Representative Steve Eliason proposes the following substitute bill:


1     
PHARMACY BENEFIT MANAGER REVISIONS

2     
2020 GENERAL SESSION

3     
STATE OF UTAH

4     
Chief Sponsor: Evan J. Vickers

5     
House Sponsor: Steve Eliason

6     

7     LONG TITLE
8     General Description:
9          This bill amends provisions relating to pharmacy benefit managers.
10     Highlighted Provisions:
11          This bill:
12          ▸     creates and amends definitions;
13          ▸     requires pharmacy benefit managers and insurers to use unique identifiers for plans
14     managed by a Medicaid managed care organization;
15          ▸     prohibits a pharmacy benefit manager from prohibiting certain actions by an
16     in-network pharmacy;
17          ▸     prohibits a pharmacy benefit manager from charging an insured customer more for
18     use of a pharmacy that offers to mail or deliver a prescription drug to an enrollee;
19          ▸     prohibits certain actions by a pharmacy benefit manager, with respect to a 340B
20     entity; and
21          ▸     makes technical and corresponding changes.
22     Money Appropriated in this Bill:
23          None
24     Other Special Clauses:
25          This bill provides a coordination clause.
26     Utah Code Sections Affected:
27     AMENDS:
28          26-18-405, as last amended by Laws of Utah 2016, Chapters 168, 222, and 394
29          31A-46-102, as enacted by Laws of Utah 2019, Chapter 241
30          31A-46-302, as renumbered and amended by Laws of Utah 2019, Chapter 241
31          31A-46-303, as renumbered and amended by Laws of Utah 2019, Chapter 241
32     ENACTS:
33          31A-46-305, Utah Code Annotated 1953
34     Utah Code Sections Affected by Coordination Clause:
35          31A-46-302, as renumbered and amended by Laws of Utah 2019, Chapter 241
36     

37     Be it enacted by the Legislature of the state of Utah:
38          Section 1. Section 26-18-405 is amended to read:
39          26-18-405. Waivers to maximize replacement of fee-for-service delivery model --
40     Cost of mandated program changes.
41          (1) The department shall develop a waiver program in the Medicaid program to replace
42     the fee-for-service delivery model with one or more risk-based delivery models.
43          (2) The waiver program shall:
44          (a) restructure the program's provider payment provisions to reward health care
45     providers for delivering the most appropriate services at the lowest cost and in ways that,
46     compared to services delivered before implementation of the waiver program, maintain or
47     improve recipient health status;
48          (b) restructure the program's cost sharing provisions and other incentives to reward
49     recipients for personal efforts to:
50          (i) maintain or improve their health status; and
51          (ii) use providers that deliver the most appropriate services at the lowest cost;
52          (c) identify the evidence-based practices and measures, risk adjustment methodologies,
53     payment systems, funding sources, and other mechanisms necessary to reward providers for
54     delivering the most appropriate services at the lowest cost, including mechanisms that:
55          (i) pay providers for packages of services delivered over entire episodes of illness
56     rather than for individual services delivered during each patient encounter; and
57          (ii) reward providers for delivering services that make the most positive contribution to
58     a recipient's health status;
59          (d) limit total annual per-patient-per-month expenditures for services delivered through
60     fee-for-service arrangements to total annual per-patient-per-month expenditures for services
61     delivered through risk-based arrangements covering similar recipient populations and services;
62     and
63          (e) except as provided in Subsection (4), limit the rate of growth in
64     per-patient-per-month General Fund expenditures for the program to the rate of growth in
65     General Fund expenditures for all other programs, when the rate of growth in the General Fund
66     expenditures for all other programs is greater than zero.
67          (3) To the extent possible, the department shall operate the waiver program with the
68     input of stakeholder groups representing those who will be affected by the waiver program.
