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THE SENATE |
S.B. NO. |
1521 |
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THIRTIETH LEGISLATURE, 2019 |
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STATE OF HAWAII |
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A BILL FOR AN ACT
relating to pharmacy benefit managers.
BE IT
ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:
SECTION
1. The legislature finds that pharmacy benefit managers are third
party administrators that contract with health plans, employers, unions, and
government entities to manage prescription drug programs on behalf of health
plan beneficiaries. Over the past
decade, the role of pharmacy benefit managers in the delivery of health care
has significantly increased. However, a
recent report has found that pharmacy benefit managers have had an adverse
impact on the overall costs and prices of prescription drugs.
The legislature further finds that a
maximum allowable cost list is a list of the maximum amounts that a pharmacy
benefit manager will reimburse a pharmacy for various drugs. In general, no two maximum allowable cost
lists are alike and will vary according to drug, pharmacy benefit manager, and
plan sponsor. However, the lack of
transparency surrounding maximum allowable cost pricing has enabled pharmacy
benefit managers to pay aggressively low reimbursements to pharmacies, while
charging significantly higher amounts for the same drug to plan sponsors. This large discrepancy between the list price
of prescription drugs and the transaction price often results in much higher
patient copayments.
The legislature also finds that nearly all
health plans require some level of cost sharing, either via a fixed copayment
or some percentage of the cost of care.
However, in certain situations, a pharmacy benefit manager may set an
insurance copayment at a higher amount than the actual cost of the medication
and later take back the excess amount from a pharmacy, in a practice known as
copay clawbacks.
The legislature additionally finds that
although Hawaii has an existing pharmacy benefit manager transparency law, the
law lacks an appropriate enforcement mechanism or incentive for pharmacy
benefit managers to comply with disclosure of maximum allowable cost
lists. Furthermore, while this law is
currently under the responsibility of the department of health, the legislature
notes that it would be more appropriate for these requirements to be within the
purview of the department of commerce and consumer affairs, as that is the
department with existing regulatory control over pharmacy benefit managers.
Finally, the legislature notes that
strengthening the ability of pharmacies to receive timely maximum allowable cost
lists, establishing a complaints process for violations, and clarifying
penalties will encourage transparency amongst pharmacy benefit managers, while
protecting the State's independent pharmacies and consumers.
Accordingly, the purpose of this Act is to:
(1) Establish requirements for pharmacy benefit managers and maximum allowable cost, including the ability of pharmacies to receive comprehensive maximum allowable cost lists and bring complaints, within the purview of the department of commerce and consumer affairs, rather than the department of health;
(2) Require pharmacy benefit managers to disclose where an equivalent drug can be obtained at or below the maximum allowable cost, when a maximum allowable cost is upheld on appeal, and allow contracting pharmacies to reverse and rebill claims if the pharmacy benefit manager establishes a maximum allowable cost that is denied on appeal and pay the difference to the contracting pharmacies; and
(3) Clarify the available penalties for violations of maximum allowable cost requirements.
SECTION 2. Chapter 431R, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:
"§431R- Pharmacy
benefit manager; maximum allowable cost. (a)
A pharmacy benefit manager that reimburses a contracting pharmacy for a
drug on a maximum allowable cost basis shall comply with the requirements of
this section.
(b) The pharmacy benefit manager shall include
the following in the contract information with a contracting pharmacy:
(1) Information
identifying any national drug pricing compendia; or
(2) Other data
sources for the maximum allowable cost list.
(c) The pharmacy benefit manager shall make
available to a contracting pharmacy not less than once per quarter, and upon
request, a comprehensive report for all drugs on the maximum allowable cost
list, which contains the most up-to-date maximum allowable cost price or prices
used by the pharmacy benefit manager for patients served by the pharmacy, in a
readily accessible, secure, and usable web-based or other comparable format.
(d) A drug shall not be included on a maximum
allowable cost list or reimbursed on a maximum allowable cost basis unless all
of the following apply:
(1) The drug is
listed as "A" or "B" rated in the most recent version of
the Orange Book or has a rating of "NR", "NA", or similar
rating by a nationally recognized reference;
(2) The drug is
generally available for purchase in this State from a national or regional
wholesaler; and
(3) The drug is not
obsolete.
(e) The pharmacy benefit manager shall review and
make necessary adjustments to the maximum allowable cost of each drug on a
maximum allowable cost list at least once every seven days using the most
recent data sources available, and shall apply the updated maximum allowable
cost list beginning that same day to reimburse the contracting pharmacy until
the pharmacy benefit manager next updates the maximum allowable cost list in
accordance with this section; provided that the pharmacy benefit manager shall
reimburse a contracting pharmacy for a drug based on the maximum allowable cost
of that drug on the day the drug is dispensed.
