HB 561-FN – AS INTRODUCED
2007 SESSION
01/10
HOUSE BILL 561-FN
AN ACT relative to pharmacy benefit managers.
SPONSORS: Rep. Nowe, Rock 9; Rep. Rosenwald, Hills 22; Rep. Millham, Belk 5; Rep. Harding, Graf 11; Rep. M. Allen, Rock 11
COMMITTEE: Executive Departments and Administration
This bill regulates the practice of pharmacy benefits management and contracts for pharmacy benefits management.
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Explanation: Matter added to current law appears in bold italics.
Matter removed from current law appears [in brackets and struckthrough.]
Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.
07-0698
01/10
STATE OF NEW HAMPSHIRE
In the Year of Our Lord Two Thousand Seven
AN ACT relative to pharmacy benefit managers.
Be it Enacted by the Senate and House of Representatives in General Court convened:
1 New Chapter; Pharmacy Benefits Managers. Amend RSA by inserting after chapter 420-K the following new chapter:
CHAPTER 420-L
420-L:1 Definitions. In this chapter:
I. “Covered entity” means a hospital or medical service organization, insurer, health coverage plan or health maintenance organization licensed by the state, a health program administered by the department of health and human services or the state in the capacity of provider of health coverage; or an employer, labor union, or other group of persons organized in the state that provides health coverage to covered individuals who are employed or reside in the state. “Covered entity” does not include a health plan that provides coverage only for accidental injury, specified disease, hospital indemnity, Medicare supplement, disability income, long-term care or other limited benefit health insurance policies and contracts.
II. “Covered individual” means a member, participant, enrollee, contract holder or policy holder or beneficiary of a covered entity who is provided health coverage by the covered entity. “Covered individual” includes a dependent or other person provided health coverage through a policy, contract or plan for a covered individual.
III. “Generic drug” means a chemically equivalent copy of a brand-name drug with an expired patent or a drug for which the Food and Drug Administration has approved an Abbreviated New Drug Application (ANDA).
IV. “Labeler” means an entity or person that receives prescription drugs from a manufacturer or wholesaler and repackages those drugs for later retail sale and that has a labeler code from the federal Food and Drug Administration under 21 C.F.R. section 207.20.
V. “Pharmacy benefits management” means the procurement of prescription drugs at a negotiated rate for dispensation within this state to covered individuals, the administration or management of prescription drug benefits provided by a covered entity for the benefit of covered individuals or any of the following services provided with regard to the administration of pharmacy benefits:
(a) Mail service pharmacy.
(b) Claims processing, retail network management and payment of claims to pharmacies for prescription drugs dispensed to covered individuals.
(c) Clinical formulary development and management services.
(d) Rebate contracting and administration.
(e) Certain patient compliance, therapeutic intervention and generic substitution programs.
(f) Disease management programs.
VI. “Pharmacy benefits manager” means an entity that performs pharmacy benefits management. “Pharmacy benefits manager” includes a person or entity acting for a pharmacy benefits manager in a contractual or employment relationship in the performance of pharmacy benefits management for a covered entity and includes mail service pharmacy.
420-L:2 Required Practices.
I. A pharmacy benefits manager owes a fiduciary duty to a covered entity and shall discharge that duty in accordance with the provisions of state and federal law.
II. A pharmacy benefits manager shall perform its duties with care, skill, prudence, and diligence and in accordance with the standards of conduct applicable to a fiduciary in an enterprise of a like character and with like aims.
III. A pharmacy benefits manager shall notify the covered entity in writing of any activity, policy, or practice of the pharmacy benefits manager that directly or indirectly presents any conflict of interest with the duties imposed by this section.
IV. A pharmacy benefits manager shall provide to a covered entity all financial and utilization information requested by the covered entity relating to the provision of benefits to covered individuals through that covered entity and all financial and utilization information relating to services to that covered entity. A pharmacy benefits manager providing information under this paragraph may designate that material as confidential. Information designated as confidential by a pharmacy benefits manager and provided to a covered entity under this paragraph shall not be disclosed by the covered entity to any person without the consent of the pharmacy benefits manager, except that disclosure may be made in a court filing under or when authorized under RSA 417 or RSA 358-A, or as ordered by a court of this state for good cause shown or made in a court filing under seal unless or until otherwise ordered by a court. Nothing in this paragraph shall be construed to limit the department of justice or other law enforcement agencies from having access to any information they may seek to obtain through normal investigatory procedures.
