SB 686-FN - AS AMENDED BY THE SENATE
SENATE BILL 686-FN
SPONSORS: Sen. Rosenwald, Dist 13; Sen. Fuller Clark, Dist 21; Sen. Morgan, Dist 23; Sen. Watters, Dist 4; Sen. Levesque, Dist 12; Sen. Chandley, Dist 11; Sen. Hennessey, Dist 5; Sen. Feltes, Dist 15; Sen. Kahn, Dist 10; Sen. Cavanaugh, Dist 16; Sen. Bradley, Dist 3; Sen. Carson, Dist 14; Rep. Williams, Hills. 4; Rep. Muscatel, Graf. 12; Rep. Marsh, Carr. 8; Rep. McMahon, Rock. 7
This bill regulates the maximum allowable cost for prescription drug benefits paid by health insurers or pharmacy benefit managers.
This bill also establishes the New Hampshire prescription drug competitive marketplace.
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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Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.
03/11/2020 1063s 20-2726
STATE OF NEW HAMPSHIRE
In the Year of Our Lord Two Thousand Twenty
Be it Enacted by the Senate and House of Representatives in General Court convened:
HEALTH PLANS THAT PROVIDE PRESCRIPTION DRUG BENEFITS
402-O:1 Definitions. In this chapter:
I. "Average wholesale price" means the average wholesale price of a prescription drug as identified by a national drug pricing source selected by a health insurer. The average wholesale price must be identified by the 11-digit national drug code, as amended from time to time, for the prescription drug dispensed for the quantity dispensed.
II. "Brand-name drug" means a prescription drug marketed under a proprietary name or registered trademark name, including a biological product.
III. "Commissioner" means the insurance commissioner.
IV. "Compensation" means any direct or indirect financial benefit, including, but not limited to, rebates, discounts, credits, fees, grants, charge-backs or other payments or benefits of any kind.
V. "Contracted pharmacy" means "contracted pharmacy" as defined in RSA 420-J:3, X-a.
VI. "Cost-sharing amount" means the amount paid by a covered person as required under the covered person's health plan for a prescription drug at the point of sale.
VII. "Covered person" means "covered person" as defined in RSA 420-J:3, XII.
VIII. "Dispensing fee" means the professional fee incurred at the point of sale or service that pays for pharmacy costs, in excess of ingredient cost, associated with ensuring that possession of the appropriate prescription drug is transferred to a covered person.
IX. "Formulary" means a list of prescription drugs covered by a health benefit plan and any tier levels applicable to a prescription drug.
X. "Generic drug" means a prescription drug, whether identified by its chemical, proprietary or nonproprietary name, that is not a brand-name drug and is therapeutically equivalent to a brand-name drug in dosage, safety, strength, method of consumption, quality, performance and intended use. "Generic drug" includes a biosimilar product.
XI. "Health carrier" means "health carrier" as defined in RSA 420-J:3, XXIII.
XII. "Health benefit plan" means "health benefit plan" as defined in RSA 420-J:3, XIX.
XIII. "Ingredient cost" means the actual amount paid to a pharmacy provider by a carrier or the carrier's pharmacy benefits manager for a prescription drug, not including the dispensing fee or cost-sharing amount.
XIV. "Mail order pharmacy" means "mail order pharmacy" as defined in RSA 318:1, VII-b.
XV. "Maximum allowable cost" means the maximum amount a health insurer will pay for a generic drug or brand-name drug that has at least one generic alternative available.
XVI. "Pharmacy" means "pharmacy" as defined in RSA 318:1, XI.
XVII. "Pharmacy and therapeutics committee" means a committee, board or equivalent body established by a health carrier to develop and maintain formularies.
