A09300
THE GENERAL ASSEMBLY OF PENNSYLVANIA
HOUSE BILL
No.
947
Session of
2015
INTRODUCED BY FABRIZIO, BAKER, D. COSTA, V. BROWN, STAATS,
LONGIETTI, DAVIS, GIBBONS, PICKETT, PASHINSKI, CRUZ, GROVE,
McNEILL, YOUNGBLOOD, M. K. KELLER, KILLION, P. COSTA, COHEN,
THOMAS, EVERETT, CARROLL, FARRY, SCHLOSSBERG, PHILLIPS-HILL,
M. DALEY, WARD, READSHAW, HARKINS, MURT, SAYLOR, GOODMAN,
GALLOWAY, BARRAR, BOYLE, MICCARELLI, DeLUCA, NEUMAN, MATZIE,
TOEPEL, WATSON, KNOWLES, O'BRIEN, SANTARSIERO, PETRI AND
QUINN, AUGUST 18, 2015
AS REPORTED FROM COMMITTEE ON HEALTH, HOUSE OF REPRESENTATIVES,
AS AMENDED, OCTOBER 19, 2015
AN ACT
Providing for registration of pharmacy benefits managers and for
maximum allowable cost transparency.
The General Assembly of the Commonwealth of Pennsylvania
hereby enacts as follows:
Section 1. Short title.
This act shall be known and may be cited as the
Pharmaceutical Transparency Act.
Section 2. Definitions.
The following words and phrases when used in this act shall
have the meanings given to them in this section unless the
context clearly indicates otherwise:
"Covered individual." A member, participant, enrollee,
contract holder or policyholder or beneficiary of a covered
entity who is provided health coverage by the covered entity.
1
2
3
4
5
6
7
8
9
10
11
12
13
14
The term includes a dependent or other person provided health
coverage through the policy, contract or plan of a covered
individual.
"Covered entity." A member, participant, enrollee, contract
holder or policy holder covered by PROVIDING PHARMACY BENEFITS
TO A COVERED INDIVIDUAL UNDER A HEALTH COVERAGE PLAN PURSUANT TO
a contract administered by a pharmacy benefit manager.
"Department." The Department of Health of the Commonwealth
Insurance Department of the Commonwealth.
"Maximum allowable cost." The maximum amount that a pharmacy
benefits manager will reimburse a pharmacy for the cost of a
drug or a medical product or device.
"Maximum allowable cost list." A list of drugs, medical
products or devices, or both, for which a maximum allowable cost
has been established by a pharmacy benefits manager.
"Multiple source drug." A covered outpatient drug for which
there is at least one other drug product that is rated as
therapeutically equivalent under the Food and Drug
Administration's most recent publication of "Approved Drug
Products with Therapeutic Equivalence Evaluations."
"Multiple source generic list." A list of drugs, medical
products or devices, or both, for which a maximum allowable cost
has been established by a pharmacy benefits manager.
"Network." A pharmacy or group of pharmacies that agree to
provide prescription services to covered individuals on behalf
of a covered entity or group of covered entities in exchange for
payment for its services by a pharmacy benefits manager or
pharmacy services administration organization. The term includes
a pharmacy that generally dispenses outpatient prescriptions to
covered individuals or dispenses particular types of
A09300 - 2 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
prescriptions, provides pharmacy services to particular types of
covered individuals or dispenses prescriptions in particular
health care settings, including networks of specialty,
institutional or long-term care facilities.
"Pharmacy." As defined in section 2(12) of the act of
September 27, 1961 (P.L.1700, No.699), known as the Pharmacy
Act.
"Pharmacy benefits manager" or "PBM." A person, business or
other entity that performs pharmacy benefits management FOR
COVERED ENTITIES.
"Pharmacy benefits management." Performing any of the
following:
(1) The procurement of prescription drugs at a
negotiated contracted rate for dispensation within this
Commonwealth to covered individuals.
(2) The administration or management of prescription
drug benefits provided by a covered entity for the benefit of
covered individuals.
(3) The provision of any of the following services in
conjunction with the administration of pharmacy benefits:
(i) Mail-service pharmacy.
(ii) Claims processing.
(iii) Retail network management.
(iv) Payment of claims to pharmacies for
prescription drugs dispensed to covered individuals via
retail or mail-order pharmacy.
(v) Clinical formulary development and management
services, including, but not limited to, utilization
management and quality assurance programs.
(vi) Rebate contracting and administration.
A09300 - 3 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
(vii) Certain patient compliance, therapeutic
intervention and generic substitution programs.
(viii) Disease management programs.
(ix) Setting pharmacy reimbursement pricing and
methodologies, including maximum allowable cost, and
determining single or multiple source drugs.
"Pharmacy Services Administration Organization" or "PSAO."
Any entity that contracts with pharmacies to assist with third-
party payer interactions and can provide a variety of other
administrative services. The administrative services vary but
may include contracting with PBMs on behalf of pharmacies and
managing pharmacies' claims payments from third-party payers.
Section 3. PBM registration.
