PRINTER'S NO. 1668
THE GENERAL ASSEMBLY OF PENNSYLVANIA
SENATE BILL
No.
1231
Session of
2022
INTRODUCED BY LAUGHLIN, PITTMAN AND HAYWOOD, MAY 23, 2022
REFERRED TO HEALTH AND HUMAN SERVICES, MAY 23, 2022
AN ACT
Amending the act of November 21, 2016 (P.L.1318, No.169),
entitled "An act providing for pharmacy audit procedures, for
registration of pharmacy benefits managers and auditing
entities, for maximum allowable cost transparency and for
prescription drugs reimbursed under the PACE and PACENET
program; and making related repeals," adding provisions
relating to contracting for pharmacy benefits management.
The General Assembly of the Commonwealth of Pennsylvania
hereby enacts as follows:
Section 1. The act of November 21, 2016 (P.L.1318, No.169),
known as the Pharmacy Audit Integrity and Transparency Act, is
amended by adding a chapter to read:
CHAPTER 6
CONTRACTING FOR
PHARMACY BENEFITS MANAGEMENT
Section 601. Application of chapter.
The provisions of this chapter shall apply to all contracts
for pharmacy benefits manager services entered into by a
contracting entity under the Medicaid program, and to each
request for proposals or invitations for bids, auctions or other
solicitations for pharmacy benefits management services on
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behalf of Medicaid recipients that occur after the effective
date of this section.
Section 602. Definitions.
The following words and phrases when used in this chapter
shall have the meanings given to them in this section unless the
context clearly indicates otherwise:
"Contracting entity." An entity authorized to contract for
pharmacy benefits manager services on behalf of Medicaid
recipients.
"Copayment." An amount a Medicaid recipient is required to
pay at a point of sale in order to receive a covered
prescription drug.
"Medicaid program." The Commonwealth's medical assistance
program authorized under Article IV of the act of June 13, 1967
(P.L.31, No.21), known as the Human Services Code.
"Medicaid recipient." An individual enrolled in the Medicaid
program.
"Pharmacy benefits management." Any of the following:
(1) The procurement of prescription drugs at a
negotiated contracted rate for distribution within this
Commonwealth.
(2) The administration or management of prescription
drug benefits provided by a managed care organization.
(3) The administration of pharmacy benefits, including
any of the following:
(i) Operating a mail-service pharmacy.
(ii) Processing claims.
(iii) Managing a retail pharmacy network.
(iv) Paying claims to pharmacies, including retail,
specialty or mail-order pharmacies, for prescription
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drugs dispensed to medical assistance recipients
receiving services in the managed care delivery system
via a retail or mail-order pharmacy.
(v) Developing and managing a clinical formulary or
preferred drug list, utilization management or quality
assurance programs.
(vi) Rebate contracting and administration.
(vii) Managing a patient compliance, therapeutic
intervention and generic substitution program.
(viii) Operating a disease management program.
(ix) Setting pharmacy payment pricing and
methodologies, including maximum allowable cost and
determining single or multiple source drugs.
"Pharmacy benefits management contract." A contract between
a contracting entity and a pharmacy benefits manager for
pharmacy benefits management services.
"Pharmacy benefits manager" or "PBM." A business that
performs pharmacy benefits management. The term does not include
a business that holds a valid license from the Insurance
Department with accident and health authority to issue a health
insurance policy and governed under any of the following:
(1) The act of May 17, 1921 (P.L.682, No.284), known as
The Insurance Company Law of 1921.
(2) The act of December 29, 1972 (P.L.1701, No.364),
known as the Health Maintenance Organization Act.
(3) 40 Pa.C.S. Ch. 61 (relating to hospital plan
corporations) or 63 (relating to professional health services
plan corporations).
"Reverse auction." A purchasing strategy that uses
specialized software or an online marketplace and enables
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suppliers to compete online in real-time by offering a contract
out for bid over a period of time and by allowing multiple
providers to offer ongoing bids on the contract while meeting
all of the specifications until the time period for bidding
expires.
Section 603. Solicitation of pharmacy benefits management
contracts.
(a) Method of solicitation.--
(1) A contracting entity, prior to soliciting an
invitation of bids or request for proposals for pharmacy
benefits management services, shall first consider best
practices, technologies and methodologies, including reverse
auctions and electronic claim review, to maximize
transparency in both contracting and contract implementation.
(2) A contracting entity shall use technology platforms
that:
(i) Reprice PBM proposals for pharmacy spending
utilizing code-based classification of drugs from
nationally accepted data sources of comparisons of the
costs of PBM proposals.