XVIII. "Pharmacy benefits manager" means a person who performs pharmacy benefits management services, including a person acting on behalf of a pharmacy benefits manager in a contractual or employment relationship in the performance of pharmacy benefits management services for a covered entity. "Pharmacy benefits manager" shall include a health insurer licensed in this state if the health insurer or its subsidiary is providing pharmacy benefits management services exclusively to its own insureds. "Pharmacy benefits manager" shall not include a private single employer self-funded plan that provides such benefits or services directly to its beneficiaries. "Pharmacy benefits management" means the administration of prescription drug benefits provided by a covered entity under the terms and conditions of the contract between the pharmacy benefits manager and the covered entity and the provision of mail order pharmacy services.
XIX. "Pharmacy provider" means a retail pharmacy, mail order pharmacy, or licensed pharmacist.
XX. "Retail pharmacy" means a chain pharmacy, a supermarket pharmacy, a mass merchandiser pharmacy, an independent pharmacy or a network of independent pharmacies that is licensed as a pharmacy by this state and that dispenses medications to the public.
402-O:2 Oversight and Contracting Responsibilities.
I. A health insurer shall ensure that oversight and management of its prescription drug benefits, whether managed and administered directly by the insurer, or by a pharmacy benefits manager under contract with the insurer, meets the requirements of this chapter.
II. A health carrier that contracts with a pharmacy benefits manager to perform any activities related to the health carrier's prescription drug benefits is responsible for ensuring that, under the contract, the pharmacy benefits manager acts as the health carrier's agent and owes a fiduciary duty to the health carrier in the pharmacy benefits manager's management of activities related to the health carrier's prescription drug benefits.
III. A health carrier shall not enter into a contract or agreement or allow a pharmacy benefits manager or any person acting on the health carrier's behalf to enter into a contract or agreement that prohibits a pharmacy provider from:
(a) Providing a covered person with the option of paying the pharmacy provider's cash price for the purchase of a prescription drug and not filing a claim with the covered person's health carrier if the cash price is less than the covered person's cost-sharing amount; or
(b) Providing information to a state or federal agency, law enforcement agency, or the commissioner when such information is required by law.
IV.(a) A health carrier or pharmacy benefits manager shall not require a covered person to make a payment at the point of sale for a covered prescription drug in an amount greater than the least of:
(1) The applicable cost-sharing amount for the prescription drug.
(2) The amount a covered person would pay for the prescription drug if the covered person purchased the prescription drug without using a health plan or any other source of prescription drug benefits or discounts.
(3) The total amount the pharmacy will be reimbursed for the prescription drug from the pharmacy benefits manager or carrier, including the cost-sharing amount paid by a covered person.
(4) The amount a health carrier or pharmacy benefits manager would pay for the prescription drug if the carrier or pharmacy benefits manager paid the pharmacy the full amount for the drug, with no cost sharing due.
(b) When calculating the cost-sharing for any prescription subject to a co-insurance, a health carrier or pharmacy benefits manager shall use the amount the pharmacy will be reimbursed for the prescription drug from the health carrier or pharmacy benefits manager minus any cost-sharing to be paid by a covered person.
V. A health carrier shall provide a reasonably adequate retail pharmacy network for the provision of prescription drugs for its covered persons. A mail order pharmacy shall not be included in determining the adequacy of a retail pharmacy network.
402-O:3 Prescription Drug Pricing; Maximum Allowable Cost.
I. A health carrier, or a pharmacy benefits manager under contract with a health carrier, shall use a single maximum allowable cost list to establish the maximum amount to be paid by a health plan to a pharmacy provider for a generic drug or a brand-name drug that has at least one generic alternative available. A health carrier, or a pharmacy benefits manager under contract with a health carrier, shall use the same maximum allowable cost list for each pharmacy provider.
II. A maximum allowable cost may be set for a prescription drug, or a prescription drug may be allowed to continue on a maximum allowable cost list, only if that prescription drug:
(a) Is rated as "A" or "B" in the most recent version of the United States Food and Drug Administration's (FDA) "Approved Drug Products with Therapeutic Equivalence Evaluations," also known as "the Orange Book," or an equivalent rating from a successor publication, or is rated as "NR" or "NA" or a similar rating by a nationally recognized pricing reference; and
(b) Is not obsolete and is generally available for purchase in New Hampshire from a national or regional wholesale distributor by pharmacies having a contract with the pharmacy benefits manager.