(a) General rule.--To conduct business in this Commonwealth,
a PBM must register with the department. annually by:
(1) Submitting the registration form prescribed under
subsection (c).
(2) Paying a registration fee promulgated by the
department.
(b) Registration renewal.--The department shall prescribe
rules for the annual renewal of a PBM registration, and the
following shall apply:
(1) A PBM shall pay a renewal fee adopted by the
department.
(2) Any lapse in registration under this section shall
be subject to penalties or late fees, or both, as established
by the department.
(c) Registration form.--The department shall develop a
registration form, which a PBM shall submit to the department.
The form must contain the following information, along with any
A09300 - 4 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
additional requirements as may be established by the department:
(1) The identity, address and telephone number of the
PBM.
(2) The name, business address and telephone number of
the contact person for the PBM.
(3) When applicable, the Federal employer identification
number for the PBM.
(4) For a PBM that maintains a mail-order pharmacy that
ships or mails prescription drugs to residents of this
Commonwealth, the identity, business address and telephone
number of the licensed pharmacist in charge and the license
number of any mail-order pharmacy owned by the PBM to the
department.
(d) Inspection.--The department may conduct announced or
unannounced random inspections annually of a licensed REGISTERED
PBM, which shall encompass the following:
(1) The operation of the PBM.
(2) Review of records as selected by the department.
(3) Adherence to other requirements of this act.
(e) Revocation, suspension, denial or restriction.--The
department may revoke, suspend, deny or restrict registration of
a PBM for violation of this section or on other grounds or
violations of Federal or State laws or regulations as determined
necessary or appropriate by the department. The department shall
promulgate regulations to implement this section.
Section 4. Maximum allowable cost Multiple source generic list
and reimbursement.
(a) General rule.--Before a PBM places a drug on a maximum
allowable cost list, the PBM must ensure that:
(1) the drug is listed as "A" or "AB" rated in the most
A09300 - 5 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
recent version of the Food and Drug Administration's
"Approved Drug Products with Therapeutic Equivalence
Evaluations" or is an authorized generic;
(2) two or more therapeutically equivalent, multiple
source drugs or authorized generics available for purchase by
network retail pharmacies from wholesalers servicing this
Commonwealth; and
(3) dispensing fees are not included in the calculation
of maximum allowable cost price reimbursement to pharmacy
providers.
(b) Removal from listing.--If a drug that has been placed on
a maximum allowable cost list no longer meets the requirements
of subsection (a), the drug shall be removed from the maximum
allowable cost list by the PBM within seven business days after
the date that the PBM becomes aware that the drug no longer
meets the requirements of subsection (a). In order to place a
particular drug on a multiple source generic list, a PBM shall,
at a minimum, ensure that:
(1) the drug is listed as "A," "B," "NR" or "NA" rated
in the most recent version of the Food and Drug
Administration's "Approved Drug Products with Therapeutic
Equivalence Evaluations," commonly known as the orange book;
and
(2) the drug is available for purchase by all pharmacies
in this State from national or regional wholesalers and is
not obsolete or temporarily unavailable.
(b) Removal from listing.--A PBM must maintain a procedure
to eliminate drugs from the list of drugs subject to multiple
source drug pricing or modify the maximum allowable cost in a
timely fashion.
A09300 - 6 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
(c) Substitutions.--A PBM may not penalize a pharmacist or
pharmacy on audit if the pharmacist or pharmacy performs a
generic substitution pursuant to the act of November 24, 1976
(P.L.1163, No.259), referred to as the Generic Equivalent Drug
Law.
Section 5. Availability of the maximum allowable cost multiple
source generic list.
(a) General rule.--Upon each contract execution or renewal,
a PBM shall make available, with respect to contracts between a
PBM and a pharmacy, or alternatively, a PBM and a pharmacy's
contracting representative or agent such as PSAO, the following:
(1) The criteria used to determine the maximum allowable
costs for the drugs and medical products and devices on each
maximum allowable cost list.
(2) The current maximum allowable cost list used by that
PBM for covered individuals served by that contracted
pharmacy.
(3) Upon request, every maximum allowable cost list used
by that PBM for covered individuals served by that contracted
pharmacy.
(4) In the event there are multiple lists under the same
contract, the contract shall identify which maximum allowable
cost lists are appropriately applicable.
Section 6. Updating maximum allowable cost list.
A PBM shall:
(1) Update each maximum allowable cost list at least
once every seven business days.
(2) Make the updated lists available to every pharmacy
with which the PBM has a contract, directly or through a
PSAO, in a readily accessible, secure and usable publicly
A09300 - 7 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
accessible Internet website or other comparable format or
process.
(3) Utilize the updated maximum allowable costs to
calculate the payments made to the contracted pharmacies
within three business days.
(4) A PBM shall provide a contractual commitment to
deliver a particular average reimbursement rate for generics.
The average reimbursement rate for generics shall be
calculated using the actual amount paid to the pharmacy,
excluding the dispensing fee, and shall not be calculated
solely according to the amount allowed by the plan and shall
include all generics dispensed, regardless of whether they
are subject to maximum allowable cost pricing. The contract
shall set forth the types of claims to be excluded from the
methodologies to be used in the calculation of the average
reimbursement rate.