(f) The pharmacy benefit manager shall notify all
contracting pharmacies of a ten per cent or greater increase in drug
acquisition cost for any drug on the maximum allowable cost list from sixty per
cent or more regional pharmaceutical wholesalers at least three days prior to
initiating any changes to the maximum allowable cost for that drug. The notification required under this subsection
may be provided electronically and shall contain the national drug code of the
drug whose acquisition cost is increasing.
(g) The pharmacy benefit manager shall have a
clearly defined process for a contracting pharmacy to appeal the maximum
allowable cost for a drug on a maximum allowable cost list that complies with
all of the following:
(1) A contracting
pharmacy may base its appeal on one or more of the following:
(A) The
maximum allowable cost for a drug is below the cost at which the drug is
available for purchase by similarly situated pharmacies in this State from a
national or regional wholesaler; or
(B) The
drug does not meet the requirements of subsection (d) for reimbursement on a
maximum allowable cost basis;
(2) A contracting
pharmacy shall be provided no less than fourteen business days following
receipt of payment for a claim to file the appeal with the pharmacy benefit
manager;
(3) The pharmacy
benefit manager shall make a final determination on the contracting pharmacy's
appeal no later than fourteen business days after the pharmacy benefit
manager's receipt of the appeal;
(4) If the maximum
allowable cost is upheld on appeal, the pharmacy benefit manager shall provide
to the contracting pharmacy the reason therefor and the national drug code of
an equivalent drug that may be purchased by a similarly situated pharmacy at a
price that is equal to or less than the maximum allowable cost of the drug that
is the subject of the appeal, with the name of the source, including but not
limited to the wholesaler or distributor, where the drug may be purchased; and
(5) If the maximum
allowable cost is not upheld on appeal, the pharmacy benefit manager shall
adjust, for the appealing contracting pharmacy, the maximum allowable cost of
the drug that is the subject of the appeal, within one calendar day of the date
of the decision on the appeal and allow the contracting pharmacy to reverse and
rebill the claim that is the subject of the appeal, and all claims for the same
drug, until the maximum allowable cost list is updated pursuant to subsection
(e), to be reimbursed at the maximum allowable cost established by the appeal.
(h)
Any pharmacy benefit manager that refuses a maximum allowable cost
reimbursement for a properly documented claim by a contracting pharmacy under
this section shall be deemed to have engaged in an unfair or deceptive act or
practice in the conduct of trade or commerce, within the meaning of section 480‑2.
(i) A contracting pharmacy shall not disclose to any third party the maximum allowable cost list and any related information it receives, either directly from a pharmacy benefit manager or through a pharmacy services administrative organization or similar entity with which the pharmacy has a contract to provide administrative services for that pharmacy, except to the insurance commissioner or an elected representative. The maximum allowable cost list and related information disclosed to the insurance commissioner or an elected representative shall be considered proprietary and confidential and not subject to public records requests under chapter 92F.
(j) The insurance commissioner shall adopt rules
pursuant to chapter 91 to establish a process to subject complaints of
violations of this section to an external review process and resolve disputed
claims, which may be binding on a complaining contracting pharmacy and a
pharmacy benefit manager against whom a complaint is made, except to the extent
that the parties have other remedies available under applicable federal or
state law, and which may assign the costs associated with the external review
process to a complaining contracting pharmacy and a pharmacy benefit manager
against whom a complaint is made."
SECTION 3. Section 431R-1, Hawaii Revised Statutes, is amended by adding three new definitions to be appropriately inserted and to read as follows:
""Maximum allowable
cost" means the maximum amount that a pharmacy benefit manager shall
reimburse a pharmacy for the cost of a drug.
"Maximum allowable cost
list" means a list of the maximum allowable reimbursement costs of
multi-source generic drugs established by a pharmacy benefit manager.
"Orange Book" means the United States Food and Drug Administration's "Approved Drug Products with Therapeutic Equivalence Evaluations" publication and its cumulative supplements, which include a list of approved prescription drug products with therapeutic equivalence evaluations."
SECTION 4. Section 431R-5, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:
"(a) The insurance commissioner may assess a fine of
up to $10,000 for each violation by a pharmacy benefit manager or prescription drug
benefit plan provider who is in violation of section 431R-2 [or],
431R-3[.], or 431R- .
In addition, the insurance commissioner may order the pharmacy benefit manager
to take specific affirmative corrective action or make restitution."
