2015 -- S 0092 SUBSTITUTE A

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LC000162/SUB A/2

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     STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2015

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A N   A C T

RELATING TO INSURANCE -- HEALTH INSURANCE - PRESCRIPTION DRUG

BENEFITS

     Introduced By: Senator William A. Walaska

     Date Introduced: January 22, 2015

     Referred To: Senate Health & Human Services

     It is enacted by the General Assembly as follows:

     SECTION 1. Chapter 27-18 of the General Laws entitled "Accident and Sickness

Insurance Policies" is hereby amended by adding thereto the following section:

     27-18-33.2. Pharmacy benefit manager requirements with respect to multi-source

generic pricing updates to pharmacies. -- (a) Definitions. As used herein:

     (1) "Maximum allowable cost" or "MAC" means the maximum amount that a pharmacy

benefits manager will pay toward the cost of a drug;

     (2) "Nationally available" means that there is an adequate supply available from regional

or national wholesalers and that the product is not obsolete or temporarily unavailable;

     (3) "Pharmacy benefit manager" or "PBM" means an entity doing business in this state

that contracts to administer or manage prescription drug benefits on behalf of any carrier that

provides prescription drug benefits to residents of this state.

     (b)(1) Upon each contract execution or renewal, a PBM shall, with respect to contracts

between a PBM and a pharmacy or, alternatively, a PBM and a pharmacy's contracting

representative or agent such as a pharmacy services administrative organization (PSAO):

     (i) Include in such contracts, the sources generally used to determine MAC pricing and a

requirement to update pricing information on the MAC list at least every ten (10) calendar days;

     (ii) Maintain a procedure to eliminate products from the list of drugs subject to such

pricing or modify MAC rates within ten (10) calendar days when such drugs do not meet the

standards and requirements of this act as set forth in order to remain consistent with pricing

changes in the marketplace.

     (2) PBM requirements for inclusion of products on a list of drugs subject to MAC

pricing. In order to place a particular prescription drug on a MAC list, the PBM must, at a

minimum, ensure that:

     (i) The product must be listed as "A," "AB," or "B" rated in the most recent version of the

United States Food and Drug Administration's approved drug products with therapeutic

equivalence evaluations, also known as the Orange Book, or has an "NR" or "NA" rating or

similar rating by a nationally recognized reference; and

     (ii) The product must be nationally available.

     (c) Standards for pharmacy appeals.

     (1) All contracts between a PBM, a contracted pharmacy or, alternatively, a PBM and a

pharmacy's contracting representative or agent such as a pharmacy services administrative

organization (PSAO) shall include a process to appeal investigate, and resolve disputes regarding

MAC pricing. The process shall include the following provisions:

     (i) The right to appeal shall be limited to fifteen (15) days following the initial claim;

     (ii) The appeal shall be investigated and resolved within fifteen (15) days following

receipt of the appeal;

     (iii) A process by which a network pharmacy may contact the PBM regarding the appeals

process;

     (iv) If the appeal is denied, the PBM shall provide the reason for the denial and identify

the national drug code of a drug product that is available in adequate supply; and

     (v) If an appeal is upheld, the PBM shall make an adjustment to the list effective no later

than one day after the date of determination.

     (d) The office of the health insurance commissioner shall enforce the provisions of this

section in collaboration with the department of health.

     SECTION 2. Chapter 27-19 of the General Laws entitled "Nonprofit Hospital Service

Corporations" is hereby amended by adding thereto the following section:

     27-19-26.1. Pharmacy benefit manager requirements with respect to multi-source

generic pricing updates to pharmacies. -- (a) Definitions. As used herein:

     (1) "Maximum allowable cost" or "MAC" means the maximum amount that a pharmacy

benefits manager will pay toward the cost of a drug;

     (2) "Nationally available" means that there is an adequate supply available from regional

or national wholesalers and that the product is not obsolete or temporarily unavailable;

LC000162/SUB A/2 - Page 2 of 8

     (3) "Pharmacy benefit manager" or "PBM" means an entity doing business in this state

that contracts to administer or manage prescription drug benefits on behalf of any carrier that

provides prescription drug benefits to residents of this state.