III. A health carrier, or a pharmacy benefits manager under contract with a health carrier, shall provide a reasonable administrative appeal procedure, including a right to appeal that is limited to 14 days following the initial claim, to allow pharmacies with which the health carrier or pharmacy benefits manager has a contract to challenge maximum allowable costs for a specified drug.
IV. A health carrier, or a pharmacy benefits manager under contract with a health carrier, shall respond to, investigate, and resolve an appeal under paragraph III within 14 days after the receipt of the appeal. The health carrier or pharmacy benefits manager shall respond to an appeal as follows:
(a) If the appeal is upheld, the health carrier or pharmacy benefits manager shall make the appropriate adjustment in the maximum allowable cost and permit the challenging pharmacy or pharmacist to reverse and rebill the claim in question; or
(b) If the appeal is denied, the health carrier or pharmacy benefits manager shall provide the challenging pharmacy or pharmacist the national drug code from national or regional wholesalers of a comparable prescription drug that may be purchased at or below the maximum allowable cost.
V. A health carrier, or a pharmacy benefits manager under contract with a health carrier, shall use the average wholesale price to establish the maximum payment for a brand-name drug for which a generic equivalent is not available or a prescription drug not included on a maximum allowable cost list. In order to use the average wholesale price of a brand-name drug or prescription drug not included on a maximum allowable cost list, a health carrier, or a pharmacy benefits manager under contract with a health carrier, shall use only one national drug pricing source during a calendar year, except that a health carrier, or a pharmacy benefits manager under contract with a health carrier, may use a different national drug pricing source if the original pricing source is no longer available. A health carrier, or a pharmacy benefits manager under contract with a health carrier, shall use the same national drug pricing source for each pharmacy provider and identify on its publicly accessible website the name of the national drug pricing source used to determine the average wholesale price of a prescription drug not included on the maximum allowable cost list.
VI. This paragraph governs payments between a health carrier or a health carrier's pharmacy benefits manager and a pharmacy provider.
(a) The amount paid by a health carrier or a health carrier's pharmacy benefits manager to a pharmacy provider under contract with the health carrier or the health carrier's pharmacy benefits manager for dispensing a prescription drug shall be the ingredient cost plus the dispensing fee less any cost-sharing amount paid by a covered person.
(b) The ingredient cost may not exceed the maximum allowable cost or average wholesale price, as applicable, and shall be disclosed by the health carrier's pharmacy benefits manager to the carrier.
(c) Only the pharmacy provider that dispensed the prescription drug may retain the payment described in this paragraph.
(d) A pharmacy provider shall not be denied payment or be subject to a reduced payment retroactively unless the original claim was submitted fraudulently or in error.
402-O:4 Prescription Drug Formularies; Pharmacy and Therapeutics Committee.
I. A health carrier, or a pharmacy benefits manager under contract with a health carrier, shall establish a pharmacy and therapeutics committee. A health carrier shall require its pharmacy and therapeutics committee or the pharmacy and therapeutics committee of the health carrier's pharmacy benefits manager to use one or more formularies.
II. A health carrier, or a pharmacy benefits manager under contract with a health carrier, shall not allow a person with a conflict of interest, as described in subparagraphs (a) and (b), to be a member of its pharmacy and therapeutics committee. A person shall not serve as a member of a pharmacy and therapeutics committee if the person:
(a) Is employed, or was employed within the preceding year, by a pharmaceutical manufacturer, developer, labeler, wholesaler, or distributor; or
(b) Receives compensation, or received compensation within the preceding year, from a pharmaceutical manufacturer, developer, labeler, wholesaler, or distributor.
III. A health carrier, or a pharmacy benefits manager under contract with a health carrier, shall prohibit its pharmacy and therapeutics committee or any member of the committee from receiving any compensation from a pharmaceutical manufacturer, developer, labeler, wholesaler, or distributor.
402-O:5 Treatment of Pharmacy Benefits Manager Compensation.
