Bill Text - SB686 (2020)

(New Title) relative to prescription drug benefits paid by health plans and establishing the New Hampshire prescription drug competitive marketplace.


Revision: Jan. 14, 2020, 4:14 p.m.

SB 686-FN - AS INTRODUCED

 

 

2020 SESSION

20-2726

01/10

 

SENATE BILL 686-FN

 

AN ACT relative to rebates paid to pharmacy benefits managers.

 

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

 

COMMITTEE: Commerce

 

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ANALYSIS

 

This bill requires pharmacy benefit managers to pass rebates paid by manufacturers on to the consumer or health benefit plan.

 

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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Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.

20-2726

01/10

 

STATE OF NEW HAMPSHIRE

 

In the Year of Our Lord Two Thousand Twenty

 

AN ACT relative to rebates paid to pharmacy benefits managers.

 

Be it Enacted by the Senate and House of Representatives in General Court convened:

 

1  New Chapter; Health Plans That Provide Prescription Drug Benefits.  Amend RSA by inserting after chapter 402-N the following new chapter:

CHAPTER 402-O

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.  "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.

VI.  "Covered person" means a policyholder, subscriber, enrollee or other individual participating in a health plan.  "Covered person" includes the authorized representative of a covered person.

VII.  "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.

VIII.  "Formulary" means a list of prescription drugs covered by a health benefit plan and any tier levels applicable to a prescription drug.

IX.  "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.

X.  "Health carrier" means "health carrier" as defined in RSA 420-J:3, XXIII.

XI.  "Health benefit plan" means "health benefit plan" as defined in RSA 420-J:3, XIX.

XII.  "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.

XIII.  "Mail order pharmacy" means a pharmacy whose primary business is to receive prescriptions by mail, by fax or through electronic submissions and to dispense medication to covered persons through the use of the United States mail or other common or contract carrier services and that provides any consultation with patients electronically rather than face to face.

XIV.  "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.

XV.  "Network pharmacy" means a licensed retail pharmacy or other pharmacy provider that contracts with a pharmacy benefits manager.

XVI.  "Pharmacy" means an established location, either physical or electronic, that is licensed under RSA 318 and that has entered into a network pharmacy contract with a pharmacy benefits manager or health carrier.

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 carrier is responsible for monitoring all activities carried out by the health carrier, or all activities carried out on behalf of the health carrier by a pharmacy benefits manager if the health carrier contracts with a pharmacy benefits manager, related to a health carrier's prescription drug benefits and for ensuring that all requirements of this chapter are met.

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 manger 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  Responsibility to Use Compensation for Benefit of Covered Persons.

I.  All compensation remitted by or on behalf of a pharmaceutical manufacturer, developer or labeler, directly or indirectly, to a health carrier, or to a pharmacy benefits manager under contract with a health carrier, related to its prescription drug benefits shall be:

(a)  Remitted directly to the covered person at the point of sale to reduce the out-of-pocket cost to the covered person associated with a particular prescription drug; or

(b)  Remitted to, and retained by, the health carrier.  Compensation remitted to the health carrier shall be applied by the health carrier in its plan design and in future plan years to offset the premium for covered persons.

II.  Beginning March 1, 2021 and annually thereafter, a health carrier shall file with the commissioner a report in the manner and form determined by the commissioner demonstrating how the health carrier has complied with this section.

402-O:5  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:6  Access to Records; Audits.

I.  A health carrier shall maintain and have the ability to access all data related to the administration and provision of prescription drug benefits under a health plan of a health carrier, including, but not limited to:

(a)  The names, addresses, member identification numbers, protected health information, and other personal information of covered persons; and

(b)  All contracts, documentation, and records, including transaction and pricing data, related to the dispensing of prescription drugs to covered persons under the health plan.

II.  A sale or transaction involving the transfer of any records, information, or data described in paragraph I shall comply with the federal Health Insurance Portability and Accountability Act of 1996, Public Law 104-191 and the federal Health Information Technology for Economic and Clinical Health Act, Public Law 111-5 and any regulations adopted pursuant to those laws.

III.  A health carrier may audit all transaction records related to the dispensing of prescription drugs to covered persons under a health plan of the health carrier.  A health carrier may conduct audits at a location of its choosing and with an auditor of its choosing.

IV.  A health carrier shall maintain all records, information, and data described in paragraph I and all audit records described in paragraph III for a period of no less than 5 years.

V.  Upon request, a health carrier shall provide to the commissioner any records, contracts, documents, or data held by the health carrier or the health carrier's pharmacy benefits manager for inspection, examination, or audit purposes.

402-O:7  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.

2  Managed Care Law.  Amend RSA 420-J:8, XV(b)(3) to read as follows:

(3)  Review and make necessary adjustments to the maximum allowable cost for every drug for which the price has changed at least every [14] 7 days.

3  Effective Date.  This act shall take effect January 1, 2021.

 

LBAO

20-2726

12/18/19

 

SB 686-FN- FISCAL NOTE

AS INTRODUCED

 

AN ACT relative to rebates paid to pharmacy benefits managers.

 

FISCAL IMPACT:      [ X ] State              [ X ] County               [ X ] Local              [    ] None

 

 

 

Estimated Increase / (Decrease)

STATE:

FY 2020

FY 2021

FY 2022

FY 2023

   Appropriation

$0

$0

$0

$0

   Revenue

$0

Indeterminable

Indeterminable

Indeterminable

   Expenditures

$0

$0

$0

$0

Funding Source:

  [ X ] General            [    ] Education            [    ] Highway           [    ] Other

 

 

 

 

 

COUNTY:

 

 

 

 

   Revenue

$0

$0

$0

$0

   Expenditures

$0

Indeterminable

Indeterminable

Indeterminable

 

 

 

 

 

LOCAL:

 

 

 

 

   Revenue

$0

$0

$0

$0

   Expenditures

$0

Indeterminable

Indeterminable

Indeterminable

 

METHODOLOGY:

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.

 

AGENCIES CONTACTED:

Departments of Insurance, Administrative Services and Health and Human Services