     (b)(1) Upon each contract execution or renewal, a PBM shall, with respect to contracts

between a PBM and a pharmacy or, alternatively, a PBM and a pharmacy's contracting

representative or agent such as a pharmacy services administrative organization (PSAO):

     (i) Include in such contracts, the sources generally used to determine MAC pricing and a

requirement to update pricing information on the MAC list at least every ten (10) calendar days;

     (ii) Maintain a procedure to eliminate products from the list of drugs subject to such

pricing or modify MAC rates within ten (10) calendar days when such drugs do not meet the

standards and requirements of this act as set forth in order to remain consistent with pricing

changes in the marketplace.

     (2) PBM requirements for inclusion of products on a list of drugs subject to MAC

pricing. In order to place a particular prescription drug on a MAC list, the PBM must, at a

minimum, ensure that:

     (i) The product must be listed as "A," "AB," or "B" rated in the most recent version of the

United States Food and Drug Administration's approved drug products with therapeutic

equivalence evaluations, also known as the Orange Book, or has an "NR" or "NA" rating or

similar rating by a nationally recognized reference; and

     (ii) The product must be nationally available.

     (c) Standards for pharmacy appeals.

     (1) All contracts between a PBM, a contracted pharmacy or, alternatively, a PBM and a

pharmacy's contracting representative or agent such as a pharmacy services administrative

organization (PSAO) shall include a process to appeal, investigate, and resolve disputes regarding

MAC pricing. The process shall include the following provisions:

     (i) The right to appeal shall be limited to fifteen (15) days following the initial claim;

     (ii) The appeal shall be investigated and resolved within fifteen (15) days following

receipt of the appeal:

     (iii) A process by which a network pharmacy may contact the PBM regarding the appeals

process:

     (iv) If the appeal is denied, the PBM shall provide the reason for the denial and identify

the national drug code of a drug product that is available in adequate supply; and

     (v) If an appeal is upheld, the PBM shall make an adjustment to the list effective no later

than one day after the date of determination.

LC000162/SUB A/2 - Page 3 of 8

     (d) The office of the health insurance commissioner shall enforce the provisions of this

section in collaboration with the department of health.

     SECTION 3. Chapter 27-20 of the General Laws entitled "Nonprofit Medical Service

Corporations" is hereby amended by adding thereto the following section:

     27-20-23.1. Pharmacy benefit manager requirements with respect to multi-source

generic pricing updates to pharmacies. -- (a) Definitions. As used herein:

     (1) "Maximum allowable cost" or "MAC' means the maximum amount that a pharmacy

benefits manager will pay toward the cost of a drug;

     (2) "Nationally available" means that there is an adequate supply available from regional

or national wholesalers and that the product is not obsolete or temporarily unavailable;

     (3) "Pharmacy benefit manager" or "PBM" means an entity doing business in this state

that contracts to administer or manage prescription drug benefits on behalf of any carrier that

provides prescription drug benefits to residents of this state.

     (b)(1) Upon each contract execution or renewal, a PBM shall, with respect to contracts

between a PBM and a pharmacy or, alternatively, a PBM and a pharmacy's contracting

representative or agent such as a pharmacy services administrative organization (PSAO):

     (i) Include in such contracts, the sources generally used to determine MAC pricing and a

requirement to update pricing information on the MAC list at least every ten (10) calendar days;

     (ii) Maintain a procedure to eliminate products from the list of drugs subject to such

pricing or modify MAC rates within ten (10) calendar days when such drugs do not meet the

standards and requirements of this act as set forth in order to remain consistent with pricing

changes in the marketplace.

