Second Substitute H.B. 113

Representative Bradley G. Last proposes the following substitute bill:




Chief Sponsor: Bradley G. Last

Senate Sponsor: Evan J. Vickers

             7      LONG TITLE
             8      General Description:
             9          This bill regulates certain reimbursement practices of pharmacy benefit managers.
             10      Highlighted Provisions:
             11          This bill:
             12          .    defines maximum allowable costs;
             13          .    requires certain contract provisions between a pharmacy benefit manager and a
             14      pharmacy related to the use of maximum allowable cost and appeal rights; and
             15          .    requires a pharmacy benefit manager to register with the Division of Corporations
             16      and Commercial Code within the Department of Commerce.
             17      Money Appropriated in this Bill:
             18          None
             19      Other Special Clauses:
             20          None
             21      Utah Code Sections Affected:
             22      AMENDS:
             23           31A-22-640 , as enacted by Laws of Utah 2012, Chapter 265
             25      Be it enacted by the Legislature of the state of Utah:

             26          Section 1. Section 31A-22-640 is amended to read:
             27           31A-22-640. Insurer and pharmacy benefit management services -- Registration
             28      -- Maximum allowable cost -- Audit restrictions -- Private right of action.
             29          (1) For purposes of this section:
             30          (a) "Maximum allowable cost" means:
             31          (i) a maximum reimbursement amount for a group of pharmaceutically and
             32      therapeutically equivalent drugs; or
             33          (ii) any similar reimbursement amount that is used by a pharmacy benefit manager to
             34      reimburse pharmacies for multiple source drugs.
             35          (b) "Obsolete" means a product that may be listed in national drug pricing compendia
             36      but is no longer available to be dispensed based on the expiration date of the last lot
             37      manufactured.
             38          (d) "[pharmacy benefits] Pharmacy benefit manager [or coordinator]" means a person
             39      or entity that provides pharmacy benefit management services as defined in Section 49-20-502
             40      on behalf of an insurer as defined in Subsection 31A-22-636 (1).
             41          (2) An insurer and an insurer's pharmacy [benefits] benefit manager [or coordinator] is
             42      subject to the pharmacy audit provisions of Section 58-17b-622 .
             43          (3) A pharmacy benefit manager shall not use maximum allowable cost as a basis for
             44      reimbursement to a pharmacy unless:
             45          (a) the drug is listed as "A" or "B" rated in the most recent version of the United States
             46      Food and Drug Administration's approved drug products with therapeutic equivalent
             47      evaluations, also known as the "Orange Book," or has an "NR" or "NA" rating or similar rating
             48      by a nationally recognized reference; and
             49          (b) the drug is:
             50          (i) generally available for purchase in this state from a national or regional wholesaler;
             51      and
             52          (ii) not obsolete.
             53          (4) The maximum allowable cost may be determined using comparable and current
             54      data on drug prices obtained from multiple nationally recognized, comprehensive data sources,
             55      including wholesalers, drug file vendors, and pharmaceutical manufacturers for drugs that are
             56      available for purchase by pharmacies in the state.

             57          (5) For every drug for which the pharmacy benefit manager uses maximum allowable
             58      cost to reimburse a contracted pharmacy, the pharmacy benefit manager shall:
             59          (a) include in the contract with the pharmacy information identifying the national drug
             60      pricing compendia and other data sources used to obtain the drug price data;
             61          (b) review and make necessary adjustments to the maximum allowable cost, using the
             62      most recent data sources identified in Subsection (5)(a)(i), at least once per week;
             63          (c) provide a process for the contracted pharmacy to appeal the maximum allowable
             64      cost in accordance with Subsection (6); and
             65          (d) include in each contract with a contracted pharmacy a process to obtain an update
             66      to the pharmacy product pricing files used to reimburse the pharmacy in a format that is readily
             67      available and accessible.
             68          (6) (a) The right to appeal in Subsection (5)(d) shall be:
             69          (i) limited to 21 days following the initial claim adjudication; and
             70          (ii) investigated and resolved by the pharmacy benefit manager within 14 business
             71      days.
             72          (b) If an appeal is denied, the pharmacy benefit manager shall provide the contracted
             73      pharmacy with the reason for the denial and the identification of the national drug code of the
             74      drug that may be purchased by the pharmacy at a price at or below the price determined by the
             75      pharmacy benefit manager.
             76          (7) The contract with each pharmacy shall contain a dispute resolution mechanism in
             77      the event either party breaches the terms or conditions of the contract.
             78          (8) (a) To conduct business in the state, a pharmacy benefit manager shall register with
             79      the Division of Corporations and Commercial Code within the Department of Commerce and
             80      annually renew the registration. To register under this section, the pharmacy benefit manager
             81      shall submit an application which shall contain only the following information:
             82          (i) the name of the pharmacy benefit manager;
             83          (ii) the name and contact information for the registered agent for the pharmacy benefit
             84      manager; and
             85          (iii) if applicable, the federal employer identification number for the pharmacy benefit
             86      manager.
             87          (b) The Department of Commerce may establish a fee in accordance with Title 63J,

             88      Chapter 1, Budgetary Procedures Act, for the initial registration, and the annual renewal of the
             89      registration, which may not exceed $100 per year.
             90          (c) The following entities do not have to register as a pharmacy benefit manager under
             91      Subsection (8)(a) when the entity is providing formulary services to its own patients,
             92      employees, members, or beneficiaries:
             93          (i) a health care facility licensed under Title 26, Chapter 21, Health Care Facility
             94      Licensing and Inspection Act;
             95          (ii) a pharmacy licensed under Title 58, Chapter 17b, Pharmacy Practice Act;
             96          (iii) a health care professional licensed under Title 58, Occupations and Professions;
             97          (iv) a health insurer; and
             98          (v) a labor union.
             99          (9) This section does not apply to a pharmacy benefit manager when the pharmacy
             100      benefit manager is providing pharmacy benefit management services on behalf of the state
             101      Medicaid program.

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