of pharmacy benefits management for a managed-care
4 company, nonprofit hospital, medical service organization, insurance
5 company, third-party payor or a health program administered by a
6 department of this state;
7 12. "Pharmacy and therapeutics committee" or "P&T Committee"
8 means a committee at a hospital or a health insurance plan that
9 decides which drugs will appear on that entity's drug formulary;
10 13. "Price protection rebate" means a negotiated price
11 concession that accrues directly or indirectly to the health
12 insurer, or other party on behalf of the health insurer, in the
13 event of an increase in the wholesale acquisition of a drug above a
14 specified threshold
15 5. 14. "Provider" means a pharmacy, as defined in Section 353.1
16 of Title 59 of the Oklahoma Statutes or an agent or representative
17 of a pharmacy;
18 15. "Rebates" means:
19 a. negotiated price concessions including, but not
20 limited to, base price concessions (whether described
21 as a rebate or otherwise) and reasonable estimates of
22 any price protection rebates and performance-based
23 price concessions that may accrue directly or
24 indirectly to the PBM during the coverage year from a
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1 manufacturer, dispensing pharmacy, or other party in
2 connection with the dispensing or administration of a
3 prescription drug, and
4 b. reasonable estimates of any price concessions, fees,
5 and other administrative costs that are passed
6 through, or are reasonably anticipated to be passed
7 through, to the PBM and serve to reduce the PBM's
8 liabilities for a prescription drug;
9 6. 16. "Retail pharmacy network" means retail pharmacy
10 providers contracted with a PBM in which the pharmacy primarily
11 fills and sells prescriptions via a retail, storefront location;
12 7. 17. "Rural service area" means a five-digit ZIP code in
13 which the population density is less than one thousand (1,000)
14 individuals per square mile;
15 8. 18 "Spread pricing" means a prescription drug pricing model
16 utilized by a pharmacy benefits manager in which the PBM charges a
17 health benefit plan a contracted price for prescription drugs that
18 differs from the amount the PBM directly or indirectly pays the
19 pharmacy or pharmacist for providing pharmacy services;
20 9. 19. "Suburban service area" means a five-digit ZIP code in
21 which the population density is between one thousand (1,000) and
22 three thousand (3,000) individuals per square mile; and
23
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1 10. 20. "Urban service area" means a five-digit ZIP code in
2 which the population density is greater than three thousand (3,000)
3 individuals per square mile.
4 SECTION 5. NEW LAW A new section of law to be codified
5 in the Oklahoma Statutes as Section 6962.1 of Title 36, unless there
6 is created a duplication in numbering, reads as follows:
7 A.