I. In this section:
(a) "Anticipated loss ratio" means the ratio of the present value of the future benefits payments to the present value of the future premiums of a policy form over the entire period for which rates are computed to provide health insurance coverage.
(b) "Pharmacy benefits manager compensation" means the difference between:
(1) The value of payments made by a health carrier of a health plan to its pharmacy benefits manager; and
(2) The value of payments made by the pharmacy benefits manager to dispensing pharmacists for the provision of prescription drugs or pharmacy services with regard to pharmacy benefits covered by the health benefit plan.
II.(a) If a health carrier uses a pharmacy benefits manager to administer or manage prescription drug benefits provided for the benefit of covered persons, for purposes of calculating a carrier's anticipated loss ratio, any pharmacy benefits manager compensation:
(1) Constitutes an administrative cost incurred by the carrier in connection with a health benefit plan; and
(2) May not constitute a benefit provided under a health benefit plan.
(b) A health carrier shall claim only the amounts paid by the pharmacy benefits manager to a pharmacy or pharmacist as an incurred claim.
III. Each rate filing submitted by a health carrier with respect to a health benefit plan that provides coverage for prescription drugs or pharmacy services that is administered or managed by a pharmacy benefits manager shall include:
(a) A memorandum prepared by a qualified actuary describing the calculation of the pharmacy benefits manager compensation; and
(b) Such records and supporting information as the commissioner reasonably determines is necessary to confirm the calculation of the pharmacy benefits manager compensation.
IV. Upon request, a health carrier shall provide any records to the commissioner that relate to the calculation of the pharmacy benefits manager compensation.
V. A pharmacy benefits manager shall provide any necessary documentation requested by a health carrier that relates to pharmacy benefits manager compensation in order to comply with the requirements of this section.
(3) Review and make necessary adjustments to the maximum allowable cost for every drug for which the price has changed at least every  7 days.
New Hampshire Prescription Drug Competitive Marketplace
21-I:96 Purpose and Intent. The purpose and intent of this subdivision is to authorize the commissioner of the department of administrative services, with the approval of the governor and the executive council, to establish the New Hampshire prescription drug competitive marketplace in accordance with this subdivision. The objective of this subdivision is to optimize prescription drug savings by the state of New Hampshire through the following:
I. Adoption of a dynamically competitive reverse auction process for the state health plan selection of pharmacy benefit managers (PBM).
II. Ongoing, real-time electronic review and validation of PBM claims invoices as the foundation for reconciling pharmacy bills.
III. Conduct of market checks using technology driven evaluation of the incumbent PBM’s prescription drug pricing based on benchmark comparators.
21-I:97 Definitions. In this subdivision:
I. "Department" means the department of administrative services.
II. "Pharmacy benefits manager" means a person, business, or other entity, including a wholly or partially owned or controlled subsidiary of a pharmacy benefits manager, that, pursuant to a contract with the health carrier or self-funded health benefit plan, manages the prescription drug coverage provided by the health carrier or self-funded health benefit plan, including, but not limited to, providing claims processing services for prescription drugs, performing drug utilization review, processing drug prior authorization requests, adjudication of grievances or appeals related to prescription drug coverage, contracting with network pharmacies, and controlling the cost of covered prescription drugs.
III. “PBM reverse auction” means an automated, transparent, and dynamically competitive bidding process conducted online that starts with an opening round of bids and allows qualified PBM bidders to counter-offer a lower price for as many rounds of bidding as determined by the department of administrative services or its authorized representative conducting the reverse auction for a multiple health plan prescription drug purchasing group.
IV. “Price” means the projected cost of a PBM proposal or “bid” for providing prescription drug benefits pursuant to this part, to enable “apples-to-apples” comparison of the costs of competing PBM proposals over the duration of the PBM services contract.
V. “Real-time” means within no more than 12 hours.
VI. "PBA” means a participant bidding agreement entered into by all participants in the PBM reverse auction prior to participation therein.
21-I:98 New Hampshire Prescription Drug Competitive Marketplace.