(ii) Conduct real-time, electronic, line-by-line,
claim-by-claim review of invoiced PBM pharmacy claims
using an automated claims adjudication technology
platform that allows for online comparison of PBM
invoices and auditing of other aspects of the services
provided by the PBM.
(3) A contracting entity may procure the technical
assistance necessary during the solicitation process to
evaluate the qualifications of bidders and to conduct online
automated reverse auction services to support the comparisons
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for the procurement of pharmacy benefits management services.
(b) Certification to department.--Within 30 days of entering
into or renewing a contract for pharmacy benefits management
services, a contracting entity shall provide a certification to
the department that the contracting entity complied with
subsection (a)(1). The certification shall include the
technologies employed and any cost or anticipated cost savings
thereof.
(c) Transparency in solicitation.--An entity that seeks to
provide pharmacy benefits management services to a contracting
entity shall provide the following information to the
contracting entity:
(1) The formulary, information on deductions and other
out-of-pocket costs and any administrative requirement,
including preauthorization requirement.
(2) Any reimbursement difference for the same drug
between a retail pharmacy network and mail order service.
(3) Any financial incentive, such as rebate, refund,
purchase order discount or administrative fee the PBM expects
to receive from a manufacturer or wholesaler.
(4) The procedure to be used in determining when a drug
has moved from brand to generic.
Section 604. Pharmacy benefits management contracts.
(a) Prohibited provisions.--
(1) (i) No pharmacy benefits management contract may
prohibit a pharmacy from disclosing lower-cost
prescription drug options to a Medicaid recipient,
including those that are available if the Medicaid
recipient would purchase the prescription drug without
using the Medicaid program.
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(ii) If information related to a Medicaid
recipient's out-of-pocket cost or the clinical efficacy
of a prescription drug or alternative medication is
available to a pharmacy provider, no pharmacy benefits
manager contract may provide penalties to a pharmacy
provider for providing the information to a Medicaid
recipient.
(2) No pharmacy benefits management contract may impose
on a Medicaid recipient a copayment for a prescription drug
benefit in an amount that exceeds the cost of the
prescription drug that the pharmacy would charge to persons
who do not purchase the prescription drug through the
Medicaid program.
(b) Required provisions.--
(1) A pharmacy benefits management contract shall
prohibit the pharmacy benefits manager from suspending the
processing of payments owed to the contracting entity during
a solicitation process undertaken to replace or renew the
contract.
(2) Subject to the PBM's reasonable objections
attributable to a conflict of interest or other bona fide
concerns, a pharmacy benefits management contract shall allow
the contracting entity to make the choice as to an auditor
assigned to validate the financial guarantees specified in
the contract.
(3) A pharmacy benefits management contract shall
require the PBM to provide the following information for each
contract year:
(i) The percentage of all prescriptions that were
provided through retail pharmacies compared to mail order
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pharmacies and the percentage of prescriptions for which
a generic drug was available and dispensed, known as the
generic dispensing rate, by pharmacy type, including an
independent pharmacy, chain pharmacy, supermarket
pharmacy or mass merchandiser pharmacy that is licensed
as a pharmacy by the State and that dispenses medication
to the general public.
(ii) To the extent attributable to patient
utilization, the aggregate amount and the type of
rebates, discounts or price concessions, excluding bona
fide service fees, including, but not limited to,
distribution service fees, inventory management fees,
product stocking allowances and fees associated with
administrative services agreements and patient care
programs negotiated by the PBM, the aggregate amount of
the rebates, discounts or price concessions and the total
number of prescriptions that were dispensed.
(iii) The aggregate amount of the difference between
the amount paid to the PBM and the amount that the PBM
pays retail pharmacies and mail order pharmacies and the
total number of prescriptions that were dispensed.
(4) A pharmacy benefits management contract shall
authorize real-time, electronic, line-by-line, claim-by-claim
review of invoiced PBM pharmacy claims, including using
automated claims adjudication technology to allow for online
comparison of PBM invoices and auditing of other aspects of
the services provided by the PBM for each contract year.
Section 605. Effect of noncompliance.
Any provision of a pharmacy benefits management contract that
violates this chapter shall be void and unenforceable.
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Section 606. Audits.
The Insurance Commissioner may, upon request, audit a
contract for pharmacy benefits management services for
compliance with the provisions of this chapter.
Section 2. This act shall take effect in 60 days.
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