69          (4) (a) For purposes of this Subsection (4), "mandated program change" shall be
70     determined by the department in consultation with the Medicaid accountable care
71     organizations, and may include a change to the state Medicaid program that is required by state
72     or federal law, state or federal guidance, policy, or the state Medicaid plan.
73          (b) A mandated program change shall be included in the base budget for the Medicaid
74     program for the fiscal year in which the Medicaid program adopted the mandated program
75     change.
76          (c) The mandated program change is not subject to the limit on the rate of growth in
77     per-patient-per-month General Fund expenditures for the program established in Subsection
78     (2)(e), until the fiscal year following the fiscal year in which the Medicaid program adopted the
79     mandated program change.
80          (5) A managed care organization or a pharmacy benefit manager that provides a
81     pharmacy benefit to an enrollee shall establish a unique group number, payment classification
82     number, or bank identification number for each Medicaid managed care organization plan for
83     which the managed care organization or pharmacy benefit manager provides a pharmacy
84     benefit.
85          Section 2. Section 31A-46-102 is amended to read:
86          31A-46-102. Definitions.
87          As used in this chapter:
88          (1) "340B drug" means a drug purchased through the 340B drug discount program by a
89     340B entity.
90          (2) "340B drug discount program" means the 340B drug discount program described in
91     42 U.S.C. Sec. 256b.
92          (3) "340B entity" means:
93          (a) an entity participating in the 340B drug discount program;
94          (b) a pharmacy of an entity participating in the 340B drug discount program; or
95          (c) a pharmacy contracting with an entity participating in the 340B drug discount
96     program to dispense drugs purchased through the 340B drug discount program.
97          [(1)] (4) "Administrative fee" means any payment, other than a rebate, that a
98     pharmaceutical manufacturer makes directly or indirectly to a pharmacy benefit manager.
99          (5) "Allowable claim amount" means the amount paid by an insurer under the
100     customer's health benefit plan.
101          [(2)] (6) "Contracting insurer" means an insurer [as defined in Section 31A-22-636]
102     with whom a pharmacy benefit manager contracts to provide a pharmacy benefit management
103     service.
104          (7) "Cost share" means the amount paid by an insured customer under the customer's
105     health benefit plan.
106          (8) "Direct or indirect remuneration" means any adjustment in the total compensation:
107          (a) received by a pharmacy from a pharmacy benefit manager for the sale of a drug,
108     device, or other product or service; and
109          (b) that is determined after the sale of the product or service.
110          (9) "Drug" means the same as that term is defined in Section 58-17b-102.
111          (10) "Insurer" means the same as that term is defined in Section 31A-22-636.
112          (11) "Maximum allowable cost" means:
113          (a) a maximum reimbursement amount for a group of pharmaceutically and
114     therapeutically equivalent drugs; or
115          (b) any similar reimbursement amount that is used by a pharmacy benefit manager to
116     reimburse pharmacies for multiple source drugs.
117          (12) "Medicaid program" means the same as that term is defined in Section 26-18-2.
118          (13) "Obsolete" means a product that may be listed in national drug pricing compendia
119     but is no longer available to be dispensed based on the expiration date of the last lot
120     manufactured.
121          [(3)] (14) "Pharmacist" means the same as that term is defined in Section 58-17b-102.
122          [(4)] (15) "Pharmacy" means the same as that term is defined in Section 58-17b-102.
123          [(5)] (16) "Pharmacy benefits management service" means any of the following
124     services provided to a health benefit plan, or to a participant of a health benefit plan:
125          (a) negotiating the amount to be paid by a health benefit plan for a prescription drug; or
126          (b) administering or managing a prescription drug benefit provided by the health
127     benefit plan for the benefit of a participant of the health benefit plan, including administering
128     or managing:
129          (i) [a] an out-of-state mail service pharmacy;
130          (ii) a specialty pharmacy;
131          (iii) claims processing;
132          (iv) payment of a claim;
133          (v) retail network management;
134          (vi) clinical formulary development;
135          (vii) clinical formulary management services;
136          (viii) rebate contracting;
137          (ix) rebate administration;
138          (x) a participant compliance program;
139          (xi) a therapeutic intervention program;
140          (xii) a disease management program; or
141          (xiii) a service that is similar to, or related to, a service described in Subsection [(5)]
142     (16)(a) or [(5)] (16)(b)(i) through (xii).