I. Notwithstanding any provision of law to the contrary, a contract for the services of a PBM for the administration of benefits under this subdivision may be procured by the department, at its sole discretion, in a transparent, online competitive process, or “PBM reverse auction” as set forth in this subdivision. If the department, acting in its discretion, opts to conduct such a process, it shall procure, through the solicitation of proposals from qualified professional services vendors, the following products and services based upon price, capabilities, and other factors as determined by the department:
(a) Technical assistance from a technology operator with respect to all of the following:
(1) Evaluating the qualifications of PBM bidders.
(2) Conducting online-automated reverse auction services to support the department or its authorized representatives in comparing the pricing for the PBM procurement.
(3) Providing related professional services.
(b) Technology platform with the required capabilities for conducting a PBM reverse auction, along with the related services of a technology operator, as described in subparagraph (a). The technology platform shall, at a minimum, possess the capacity to do the following:
(1) Conduct an automated, online, reverse auction of PBM services.
(2) Automate repricing of diverse and complex PBM prescription drug pricing proposals to enable "apples-to-apples" comparisons of the price of PBM bids utilizing 100 percent of annual prescription drug claims data available for state-funded health plans or a multiple health plan prescription drug purchasing group and using code-based classification of drugs from nationally accepted drug sources.
(3) Produce an automated report and analysis of PBM bids, including the ranking of PBM bids based on the comparative costs and qualitative aspects thereof within a 48-hour time period following the close of each round of reverse auction bidding.
(4) Perform real-time, electronic, line-by-line, claim-by-claim review of 100 percent of invoiced PBM prescription drug claims, and identify all deviations from the specific terms of the PBM services contract resulting from the reverse auction process.
(c) The contract for procurement of the technology platform and technology operator services shall not be awarded to any of the following:
(1) A vendor that is a PBM.
(2) A vendor that is a subsidiary or affiliate of a PBM.
(3) A vendor that is managed by a PBM or receives remuneration from a PBM for aggregating clients into a contractual relationship with a PBM.
(d) The vendor shall not outsource any part of the PBM reverse auction or the automated, real-time, electronic, line-by-line, claim-by-claim review of invoiced PBM prescription drug claims.
(e) With technical assistance and support provided by the technology operator, the department or its authorized representative shall specify the terms of the PBA. The terms of the PBA shall not be modified except by specific consent of the department of administrative services or its authorized representatives.
II. When and if procured, the technology platform used to conduct the reverse auction shall be repurposed over the duration of the PBM services contract as an automated pharmacy claims adjudication engine to perform real-time, electronic, line-by-line, claim-by-claim review of 100 percent of invoiced PBM prescription drug claims, and identify all deviations from the specific terms of PBM services contracts.
III. An entity may request in writing and subject to the approval of the commissioner to participate in a joint purchasing group with the state employee and retiree group insurance program for procuring for PBM services through a PBM reverse auction or otherwise. All entities participating in a joint purchasing group shall share proportionally in the cost of procurement including all support services.
IV. If the department opts, at its discretion, to conduct a transparent, online competitive PBM selection process, as set forth in this subdivision, the processes and procedures set forth in this section shall apply to prescription drug coverage in connection with the state employee health plan for benefits under this part including for state employees, retirees, spouses, and eligible dependents in accordance with the provisions of RSA 21-I:30 and any applicable collective bargaining agreements. Any other state-funded health plan or self-funded municipal employee or other local government employee health plan, public school employee health plans, operating individually or collectively, and the health plans of the university system of New Hampshire and the community college system of New Hampshire may utilize the processes and procedures set forth in this section individually or collectively or as a joint purchasing group with the state employee health plan.
V. After completion of a first PBM reverse auction by the department for the administration of benefits under the state employee health plan, and at the discretion of the department, self-funded private sector employer or multi-employer health plans with substantial participation by New Hampshire employees and their dependents may be permitted to participate in a joint purchasing pool with state employees for conduct of subsequent PBM reverse auctions provided that such participation shall comply with and shall be consistent with all applicable state and federal law and requirements of ERISA.