     (2) PBM requirements for inclusion of products on a list of drugs subject to MAC

pricing. In order to place a particular prescription drug on a MAC list, the PBM must. at a

minimum, ensure that:

     (i) The product must be listed as "A," "AB," or "B" rated in the most recent version of the

United States Food and Drug Administration's approved drug products with therapeutic

equivalence evaluations, also known as the Orange Book, or has an "NR" or "NA" rating or

similar rating by a nationally recognized reference; and

     (ii) The product must be nationally available.

     (c) Standards for pharmacy appeals.

     (1) All contracts between a PBM, a contracted pharmacy or, alternatively, a PBM and a

pharmacy's contracting representative or agent such as a pharmacy services administrative

organization (PSAO) shall include a process to appeal, investigate, and resolve disputes regarding

LC000162/SUB A/2 - Page 4 of 8

MAC pricing. The process shall include the following provisions:

     (i) The right to appeal shall be limited to fifteen (15) days following the initial claim;

     (ii) The appeal shall be investigated and resolved within fifteen (15) days following

receipt of the appeal:

     (iii) A process by which a network pharmacy may contact the PBM regarding the appeals

process;

     (iv) If the appeal is denied. the PBM shall provide the reason for the denial and identify

the national drug code of a drug product that is available in adequate supply; and

     (v) If an appeal is upheld, the PBM shall make an adjustment to the list effective no later

than one day after the date of determination.

     (d) The office of the health insurance commissioner shall enforce the provisions of this

section in collaboration with the department of health.

     SECTION 4. Chapter 27-20.1 of the General Laws entitled "Nonprofit Dental Service

Corporations" is hereby amended by adding thereto the following section:

     27-20.1-15.1. Pharmacy benefit manager requirements with respect to multi-source

generic pricing updates to pharmacies. -- (a) Definitions. As used herein:

     (1) "Maximum allowable cost" or "MAC" means the maximum amount that a pharmacy

benefits manager will pay toward the cost of a drug;

     (2) "Nationally available" means that there is an adequate supply available from regional

or national wholesalers and that the product is not obsolete or temporarily unavailable;

     (3) "Pharmacy benefit manager" or "PBM" means an entity doing business in this state

that contracts to administer or manage prescription drug benefits on behalf of any carrier that

provides prescription drug benefits to residents of this state.

     (b)(1) Upon each contract execution or renewal, a PBM shall, with respect to contracts

between a PBM and a pharmacy or, alternatively, a PBM and a pharmacy's contracting

representative or agent such as a pharmacy services administrative organization (PSAO):

     (i) Include in such contracts, the sources generally used to determine MAC pricing and a

requirement to update pricing information on the MAC list at least every ten (10) calendar days;

     (ii) Maintain a procedure to eliminate products from the list of drugs subject to such

pricing or modify MAC rates within ten (10) calendar days when such drugs do not meet the

standards and requirements of this act as set forth in order to remain consistent with pricing

changes in the marketplace.

     (2) PBM requirements for inclusion of products on a list of drugs subject to MAC

pricing. In order to place a particular prescription drug on a MAC list, the PBM must, at a

LC000162/SUB A/2 - Page 5 of 8

minimum, ensure that:

     (i) The product must be listed as "A," "AB," or "B" rated in the most recent version of the

United States Food and Drug Administration's approved drug products with therapeutic

equivalence evaluations, also known as the Orange Book, or has an "NR" or "NA" rating or

similar rating by a nationally recognized reference; and

     (ii) The product must be nationally available.

     (c) Standards for pharmacy appeals.