(5) Maintain a procedure to eliminate products from the
list of drugs subject to such pricing or modify maximum
allowable cost rates within seven business 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.
Section 7. Maximum allowable cost appeals process.
(a) Process to be established.--All contracts between a
pharmacy and a PBM or a pharmacy contracted directly with a
contracting representative or agent such as a PSAO shall include
a process to appeal, investigate and resolve disputes regarding
the listed maximum allowable cost for a particular drug or
medical PRODUCT OR device. The process shall be made available
on the PBM's publicly accessible Internet website and contain
A09300 - 8 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
information about the appeals process, including, but not
limited to, a telephone number or process that a pharmacy may
use to submit maximum allowable cost appeals.
(b) Grounds.--A pharmacy may base an appeal on either of the
following:
(1) the maximum allowable cost established for a
particular drug or medical product or device is below cost at
which the drug is available for purchase by that pharmacy in
this Commonwealth from national or regional wholesalers; or
(2) the PBM has placed a drug on the list in violation
of section 4.
(c) Time period for filing.--The right to appeal shall be
limited to 30 days following the reimbursement for a drug by a
PBM.
(d) Determination.--A PBM shall make a final determination
within seven business days of receiving an appeal and shall
notify the appealing party of the determination.
(e) Denial.--If a PBM denies an appeal, the PBM shall state
the reason for the denial and provide the national drug code of
an equivalent drug that is available for purchase by network
retail pharmacies in the Commonwealth from wholesalers at a
price that is equal to or less than the maximum cost for that
drug.
(f) Filing of grievance.--A pharmacy may file a grievance
with the department should a disagreement over denial between a
PBM and a pharmacy occur. The department shall investigate the
grievance and report its findings to the pharmacy within 30
business days.
(g) Approval.--If a PBM grants an appeal, the PBM shall
adjust the maximum allowable cost of the drug for the appealing
A09300 - 9 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
pharmacy, along with all network pharmacies. The adjustment
shall be paid to the pharmacy within one business day of the
determination. The PBM shall notify all similarly situated
network pharmacy providers as defined by the plan sponsor.
representative or agent such as PSAO:
(1) Include in the contract the sources utilized to
determine multiple source drug pricing, including, if
applicable, the maximum allowable cost or any successive
pricing formula of the PBM.
(2) Update the pricing information every seven calendar
days.
(3) Establish a reasonable process by which pharmacies
have a method to access relevant or current maximum allowable
cost pricing lists in effect and any successive pricing
formulas in a timely fashion.
(b) Confidentiality provision.--Nothing in this section may
prohibit a PBM from establishing a reasonable confidentiality
provision with a pharmacy's or pharmacist's contracting
representative agent such as a PSAO.
Section 6. Multiple source generic drug pricing appeals
process.
(a) Process to be established.--All contracts between a PBM
or a pharmacy, or alternatively, a pharmacy's contracting agent,
such a PSAO, shall include a process to appeal, investigate and
resolve disputes regarding multiple source drug pricing. The
contract provision establishing the process shall include the
following:
(1) The right to appeal shall be limited to 14 calendar
days following the initial claim.
(2) The appeal shall be investigated and resolved by the
A09300 - 10 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
PBM through an internal process within 14 calendar days of
receipt of the appeal by the PBM.
(3) A telephone number at which a pharmacy may contact
the PBM and speak with an individual who is involved in the
appeals process.
(b) Denial.--If a PBM denies an appeal, the PBM shall
provide the reason for the denial and identify the national drug
code of an equivalent drug that is available for purchase by
network retail pharmacies in this Commonwealth from wholesalers
at a price that is equal to or less than the maximum allowable
cost for the appealed drug as determined by the PBM.
(c) Approval.--If a PBM grants an appeal, the PBM shall make
the price correction, permit the reporting pharmacy to reverse
and rebill the appealed claim and make the price correction
effective for all similarly situated pharmacies from the date of
the approved appeal.
Section 8 7. Enforcement.
(a) Action by the department.--The department shall enforce
the provisions of this act and shall take action or impose
penalties to bring noncomplying entities into full compliance
with this act.
(b) Violation of Unfair Trade Practices and Consumer
Protection Law.--A violation of this act shall constitute a
violation of the act of December 17, 1968 (P.L.1224, No.387),
known as the Unfair Trade Practices and Consumer Protection Law.
(c) Financial penalties.--A violation of this act may
subject the PBM to financial penalties as determined by the
department. Additionally, the department may subject a pharmacy
to financial penalties if the department finds the pharmacy has
engaged in conduct that would constitute an abuse of the appeal
A09300 - 11 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
process.
Section 9 8. Department authority.
The department shall promulgate regulations necessary to
implement the provisions of this act.
Section 9. Applicability.
This act shall apply to all contracts and agreements for
pharmacy benefits management services executed or renewed on or
after the effective date of this section.
Section 10. Effective date.
This act shall take effect in 90 days.
A09300 - 12 -
1
2
3
4
5
6
7
8
9
10