143          [(6)] (17) "Pharmacy benefit manager" means a person licensed under this chapter to
144     provide a pharmacy benefits management service.
145          [(7)] (18) "Pharmacy service" means a product, good, or service provided to an
146     individual by a pharmacy or pharmacist.
147          (19) "Pharmacy services administration organization" means an entity that contracts
148     with a pharmacy to assist with third-party payer interactions and administrative services related
149     to third-party payer interactions, including:
150          (a) contracting with a pharmacy benefit manager on behalf of the pharmacy; and
151          (b) managing a pharmacy's claims payments from third-party payers.
152          (20) "Pharmacy service entity" means:
153          (a) a pharmacy services administration organization; or
154          (b) a pharmacy benefit manager.
155          (21) "Prescription device" means the same as that term is defined in Section
156     58-17b-102.
157          [(8)] (22) (a) "Rebate" means a refund, discount, or other price concession that is paid
158     by a pharmaceutical manufacturer to a pharmacy benefit manager based on a prescription
159     drug's utilization or effectiveness.
160          (b) "Rebate" does not include an administrative fee.
161          (23) (a) "Reimbursement report" means a report on the adjustment in total
162     compensation for a claim.
163          (b) "Reimbursement report" does not include a report on adjustments made pursuant to
164     a pharmacy audit or reprocessing.
165          (24) "Sale" means a prescription drug or prescription device claim covered by a health
166     benefit plan.
167          Section 3. Section 31A-46-302 is amended to read:
168          31A-46-302. Direct or indirect remuneration by pharmacy benefit managers --
169     Disclosure of customer costs -- Limit on customer payment for prescription drugs.
170          [(1) As used in this section:]
171          [(a) "Allowable claim amount" means the amount paid by an insurer under the
172     customer's health benefit plan.]
173          [(b) "Cost share" means the amount paid by an insured customer under the customer's
174     health benefit plan.]
175          [(c) "Direct or indirect remuneration" means any adjustment in the total
176     compensation:]
177          [(i) received by a pharmacy from a pharmacy benefit manager for the sale of a drug,
178     device, or other product or service; and]
179          [(ii) that is determined after the sale of the product or service.]
180          [(d) "Health benefit plan" means the same as that term is defined in Section
181     31A-1-301.]
182          [(e) "Pharmacy reimbursement" means the amount paid to a pharmacy by a pharmacy
183     benefit manager for a dispensed prescription drug.]
184          [(f) "Pharmacy services administration organization" means an entity that contracts
185     with a pharmacy to assist with third-party payer interactions and administrative services related
186     to third-party payer interactions, including:]
187          [(i) contracting with a pharmacy benefit manager on behalf of the pharmacy; and]
188          [(ii) managing a pharmacy's claims payments from third-party payers.]
189          [(g) "Pharmacy service entity" means:]
190          [(i) a pharmacy services administration organization; or]
191          [(ii) a pharmacy benefit manager.]
192          [(h) (i) "Reimbursement report" means a report on the adjustment in total
193     compensation for a claim.]
194          [(ii) "Reimbursement report" does not include a report on adjustments made pursuant
195     to a pharmacy audit or reprocessing.]
196          [(i) "Sale" means a prescription drug claim covered by a health benefit plan.]
197          [(2)] (1) If a pharmacy service entity engages in direct or indirect remuneration with a
198     pharmacy, the pharmacy service entity shall make a reimbursement report available to the
199     pharmacy upon the pharmacy's request.