VI. The state employee health plan and any self-funded public or private sector health plans that may be permitted to participate with the state in a joint PBM reverse auction purchasing pool shall retain full autonomy over determination of their respective prescription drug formularies and pharmacy benefit designs and shall not be required to adopt a common drug formulary or common prescription pharmacy benefit design. Any such entity or purchasing group shall agree, before participating in the PBM reverse auction, to accept the prescription drug pricing plan that is selected through the PBM reverse auction process.
VII. Any PBM providing services to the department or a self-funded health plan as described in paragraphs IV and V, shall provide the department and the plan the complete pharmacy claims data necessary to conduct the reverse auction and carry out their administrative and management duties.
VIII. The department may adopt rules, pursuant to RSA 541-A, to implement the provisions of this subdivision.
4 Severability. If any provision of this act or the application thereof to any person or circumstance is held invalid, the invalidity shall not affect other provisions or applications of the act which can be given effect without the invalid provision or application, and to this end the provisions of this act are severable.
I. Sections 1 and 2 of this act shall take effect January 1, 2021.
II. The remainder of this act shall take effect upon passage.
SB 686-FN- FISCAL NOTE
FISCAL IMPACT: [ X ] State [ X ] County [ X ] Local [ ] None
Estimated Increase / (Decrease)
[ X ] General [ ] Education [ ] Highway [ ] Other
This bill requires pharmacy benefit managers to pass rebates paid by manufacturers on to the consumer or health benefit plan.
The Insurance Department assumes the additional requirements imposed on the Department could be handled within its current administrative budget and resources. It is unclear to the Department what impact, if any, the changes in the bill would have on claim costs and plan pricing. To the extent there is an impact there may also be an impact on premium tax revenue. However, due to insurance purchasing decisions, any impact on premium tax revenue would not necessarily be proportionate to changes in premiums.
The Department of Administrative Services indicates there would be no fiscal impact on the State Health Benefit Plans for Employees and Retirees (Plan). Because the Plan is a governmental sail-insured plan, it is not subject to managed care law and the bill would have no impact on the Plan.
The Department of Health and Human Services assumes the bill would apply to commercial carriers and not the Medicaid Plan and the bill would have no fiscal impact to the Department.
Departments of Insurance, Administrative Services and Health and Human Services
|Jan. 21, 2020||Senate||Hearing|
|Jan. 28, 2020||Senate||Hearing|
|Jan. 28, 2020||Senate||Hearing|
|March 12, 2020||Senate||Floor Vote|
|March 11, 2020||Senate||Floor Vote|
|Jan. 8, 2020||Introduced 01/08/2020 and Referred to Commerce; SJ 2|
|Jan. 21, 2020||==RECESSED== Hearing: 01/21/2020, Room 100, SH, 02:15 pm; SC 3|
|Jan. 28, 2020||Hearing: 01/28/2020, Room 100, SH, 01:00 pm; SC 4|
|Jan. 28, 2020||==RECONVENE== Hearing: 01/28/2020, Room 100, SH, 01:00 pm; SC 4|
|March 12, 2020||Committee Report: Ought to Pass with Amendment # 2020-1063s, 03/12/2020; SC 10|
|March 11, 2020||Committee Report: Ought to Pass with Amendment # 2020-1063s, 03/11/2020; SC 10|
|March 11, 2020||Sen. Carson Moved to divide the Question on Committee Amendment #2020-1063s: Sections 1, 2 and 5 I, and Sections 3, 4 and 5, II; 03/11/2020; SJ 6|
|March 11, 2020||Sen. Carson Withdraws the motion to divide the Question; 03/11/2020; SJ 6|
|March 11, 2020||Committee Amendment # 2020-1063s, AA, VV; 03/11/2020; SJ 6|
|March 11, 2020||Ought to Pass with Amendment 2020-1063s, RC 14Y-10N, MA; OT3rdg; 03/11/2020; SJ 6|