     (1) All contracts between a PBM, a contracted pharmacy or, alternatively, a PBM and a

pharmacy's contracting representative or agent such as a pharmacy services administrative

organization (PSAO) shall include a process to appeal, investigate, and resolve disputes regarding

MAC pricing. The process shall include the following provisions:

     (i) The right to appeal shall be limited to fifteen (15) days following the initial claim;

     (ii) The appeal shall be investigated and resolved within fifteen (15) days following

receipt of the appeal;

     (iii) A process by which a network pharmacy may contact the PBM regarding the appeals

process;

     (iv) If the appeal is denied, the PBM shall provide the reason for the denial and identify

the national drug code of a drug product that is available in adequate supply; and

     (v) If an appeal is upheld, the PBM shall make an adjustment to the list effective no later

than one day after the date of determination.

     (d) The office of the health insurance commissioner shall enforce the provisions of this

section in collaboration with the department of health.

     SECTION 5. Chapter 27-41 of the General Laws entitled "Health Maintenance

Organizations" is hereby amended by adding thereto the following section:

     27-41-38.1. Pharmacy benefit manager requirements with respect to multi-source

generic pricing updates to pharmacies. -- (a) Definitions. As used herein:

     (1) "Maximum allowable cost" or "MAC" means the maximum amount that a pharmacy

benefits manager will pay toward the cost of a drug;

     (2) "Nationally available" means that there is an adequate supply available from regional

or national wholesalers and that the product is not obsolete or temporarily unavailable;

     (3) "Pharmacy benefit manager" or "PBM" means an entity doing business in this state

that contracts to administer or manage prescription drug benefits on behalf of any carrier that

provides prescription drug benefits to residents of this state.

     (b)(1) Upon each contract execution or renewal, a PBM shall, with respect to contracts

LC000162/SUB A/2 - Page 6 of 8

between a PBM and a pharmacy or, alternatively, a PBM and a pharmacy's contracting

representative or agent such as a pharmacy services administrative organization (PSAO):

     (i) Include in such contracts. the sources generally used to determine MAC pricing and a

requirement to update pricing information on the MAC list at least every ten (10) calendar days;

     (ii) Maintain a procedure to eliminate products from the list of drugs subject to such

pricing or modify MAC rates within ten (10) calendar days when such drugs do not meet the

standards and requirements of this act as set forth in order to remain consistent with pricing

changes in the marketplace.

     (2) PBM requirements for inclusion of products on a list of drugs subject to MAC

pricing. In order to place a particular prescription drug on a MAC list, the PBM must, at a

minimum, ensure that:

     (i) The product must be listed as "A," "AB," or "B" rated in the most recent version of the

United States Food and Drug Administration's approved drug products with therapeutic

equivalence evaluations, also known as the Orange Book, or has an "NR" or "NA" rating or

similar rating by a nationally recognized reference; and

     (ii) The product must be nationally available.

     (c) Standards for pharmacy appeals.

     (1) All contracts between a PBM, a contracted pharmacy or, alternatively, a PBM and a

pharmacy's contracting representative or agent such as a pharmacy services administrative

organization (PSAO) shall include a process to appeal, investigate, and resolve disputes regarding

MAC pricing. The process shall include the following provisions:

     (i) The right to appeal shall be limited to fifteen (15) days following the initial claim:

     (ii) The appeal shall be investigated and resolved within fifteen (15) days following

receipt of the appeal;

     (iii) A process by which a network pharmacy may contact the PBM regarding the appeals

process;

     (iv) If the appeal is denied, the PBM shall provide the reason for the denial and identify

the national drug code of a drug product that is available in adequate supply; and

     (v) If an appeal is upheld, the PBM shall make an adjustment to the list effective no later

than one day after the date of determination.

     (d) The office of the health insurance commissioner shall enforce the provisions of this

section in collaboration with the department of health.

LC000162/SUB A/2 - Page 7 of 8

     SECTION 6. This act shall take effect on September 30, 2015.

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EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N   A C T

RELATING TO INSURANCE -- HEALTH INSURANCE - PRESCRIPTION DRUG

BENEFITS

***

     This act would require the health insurance commissioner to regulate business

relationships among pharmacy services providers with oversight by the department of health.

     This act would take effect on September 30, 2015.

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