200          [(3)] (2) For the reimbursement report described in Subsection [(2)] (1), the pharmacy
201     service entity shall:
202          (a) include the adjusted compensation amount related to a claim and the reason for the
203     adjusted compensation; and
204          (b) provide the reimbursement report:
205          (i) in accordance with the contract between the pharmacy and the pharmacy service
206     entity;
207          (ii) in an electronic format that is easily accessible; and
208          (iii) within 120 days after the day on which the pharmacy benefit manager receives a
209     report of a sale of a product or service by the pharmacy.
210          [(4)] (3) A pharmacy service entity shall, upon a pharmacy's request, provide the
211     pharmacy with:
212          (a) the reasons for any adjustments contained in a reimbursement report; and
213          (b) an explanation of the reasons provided in Subsection [(4)] (3)(a).
214          [(5)] (4) (a) A pharmacy benefit manager may not prohibit or penalize the disclosure by
215     a pharmacist of:
216          (i) an insured customer's cost share for a covered prescription drug;
217          (ii) the availability of any therapeutically equivalent alternative medications; or
218          (iii) alternative methods of paying for the prescription medication, including paying the
219     cash price, that are less expensive than the cost share of the prescription drug.
220          (b) Penalties that are prohibited under Subsection [(5)] (4)(a) include increased
221     utilization review, reduced payments, and other financial disincentives.
222          [(6)] (5) A pharmacy benefit manager may not require an insured customer to pay, for a
223     covered prescription drug, more than the lesser of:
224          (a) the applicable cost share of the prescription drug being dispensed;
225          (b) the applicable allowable claim amount of the prescription drug being dispensed;
226          (c) the applicable pharmacy reimbursement of the prescription drug being dispensed; or
227          (d) the retail price of the drug without prescription drug coverage.
228          (6) A pharmacy benefit manager or an insurer may not, directly or indirectly:
229          (a) prohibit an in-network retail pharmacy from:
230          (i) mailing or delivering a prescription drug to an enrollee as a service of the
231     in-network retail pharmacy;
232          (ii) charging a shipping or handling fee to an enrollee who requests that the in-network
233     retail pharmacy mail or deliver a prescription drug to the enrollee; or
234          (iii) offering the services described in Subsection (6)(a)(i) to an enrollee; or
235          (b) charge an enrollee who uses an in-network retail pharmacy that offers to mail or
236     deliver a prescription drug to an enrollee a fee or copayment that is higher than the fee or
237     copayment the enrollee would pay if the enrollee used an in-network retail pharmacy that does
238     not offer to mail or deliver a prescription drug to an enrollee.
239          Section 4. Section 31A-46-303 is amended to read:
240          31A-46-303. Insurer and pharmacy benefit management services -- Registration
241     -- Maximum allowable cost -- Audit restrictions.
242          [(1) As used in this section:]
243          [(a) "Maximum allowable cost" means:]
244          [(i) a maximum reimbursement amount for a group of pharmaceutically and
245     therapeutically equivalent drugs; or]
246          [(ii) any similar reimbursement amount that is used by a pharmacy benefit manager to
247     reimburse pharmacies for multiple source drugs.]
248          [(b) "Obsolete" means a product that may be listed in national drug pricing compendia
249     but is no longer available to be dispensed based on the expiration date of the last lot
250     manufactured.]
251          [(c) " Pharmacy benefit manager" means a person or entity that provides pharmacy
252     benefit management services as defined in Section 49-20-502 on behalf of an insurer as defined
253     in Subsection 31A-22-636(1).]
254          [(2)] (1) An insurer and an insurer's pharmacy benefit manager is subject to the
255     pharmacy audit provisions of Section 58-17b-622.
256          [(3)] (2) A pharmacy benefit manager shall not use maximum allowable cost as a basis
257     for reimbursement to a pharmacy unless:
258          (a) the drug is listed as "A" or "B" rated in the most recent version of the United States
259     Food and Drug Administration's approved drug products with therapeutic equivalent
260     evaluations, also known as the "Orange Book," or has an "NR" or "NA" rating or similar rating
261     by a nationally recognized reference; and
262          (b) the drug is:
263          (i) generally available for purchase in this state from a national or regional wholesaler;
264     and
265          (ii) not obsolete.