V. With regard to the dispensation of a substitute prescription drug for a prescribed drug to a covered individual the following provisions apply:
(a) If a pharmacy benefits manager makes a substitution in which the substitute drug costs more than the prescribed drug, the pharmacy benefits manager shall disclose to the covered entity the cost of both drugs and any benefit or payment directly or indirectly accruing to the pharmacy benefits manager as a result of the substitution.
(b) The pharmacy benefits manager shall transfer in full to the covered entity any benefit or payment received in any form by the pharmacy benefits manager either as a result of a prescription drug substitution under subparagraph (a) or as a result of the pharmacy benefits manager substituting a lower priced generic and therapeutically equivalent drug for a higher priced prescribed drug.
VI. A pharmacy benefits manager that derives any payment or benefit for the dispensation of prescription drugs within the state based on volume of sales for certain prescription drugs or classes or brands of drugs within the state shall pass that payment or benefit on in full to the covered entity.
VII. A pharmacy benefits manager shall disclose to the covered entity all financial terms and arrangements for remuneration of any kind that apply between the pharmacy benefits manager and any prescription drug manufacturer or labeler, including, without limitation, formulary management and drug-switch programs, educational support, claims processing and pharmacy network fees that are charged from retail pharmacies and data sales fees. A pharmacy benefits manager disclosing information under this paragraph may designate that material as confidential. Information designated as confidential by a pharmacy benefits manager and disclosed to a covered entity under this paragraph may not be disclosed by the covered entity to any person without the consent of the pharmacy benefits manager, except that disclosure may be made in a court filing under or when authorized under RSA 417 or RSA 358-A, or as ordered by a court of this state for good cause shown or made in a court filing under seal unless or until otherwise ordered by a court. Nothing in this paragraph limits the attorney general’s authority to investigate violations of this section.
420-L:3 Compliance. Compliance with the requirements of this chapter is required in all contracts for pharmacy benefits management entered into in this state or by a covered entity in this state.
420-L:4 Enforcement.
I. Any violation of this chapter by a person subject to RSA 417 shall be deemed an unfair insurance trade practice under RSA 417.
II. Any violation of this chapter shall be deemed an unfair or deceptive act or practice within the meaning of RSA 358-A:2 and may be enforced by the attorney general pursuant to RSA 358-A.
2 New Subparagraph; Enforcement; Attorney General; Consumer Protection and Antitrust. Amend RSA 21-M:9, II by inserting after subparagraph (u) the following new subparagraph:
(v) Administering and enforcing the provisions of RSA 420-L relative to pharmacy benefits managers.
3 Effective Date. This act shall take effect January 1, 2008.
LBAO
07-0698
Revised 03/30/07
HB 561 FISCAL NOTE
AN ACT relative to pharmacy benefit managers.
FISCAL IMPACT
The Department of Justice, and Department of Health and Human Services state this bill may increase state expenditures by an indeterminable amount in FY 2008 and each year thereafter. This bill will have no fiscal impact on state, county, and local revenue, or county and local expenditures.
METHODOLOGY
The Department of Justice states this bill would regulate the practice of pharmacy benefits management and contracts for pharmacy benefits management. Violations of this new chapter would be a violation of RSA 417 as an unfair insurance trade practice, and a violation of the consumer protection act, RSA 358-A. Violations of RSA 358-A could be prosecuted through civil or criminal action by the Department of Justice. Because it is currently not possible to determine how many actions may be generated by this legislation, no fiscal impact can be determined at this time.
The Department of Health and Human states this bill does not appear to have a fiscal impact on the Department. While DHHS administers the Medicaid program, the program’s pharmacy benefit component is administered by a contracted vendor that does not keep any rebate monies or decide which drugs go on the preferred drug list. Therefore, the Department does not believe this bill would apply to the Department’s pharmacy benefit manger.