SECTION 5. Section 328-91, Hawaii Revised Statutes, is amended by deleting the definitions of "maximum allowable cost" and "maximum allowable cost list".
[""Maximum allowable
cost" means the maximum amount that a pharmacy benefit manager shall
reimburse a pharmacy for the cost of a drug.
"Maximum allowable cost
list" means a list of drugs for which a maximum allowable cost has been
established by a pharmacy benefit manager."]
SECTION 6. Section 328-106, Hawaii Revised Statutes, is repealed.
["[§328-106] Pharmacy
benefit manager; maximum allowable cost. (a) A
pharmacy benefit manager that reimburses a contracting pharmacy for a drug on a
maximum allowable cost basis shall comply with the requirements of this
section.
(b) The pharmacy benefit manager shall include
the following in the contract information with a contracting pharmacy:
(1) Information
identifying any national drug pricing compendia; or
(2) Other data
sources for the maximum allowable cost list.
(c) The pharmacy benefit manager shall make
available to a contracting pharmacy, upon request, the most up-to-date maximum
allowable cost price or prices used by the pharmacy benefit manager for
patients served by the pharmacy in a readily accessible, secure, and usable
web-based or other comparable format.
(d) A drug shall not be included on a maximum
allowable cost list or reimbursed on a maximum allowable cost basis unless all
of the following apply:
(1) The drug is
listed as "A" or "B" rated in the most recent version of
the Orange Book or has a rating of "NR", "NA", or similar
rating by a nationally recognized reference;
(2) The drug is
generally available for purchase in this State from a national or regional
wholesaler; and
(3) The drug is not
obsolete.
(e) The pharmacy benefit manager shall review and
make necessary adjustments to the maximum allowable cost of each drug on a maximum
allowable cost list at least once every seven days using the most recent data
sources available, and shall apply the updated maximum allowable cost list
beginning that same day to reimburse the contracted pharmacy until the pharmacy
benefit manager next updates the maximum allowable cost list in accordance with
this section.
(f) The pharmacy benefit manager shall have a
clearly defined process for a contracting pharmacy to appeal the maximum
allowable cost for a drug on a maximum allowable cost list that complies with
all of the following:
(1) A contracting
pharmacy may base its appeal on one or more of the following:
(A) The
maximum allowable cost for a drug is below the cost at which the drug is
available for purchase by similarly situated pharmacies in this State from a
national or regional wholesaler; or
(B) The
drug does not meet the requirements of subsection (d);
(2) A contracting
pharmacy shall be provided no less than fourteen business days following
receipt of payment for a claim to file the appeal with the pharmacy benefit
manager;
(3) The pharmacy
benefit manager shall make a final determination on the contracting pharmacy's
appeal no later than fourteen business days after the pharmacy benefit
manager's receipt of the appeal;
(4) If the maximum
allowable cost is upheld on appeal, the pharmacy benefit manager shall provide
to the contracting pharmacy the reason therefor and the national drug code of
an equivalent drug that may be purchased by a similarly situated pharmacy at a
price that is equal to or less than the maximum allowable cost of the drug that
is the subject of the appeal; and
(5) If the maximum
allowable cost is not upheld on appeal, the pharmacy benefit manager shall
adjust, for the appealing contracting pharmacy, the maximum allowable cost of
the drug that is the subject of the appeal, within one calendar day of the date
of the decision on the appeal and allow the contracting pharmacy to reverse and
rebill the appealed claim.
(g) A contracting pharmacy shall not disclose to
any third party the maximum allowable cost list and any related information it
receives, either directly from a pharmacy benefit manager or through a pharmacy
services administrative organization or similar entity with which the pharmacy
has a contract to provide administrative services for that pharmacy."]
SECTION 7. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.
SECTION 8. This Act shall take effect on July 1, 2019.
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INTRODUCED BY: |
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Report Title:
Pharmacy Benefit Managers; Maximum Allowable Cost; Requirements; Contracting Pharmacies
Description:
Establishes requirements for pharmacy benefit managers and maximum allowable cost, including the ability of pharmacies to receive comprehensive maximum allowable cost lists and bring complaints within the purview of the department of commerce and consumer affairs, rather than the department of health. Requires pharmacy benefit managers to disclose where an equivalent drug can be obtained at or below the maximum allowable cost when a maximum allowable cost is upheld on appeal and allow contracting pharmacies to reverse and rebill claims if the pharmacy benefit manager establishes a maximum allowable cost that is denied on appeal and pay the difference to the contracting pharmacies. Clarifies the available penalties for violations of maximum allowable cost requirements.
The summary description
of legislation appearing on this page is for informational purposes only and is
not legislation or evidence of legislative intent.