266          [(4)] (3) The maximum allowable cost may be determined using comparable and
267     current data on drug prices obtained from multiple nationally recognized, comprehensive data
268     sources, including wholesalers, drug file vendors, and pharmaceutical manufacturers for drugs
269     that are available for purchase by pharmacies in the state.
270          [(5)] (4) For every drug for which the pharmacy benefit manager uses maximum
271     allowable cost to reimburse a contracted pharmacy, the pharmacy benefit manager shall:
272          (a) include in the contract with the pharmacy information identifying the national drug
273     pricing compendia and other data sources used to obtain the drug price data;
274          (b) review and make necessary adjustments to the maximum allowable cost, using the
275     most recent data sources identified in Subsection [(5)] (4)(a), at least once per week;
276          (c) provide a process for the contracted pharmacy to appeal the maximum allowable
277     cost in accordance with Subsection [(6)] (5); and
278          (d) include in each contract with a contracted pharmacy a process to obtain an update
279     to the pharmacy product pricing files used to reimburse the pharmacy in a format that is readily
280     available and accessible.
281          [(6)] (5) (a) The right to appeal in Subsection [(5)] (4)(c) shall be:
282          (i) limited to 21 days following the initial claim adjudication; and
283          (ii) investigated and resolved by the pharmacy benefit manager within 14 business
284     days.
285          (b) If an appeal is denied, the pharmacy benefit manager shall provide the contracted
286     pharmacy with the reason for the denial and the identification of the national drug code of the
287     drug that may be purchased by the pharmacy at a price at or below the price determined by the
288     pharmacy benefit manager.
289          [(7)] (6) The contract with each pharmacy shall contain a dispute resolution mechanism
290     in the event either party breaches the terms or conditions of the contract.
291          [(8)] (7) This section does not apply to a pharmacy benefit manager when the
292     pharmacy benefit manager is providing pharmacy benefit management services on behalf of the
293     [state] Medicaid program.
294          Section 5. Section 31A-46-305 is enacted to read:
295          31A-46-305. Reimbursement -- Prohibitions.
296          (1) This section applies to a contract entered into or renewed on or after January 1,
297     2021, between a pharmacy benefit manager and a pharmacy.
298          (2) A pharmacy benefit manager may not vary the amount it reimburses a pharmacy for
299     a drug on the basis of whether:
300          (a) the drug is a 340B drug; or
301          (b) the pharmacy is a 340B entity.
302          (3) Subsection (2) does not apply to a drug reimbursed, directly or indirectly, by the
303     Medicaid program.
304          (4) A pharmacy benefit manager may not:
305          (a) on the basis that a 340B entity participates, directly or indirectly, in the 340B drug
306     discount program:
307          (i) assess a fee, charge-back, or other adjustment on the 340B entity;
308          (ii) restrict access to the pharmacy benefit manager's pharmacy network;
309          (iii) require the 340B entity to enter into a contract with a specific pharmacy to
310     participate in the pharmacy benefit manager's pharmacy network;
311          (iv) create a restriction or an additional charge on a patient who chooses to receive
312     drugs from a 340B entity; or
313          (v) create any additional requirements or restrictions on the 340B entity; or
314          (b) require a claim for a drug to include a modifier to indicate that the drug is a 340B
315     drug unless the claim is for payment, directly or indirectly, by the Medicaid program.
316          Section 6. Coordinating S.B. 138 with H.B. 272 -- Omitting substantive changes.
317          If this S.B. 138 and H.B. 272, Pharmacy Benefit Amendments, both pass and become
318     law, it is the intent of the Legislature that the Office of Legislative Research and General
319     Counsel, in preparing the Utah Code database for publication, not enact Subsection
320     31A-46-302(6) in S.B. 138.